BEARINGS, INC.
DEFERRED COMPENSATION PLAN
ARTICLE I
Purpose of the Plan
The purpose of the Bearings, Inc. Deferred Compensation
Plan is to provide key executives of Bearings, Inc. (the
"Company") and its affiliates with the option to defer receipt of
all or a portion of incentive compensation payable under the
Bearings, Inc. Management Incentive Plan program and to enable
such executives to participate in the long-term growth and
success of the Company through an increased opportunity to invest
in common stock of the Company.
ARTICLE II
Definitions and Construction
2.1 Definitions.
As used herein, the following words shall have the
meanings hereinafter set forth unless otherwise specifically
provided.
(1) The term "Annual Incentive Plan" shall mean any
Management Incentive Plan adopted by the Board with respect to
any Fiscal Year.
(2) The term "Award" shall mean the aggregate benefit
payable to a Plan Participant under an Annual Incentive Plan for
a Fiscal Year.
(3) The term "Beneficiary" shall mean the person or
persons designated by a Participant to receive a distribution
under the Plan pursuant to the provisions of Section 5.4 in the
event of the death of such Participant prior to distribution of
the full value of his Deferral Account.
(4) The term "Board" shall mean the Board of Directors
of the Company.
(5) The term "Committee" shall mean the Executive
Organization Compensation Committee of the Board, or such other
committee of the Board that is designated by the Board to
administer the Plan. The Committee shall be constituted so as to
satisfy any applicable legal requirements including the
requirements of Rule 16b-3 promulgated under the Securities
Exchange Act of 1934 (the "Exchange Act") or any similar rule
which may subsequently be in effect. The members shall be
appointed by, and serve at the pleasure of, the Board and any
vacancy on the Committee shall be filled by the Board.
(6) The term "Common Shares" shall mean the common
stock of the Company.
(7) The term "Company" shall mean Bearings, Inc., its
corporate successors, and any corporation into or with which it
is merged or consolidated.
(8) The term "Comprehensive Plan" shall mean the
Bearings, Inc. Comprehensive Deferred Compensation and
Supplemental Benefit Plan.
(9) The term "Deferral" shall mean that portion of an
Award which a Participant elects to defer pursuant to the terms
of the Plan.
(10) The term "Deferral Account" shall mean the
bookkeeping account established under the Plan with respect to
each Participant to reflect any of his Deferrals.
(11) The term "Eligible Employee" shall mean any highly
compensated or select management employee of the Company or an
affiliate who is designated by the Committee to participate in an
Annual Incentive Plan with respect to a particular Fiscal Year.
(12) The term "Fair Market Value" shall mean the
average of the high and low prices of Common Shares as reported
on the composite tape for securities listed on the New York Stock
Exchange for the date in question, provided that if no sales of
Common Shares were made on said exchange on that date, the
average of the high and low prices of Common Shares as reported
on said composite tape for the preceding day on which sales of
Common Shares were made on said Exchange.
(13) The term "Fiscal Year" shall mean the fiscal year
of the Company.
(14) The term "Participant" shall mean an Eligible
Employee who elects to defer all or any portion of an Award under
the Plan pursuant to the provision of Article III.
(15) The term "Plan" shall mean the Bearings, Inc.
Deferred Compensation Plan which is set forth herein with all
amendments, supplements, and modifications hereafter made and
which is part of the Comprehensive Plan and listed on Exhibit A
attached thereto.
(16) The term "Trust" shall mean the trust maintained
pursuant to the terms of the Bearings, Inc. Supplemental
Executive Retirement Benefits Trust Agreement.
(17) The term "Valuation Date" shall mean the last day
of each Fiscal Year quarter and any other date as may be
designated as such by the Committee.
2.2 Construction. Where necessary or appropriate to
the meaning herein, the singular shall be deemed to include the
plural and the masculine pronoun to include the feminine.
ARTICLE III
Elections by Eligible Employees
3.1 Election to Defer. Prior to the January 1
following the adoption by the Board of an Annual Incentive Plan,
an Eligible Employee may elect to defer receipt of all or a
portion of the Award that he may receive under such Annual
Incentive Plan as a Deferral under the Plan. Any election under
this Section 3.1 shall be made on a form specified by the
Committee (an "Election Form") and in a manner acceptable to the
Company. In addition, such election shall indicate the allocation
of the Deferral to be deemed invested in a money market fund
and/or Common Shares under the Trust.
3.2 Effectiveness of Elections. Subject to the
provisions of Sections 5.1 and 5.2, an election to defer any
portion of an Award hereunder shall be effective and irrevocable
upon the delivery of an Election Form to the Committee.
Notwithstanding anything to the contrary set forth herein, the
effective date of any transaction in which any Deferral is deemed
invested in Common Shares shall be not less than six months after
the date of the filing of such Election Form.
ARTICLE IV
Accounts and Investments
4.1 Establishment of Accounts. The Deferral Account of
each Participant shall have two subaccounts, a Common Shares
subaccount and a money market subaccount, to which Deferrals shall
be credited pursuant to the applicable Election Form filed by the
Participant with the Committee.
4.2 Amount of Deferrals. If a Participant elects to
have less than 50% of his Award deferred under the Plan as a
Deferral, the amount of such Deferral shall be credited to his
Deferral Account and subaccounts in accordance with his duly filed
Election Forms. If, however, the Participant elects to have at
least 50% of his Award deferred under the Plan as a Deferral and
elects to have at least 50% of his Award deemed to be invested in
Common Shares, 110% of the amount of such Deferral deemed so
invested in Common Shares and 100% of the amount of such Deferral
deemed to be invested in a money market fund, shall be credited to
his Deferral Account and subaccounts in accordance with the terms
of his duly filed Election Form. In the event any Deferral or
portion thereof is deemed to be invested in a money market fund,
such crediting shall be made within 30 days after the date on
which the Deferral would otherwise have been payable to the
Participant under the applicable Annual Incentive Plan and in the
event any Deferral or portion thereof is deemed to be invested in
Common Shares, such crediting shall be made on a date that is the
later of the date such Deferral would otherwise have been payable
to the Participant or six months after the date of the election
referred to in Section 3.2 hereof. Common Shares credited to a
Deferral Account shall be valued at Fair Market Value.
4.3 AdJustments of Accounts. As of each Valuation
Date, the value of each Deferral Account shall be adjusted to
reflect deemed earnings, losses and dividends determined by the
Committee. Common Shares credited to any Deferral Account shall
be valued at Fair Market Value.
ARTICLE V
Payment of Accounts
5.1 Method of Distribution. The value of a
Participant's Deferral Account deemed invested in Common Shares
shall be distributed in Common Shares and the value of a
Participant's Deferral Account deemed invested in a money market
fund shall be distributed in cash. Such value shall be determined
as of the most recent Valuation Date. Subject to the provisions
of Section 5.2, distribution of a Participant's Deferral Account
shall be made either in a lump sum or in equal installments over a
period of not more than ten years as specified in such
Participant's Election Form.
5.2 Time of Payments. Except as otherwise may be
provided in the Trust or as provided in Section 5.3, distribution
of the value of a Participant's Deferral Account shall commence
upon a date which is not more than 30 days after the earlier of
(i) the Participant's termination of employment due to
resignation, retirement, death or other reason, or (ii) a
Committee-approved date specified in the Election Form filed by
him with the Company. Such Election Form will be provided by the
Company and will set forth the time and manner of payment
permitted and approved by the Committee under the Plan.
Notwithstanding any other provision of the Plan to the contrary, a
Participant, subject to approval of the Committee, may elect to
change the manner and the time of distribution of the value of his
Deferral Account during the period which commences no earlier than
80 days prior to his termination of employment and terminates no
later than 30 days prior to his termination of employment.
5.3 Hardship Distribution. Prior to the time the
Deferral Account of a Participant becomes payable under Section
5.2, the Committee, in its sole discretion, may elect to
distribute all or a portion of the Participant's Deferral Account
on account of severe financial hardship of the Participant. For
purposes of the Plan, severe financial hardship shall be deemed to
exist in the event the Committee determines that the Participant
requires a distribution to meet immediate and heavy financial
needs resulting from a sudden or unexpected illness or accident of
the Participant or a member of his or her family, loss of the
Participant's property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant. A distribution
based on financial hardship shall not exceed the amount required
to meet the immediate financial need created by the hardship.
5.4 Distributions Upon Death. Upon the death of a
Participant, his or her Deferral Account shall be paid to his
Beneficiary. If there is no Beneficiary surviving at a
Participant's death, payment of the Participant's Deferral Account
shall be made to his or her estate. Beneficiary designations shall
be made in writing. A Participant may designate a new Beneficiary
or Beneficiaries at any time by notifying the Committee in
writing.
5.5 Taxes. In the event any taxes are required by law
to be withheld or paid from any payments made pursuant to the
Plan, the Committee shall cause such amounts to be withheld from
such payments and shall transmit the withheld amounts to the
appropriate taxing authority.
ARTICLE VI
Funding
The Company may cause Plan benefits to be paid from the
Trust which is a grantor trust that provides full funding of the
Plan benefits in the event of a potential change in control or
change in control. Subject to the provisions of the Trust, the
obligation of the Company under the Plan to provide a Participant
or Beneficiary with a benefit constitutes the unsecured promise of
the Company to make payments as provided herein, and no person
shall have any interest in, or a lien or prior claim upon, any
property of the Company.
ARTICLE VII
Miscellaneous
7.1 Amendment and Termination of the Plan. The Company
reserves the right to amend or terminate the Plan at any time;
provided, however, that no amendment or termination shall affect
the right of Participants to amounts previously credited to their
Deferral Accounts pursuant to Section 4.2.
7.2 Non-Alienation. No benefit under the Plan shall at
any time be subject in any manner to alienation or encumbrance.
If any Participant or Beneficiary shall attempt to, or shall,
alienate or in any way encumber his rights or benefits under the
Plan, or any part thereof, or if by reason of his bankruptcy or
other event happening at any time any such benefits would
otherwise be received by anyone else or would not be enjoyed by
him, his interest in all such benefits shall automatically
terminate and the same shall be held or applied to or for the
benefit of such person, his spouse, children, or other dependents
as the Committee may select.
7.3 Payment of Benefits to Others. If any Participant
or Beneficiary to whom a benefit is payable under the Plan is
unable to care for his affairs because of illness or accident, any
payment due (unless prior claim therefor shall have been made by a
duly qualified guardian or other legal representative) may be paid
to the spouse, parent, brother, sister, adult child, or any other
individual deemed by the Company to be maintaining or responsible
for the maintenance of such person. Any payment made in
accordance with the provisions of this Section 7.3 shall be a
complete discharge of any liability of the Plan with respect to
the benefit so paid.
7.4 Plan Non-Contractual. Nothing contained herein
shall be construed as a commitment or agreement on the part of any
person employed by the Company to continue his employment with the
Company, and nothing herein contained shall be construed as a
commitment on the part of the Company to continue the employment
or the annual rate of compensation of any such person for any
period, and all Participants shall remain subject to discharge to
the same extent as if the Plan had never been established.
7.5 Taxability of Plan Benefits. This Plan is intended
to be treated as an unfunded deferred compensation plan under the
Internal Revenue Code of 1986, as amended. It is the intention of
the Company that the amounts deferred pursuant to the Plan shall
not be included in the gross income of the Participants or their
Beneficiaries until such time as the deferred amounts are
distributed from the Plan. If, at any time, it is determined that
amounts deferred pursuant to the Plan are currently taxable to a
Participant or his Beneficiary, the amounts credited to such
Participant's Deferral Account which become so taxable shall be
distributed immediately to him; provided, however, that in no
event shall amounts so payable under the Plan to a Participant
exceed the value of his Deferral Account.
7.6 Effective Date. Subject to approval of the
shareholders of the Company and the provisions of Section 7.1, the
Plan shall be effective as of July 1, 1993.
Executed at Cleveland, Ohio, effective this 22nd day of
July, 1993.
BEARINGS INC.