DECORATOR INDUSTRIES, INC.
STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
EFFECTIVE MAY 16, 1997
1. PURPOSE. The purpose of the Decorator Industries, Inc. Stock Plan for
Non-Employee Directors (the "Plan") is to attract and retain qualified persons
to serve as directors of Decorator Industries, Inc., a Pennsylvania corporation
(the "Company"), to enhance the equity interest of directors in the Company,
and to encourage the highest level of director performance by providing them
with a proprietary interest in the Company's performance and progress, by
crediting them with shares of the Company's Common Stock, par value $.20 per
share ("Common Stock"), in lieu of cash compensation.
2. EFFECTIVE DATE AND TERM. The Plan shall be effective as of May 16,
1997. The Plan shall remain in effect until terminated by action of the Board
of Directors of the Company (the "Board").
3. PARTICIPATION. All Non-Employee Directors shall participate in the
Plan. The term "Non-Employee Director" means any individual who was a member of
the Board as of the election of directors at the annual meeting of stockholders
on May 16, 1997, or who becomes a member of the Board thereafter during the term
of the Plan and in each case during such periods as he or she is not a full-time
employee of the Company or any of its subsidiaries.
4. ADMINISTRATION; AMENDMENT. (a) The Plan will be administered by a
committee (the "Committee"), the members of which are appointed from time to
time by the Board, which shall have full power and authority to interpret and
construe the Plan, to establish, amend and rescind rules and regulations
relating to the Plan, and to take all such actions and make all such
determinations in connection with the Plan as it may deem necessary or
desirable.
(b) The Board may from time to time make such amendments to the Plan
as it may deem proper and in the best interest of the Company without further
approval of the Company's stockholders, unless and to the extent required to
qualify transactions under the Plan for exemption under Rule 16b-3 promulgated
under Section 16 of the Securities Exchange Act of 1934, as amended from time to
time ("Rule 16b-3"). Further, if and to the extent required for the Plan to
comply with Rule 16b-3, no amendment to the Plan shall be made more than once in
any six-month period that would change the amount, price or timing of the grants
of Common Stock hereunder other than to comport with changes in the Internal
Revenue Code of 1986, as amended from time to time and any successor thereto,
the Employee Retirement Income Security Act of 1974, as amended from time to
time and any successor thereto, or the regulations thereunder.
EXHIBIT 10W
(c) Subject to the above provisions, the Board shall have authority,
without stockholder approval, to amend the Plan to take into account changes in
law and tax and accounting rules as well as other developments, including
without limitation new rules which may be promulgated under Section 16 of the
Securities Exchange Act of 1934, as amended from time to time, and to grant
awards which qualify for beneficial treatment under such rules.
5. SHARES. (a) Each Non-Employee Director shall receive annual
compensation in the form of shares of Common Stock, payable in equal
quarterly installments on or before March 15, June 15, September 15 and
December 15 of each year, commencing June 13, 1997. A Plan Year shall be the
Company's fiscal year. The first Plan Year under the Plan shall be the
fiscal year ending January 3, 1998 (the "First Plan Year"). Annual
compensation for the First Plan Year shall be that number of whole shares of
Common Stock which is equal to the quotient of: Seven Thousand Five Hundred
Dollars ($7,500) divided by the closing price per share of Common Stock on
the American Stock Exchange on May 12, 1997. Annual compensation for each
succeeding Plan Year shall be that number of whole shares of Common Stock
which is equal to the quotient of: Ten Thousand Dollars ($10,000) divided by
the closing price per share of Common Stock on the American Stock Exchange on
the third business day following the date of the public announcement of the
Company's sales and earnings for its preceding fiscal year. Either authorized
but unissued or Treasury shares shall be used for this purpose. Any
fractional shares will be paid in cash. Each Non-Employee Director will be
required to represent that the shares are to be held for investment purposes
and not with a view to resale or distribution except in compliance with the
Securities Act of 1933, as amended from time to time (the "Securities Act")
and to give a written undertaking, in form and substance satisfactory to the
Company, that he or she will not publicly offer or sell or otherwise
distribute the shares other than (i) in the manner and to the extent
permitted by Rule 144 of the Securities and Exchange Commission under the
Securities Act, (ii) pursuant to any other exemption from the registration
provisions of the Securities Act, or (iii) pursuant to an effective
registration statement.
(b) If an individual becomes a Non-Employee Director during a Plan
Year, he or she shall receive for that Plan Year the number of shares equal
to the product of (i) the number of shares to which he or she would have been
entitled under Section 5(a) had he or she been a Non-Employee Director for
the full Plan Year, and (ii) the fraction obtained by dividing (x) the number
of calendar months during such Plan Year that such person was a Non-Employee
Director by (y) 12; provided, that for purposes of the foregoing a partial
calendar month shall be treated as a whole month.
6. ADJUSTMENTS. In the event of any change in the Common Stock of the
Company, through the declaration of stock dividends, through recapitalization
resulting in stock split-ups or combinations of shares, or as the result of
similar events, appropriate adjustments shall be made by the Committee in the
number and kind of shares to be paid pursuant to the Plan.
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7. ELECTION TO DEFER SHARES. (a) Subject to Section 7(b), each
Non-Employee Director may make an irrevocable election to defer receipt of
all or part of the shares granted under this Plan (the "Deferral Election").
In order to make a Deferral Election pursuant to this Section 7(a), a
Non-Employee Director must deliver to the Secretary of the Company a written
notice of the Deferral Election setting forth the number of shares to be
deferred on such form as may be prescribed by the Committee. The Deferral
Election may also specify that the Non-Employee Director elects to receive
distribution of his or her Director's Trust Account (as defined below) in
accordance with Section 7(d) in a lump sum (a "Lump Sum Delivery Election"),
or in installments over a period of less than ten years (a "Specific
Installment Election"). In the case of individuals who are Non-Employee
Directors on May 16, 1997, this notice must be delivered no later than June
2, 1997, except as specified in Section 7(b); in the case of individuals who
become Non-Employee Directors after May 16, 1997, during the term of the
Plan, this notice must be delivered within thirty (30) days after the date on
which the Non-Employee Director becomes a Non-Employee Director.
(b) It is the intention of this Plan that Non-Employee Directors
shall have the ability to make a Deferral Election on an annual basis
provided that such annual Deferral Elections would not cause the Plan to fail
to comply with Rule 16b-3. Subject to the preceding limitation, a
Non-Employee Director may make a Deferral Election on an annual basis on or
before June 20 of the Plan Year prior to the commencement of the first Plan
Year to which the Deferral Election relates, or such later date up to and
including the last business day of such prior Plan Year as may be permitted
by the Committee and as permitted under Rule 16b-3. The Deferral Election
made pursuant to Section 7(a), or any subsequent Deferral Election permitted
and made pursuant to this Section 7(b), as the case may be, shall remain in
effect for subsequent Plan Years unless a subsequent different Deferral
Election is permitted and made in accordance with this Section 7(b).
(c) The Committee may establish a trust for the benefit of the
Non-Employee Directors on such terms and conditions as the Committee shall
determine (the "Plan Trust"), the assets of which shall be subject to the
claims of the Company's creditors. All shares deferred pursuant to this
Section 7 shall be delivered to the Plan Trust and shall be credited to the
account of each Non-Employee Director in accordance with his or her Deferral
Election (the "Director's Trust Account") and held for delivery in accordance
with the terms of this Plan; and all earnings of a Director's Trust Account
(including without limitation dividends on the Common Stock) shall be
accumulated and reinvested by the trustee in the trustee's discretion.
(d) All distributions from a Director's Trust Account under the
Plan Trust shall be made to the Non-Employee Director (or, in the event of an
eligible Non-Employee Director's death, his or her designated beneficiary) in
ten (10) annual installments commencing as soon as practicable following the
cessation of his or
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her services as a Non-Employee Director. However, if the Non-Employee
Director has in effect a valid Lump Sum Delivery Election or a valid Specific
Installment Election pursuant to Section 7(b), such distributions shall be
made in a lump sum, or in the specified number of installments as the case
may be, commencing as soon as practicable following the cessation of his or
her services as a Non-Employee Director. Distributions will be made in
shares of Common Stock unless the Committee otherwise determines, in
accordance with the terms of the Plan Trust. If such shares are to be
distributed in installments, such installments shall be equal; provided, that
if in order to equalize such installments fractional shares would have to be
delivered, such installments shall be adjusted by rounding to the nearest
whole share. If any such shares are to be delivered after the Non-Employee
Director has died or become legally incompetent, the Committee shall deliver
promptly all remaining undelivered shares to the Non-Employee Director's
designated beneficiary or legal guardian, respectively. References to a
Non-Employee Director in this Plan shall be deemed to refer to the
Non-Employee Director's designated beneficiary or legal guardian, where
appropriate.
(e) Nothing in the Plan or the Plan Trust shall confer on any
individual any right to continue as a director of the Company or interfere in
any way with the right of the Company to terminate the individual's service
as a director at any time.
(f) A Non-Employee Director shall be entitled to early distribution
of all or part of his or her Director's Trust Account in the event of an
"Unforeseeable Emergency," in accordance with this paragraph. An
"Unforeseeable Emergency" means severe financial hardship to the Non-Employee
Director resulting from a sudden and unexpected illness or accident of the
Non-Employee Director or a dependent of the Non-Employee Director, loss of
the Non-Employee Director's property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Non-Employee Director. A distribution pursuant to
this paragraph may only be made to the extent reasonably needed to satisfy
the emergency need, and may not be made if such hardship is or may be
relieved (i) through reimbursement or compensation by insurance or otherwise,
(ii) by liquidation of the Non-Employee Director's assets to the extent such
liquidation would not itself cause severe financial hardship, or (iii) by
cessation of participation in the Plan prospectively. The determination of
whether and to what extent a distribution is permitted pursuant to this
paragraph shall be made by the Committee.
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DECORATOR INDUSTRIES, INC.
GRANTOR TRUST AGREEMENT
STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
EFFECTIVE JUNE 13, 1997
(a) This agreement made this 13th day of June, 1997, by and between
Decorator Industries, Inc. ("Company") and William A. Bassett, as trustee
(the "Trustee");
(b) WHEREAS, Company has adopted the nonqualified deferred
compensation plan entitled Decorator Industries, Inc. Stock Plan for
Non-Employee Directors, effective May 16, 1997 (the "Plan"), as set forth in
Appendix A hereto;
(c) WHEREAS, Company has incurred or expects to incur liability
under the terms of the Plan with respect to the individuals participating in
the Plan;
(d) WHEREAS, Company wishes to establish a trust (hereinafter
called "Trust") and to contribute to the Trust assets that shall be held
therein, subject to the claims of the Company's creditors in the event of
Company's Insolvency, as herein defined, until paid to Plan participants and
their beneficiaries in such manner and at such times as specified in the Plan;
(e) WHEREAS, it is the intention of the parties that this Trust
shall constitute an unfunded arrangement and shall not affect the status of
the Plan as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of non-employee directors for purposes of
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"); and
(f) WHEREAS, it is the intention of Company to make contributions
to the Trust to provide itself with a source of funds to assist it in meeting
its liabilities under the Plan;
NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be composed, held and disposed of as follows:
SECTION 1. ESTABLISHMENT OF TRUST
(a) Company hereby deposits with Trustee in trust 1,076 shares of
Company Common Stock which shall become the initial principal of the Trust to
be held, administered and disposed of by the Trustee as provided in this
Trust Agreement.
(b) The Trust hereby established shall be irrevocable by the
Company.
(c) The Trust is intended to be a grantor trust, of which Company
is the grantor, within the meaning of subpart E, part I, subchapter J,
chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and
shall be construed accordingly.
(d) The principal of the Trust, and any earnings thereon, shall be
held separate and apart from other funds of Company and shall be used
exclusively for the uses and purposes of Plan participants and general
creditors as herein set forth. Plan participants and their beneficiaries
shall have no preferred claim on, or any beneficial ownership interest in,
any
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assets of the Trust. Any rights created under the Plan and this Trust
Agreement shall be mere unsecured contractual rights of Plan participants and
their beneficiaries against Company. Any assets held by the Trust will be
subject to the claims of Company's general creditors under Federal and state
law in the event Company is Insolvent, as defined in Section 3(a) herein.
(e) Company may at any time or from time to time, make additional
contributions of property in Trust with Trustee to augment the principal to
be held, administered and disposed of by Trustee as provided in this Trust
Agreement.
SECTION 2. PAYMENTS TO PLAN PARTICIPANTS AND THEIR BENEFICIARIES
(a) Company shall deliver to Trustee a schedule (the "Payment
Schedule") that indicates the amounts payable in respect to each Plan
participant (and his or her beneficiaries), that provides a formula or other
instructions acceptable to Trustee for determining the amounts so payable,
the form in which such amount is to be paid (as provided for or available
under the Plan), and the time of commencement for payment of such amounts.
Except as otherwise provided in subparagraph (c) herein, Trustee shall make
payments to the Plan participants and their beneficiaries in accordance with
the Payment Schedule and the Plan. Trustee shall make provision for the
reporting and withholding of any Federal, state or local taxes that may be
required to be withheld with respect to the payment of benefits pursuant to
the terms of the Plan and shall pay amounts withheld to the appropriate
authorities or determine that such amounts have been reported, withheld and
paid by Company.
(b) The entitlement of a Plan participant or his or her
beneficiaries to benefits under the Plan shall be determined by Company or
such party as shall be designated under the Plan, and any claim for such
benefits shall be considered and reviewed under the procedures set out in the
Plan.
(c) Company may make payment of benefits directly to Plan
participants or their beneficiaries as they become due under the terms of the
Plan. Company shall notify Trustee of its decision to make payment of
benefits directly prior to the time amounts are payable to Plan participants
or their beneficiaries.
(d) If the principal of the Trust, and any earnings thereon, are
not sufficient to make payments of benefits when due in accordance with the
Payment Schedule and terms of the Plan, Trustee shall notify Company at least
30 days prior to the date such benefits are due. Upon notice from Trustee,
Company shall make the balance of each such benefit payment as it falls due.
SECTION 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST
BENEFICIARIES WHEN COMPANY IS INSOLVENT.
(a) Trustee shall cease payment of benefits to Plan participants
and their beneficiaries if Company is Insolvent. Company shall be considered
"Insolvent" for purposes of this Trust Agreement if (i) Company is unable to
pay its debts as they become due, or (ii) Company is subject to a pending
proceeding as a debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, as provided
in Section 1(d) hereof, the principal and income of the Trust shall be
subject to claims of general creditors of Company under Federal and state law
as set forth below.
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(1) An authorized officer or director of the Company shall have
the duty, on behalf of Company, to inform Trustee in writing if
Company is Insolvent. If a person claiming to be a creditor of
Company alleges in writing to Trustee that Company has become
Insolvent, Trustee shall determine whether Company is Insolvent and,
pending such determination, Trustee shall discontinue payment of
benefits to Plan participants or their beneficiaries.
(2) Unless Trustee has actual knowledge that Company is
Insolvent, or has received notice from Company or a person claiming to
be a creditor alleging that Company is Insolvent, Trustee shall have
no duty to inquire whether Company is Insolvent. Trustee may in all
events rely on such evidence concerning Company's solvency as may be
furnished to Trustee and that provides Trustee with a reasonable basis
for making a determination concerning Company's solvency.
(3) If at any time Trustee has determined that Company is
Insolvent, Trustee shall discontinue payments to Plan participants or
their beneficiaries, shall provide written notice to Plan participants
or their beneficiaries as to why payments have ceased and shall hold
the assets of the Trust for the benefit of Company's general
creditors. Nothing in this Trust Agreement shall in any way diminish
any rights of Plan participants or their beneficiaries to pursue their
rights as general creditors of Company with respect to benefits due
under the Plan or otherwise.
(4) Trustee shall resume the payment of benefits to Plan
participants or their beneficiaries in accordance with Section 2 of
this Trust Agreement only after Trustee has determined that Company is
not Insolvent (or is no longer Insolvent).
(c) Provided that there are sufficient assets, if Trustee
discontinues the payment of benefits from the Trust pursuant to Section 3(b)
hereof and subsequently resumes such payments, the first payment following
such discontinuance shall include the aggregate amount of all payments due to
Plan participants or their beneficiaries under the terms of the Plan for the
period of such discontinuance, less the aggregate amount of any payments made
to Plan participants or their beneficiaries by Company in lieu of the
payments provided for hereunder during any such period of discontinuance.
SECTION 4. INVESTMENT AUTHORITY
(a) Company Common Stock delivered to Trustee under the provisions
of the Plan shall be retained in the Trust and, subject to Section 1(d)
hereof, distributed to Plan participants or their beneficiaries in accordance
with the provisions of the Plan. Trustee may invest any cash dividends
thereon in his discretion, including investments in securities (including
stock or rights to acquire stock) or obligations issued by Company. All
rights associated with assets of the Trust shall be exercised by Trustee or
the person designated by Trustee, and shall in no event be exercisable by or
rest with Plan participants.
(b) Company shall have the right, at any time, and from time to
time in its sole discretion, to substitute assets of equal fair market value
for any asset held by the Trust. This right is exercisable by Company in a
nonfiduciary capacity without the approval or consent of any person in a
fiduciary capacity.
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SECTION 5. DISPOSITION OF INCOME
During the term of this Trust, all income received by the Trust, net
of expenses and taxes, shall be accumulated and reinvested.
SECTION 6. ACCOUNTING BY TRUSTEE
Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made,
including such specific records as shall be agreed upon in writing between
Company and Trustee.
SECTION 7. RESPONSIBILITY OF TRUSTEE
(a) Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in like
capacity and familiar with such matters would use in the conduct of any
enterprise of like character and with like aims, provided, however, that
Trustee shall incur no liability to any person for any action taken pursuant
to a direction, request or approval given by Company which is contemplated
by, and in conformity with, the terms of the Plan or this Trust and is given
in writing by Company. In the event of a dispute between Company and a
party, Trustee may apply to a court of competent jurisdiction to resolve the
dispute.
(b) If Trustee undertakes or defends any litigation arising in
connection with this Trust, Company agrees to indemnify Trustee against
Trustee's reasonable costs, expenses and liabilities (including, without
limitation, reasonable attorneys' fees and expenses) relating thereto and to
be primarily liable for such payments.
(c) Trustee shall have, without exclusion, all powers conferred on
trustees by applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an asset of the
Trust, Trustee shall have no power to name a beneficiary of the policy other
than the Trust, to assign the policy (as distinct from conversion of the
policy to a different form) other than to a successor trustee, or to loan to
any person the proceeds of any borrowing against such policy.
(d) Notwithstanding any powers granted to Trustee pursuant to this
Trust Agreement or to applicable law, Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing
the gains therefrom, within the meaning of Section 301.7701-2 of the
Procedure and Administrative Regulations promulgated pursuant to the Internal
Revenue Code.
SECTION 8. COMPENSATION AND EXPENSES OF TRUSTEE
Company shall pay all administrative and Trustee's fees and
expenses. If not so paid, the fees and expenses shall be paid from the Trust,
provided that such fees and expenses shall not exceed the income received by
the Trust.
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SECTION 9. RESIGNATION AND REMOVAL OF TRUSTEE
(a) Trustee may resign at any time by written notice to Company,
which shall be effective ninety (90) days after receipt of such notice unless
Company and Trustee agree otherwise.
(b) Trustee may be removed by Company on thirty (30) days written
notice or upon shorter notice accepted by Trustee.
(c) Upon resignation or removal of Trustee and appointment of a
successor trustee, all assets of the Trust shall subsequently be transferred
to the successor trustee. The transfer to the successor trustee shall be
completed within thirty (30) days after receipt of notice of resignation or
removal, unless Company extends the time limit.
(d) If Trustee resigns or is removed, a successor shall be
appointed in accordance with Section 10 hereof, by the effective date of
resignation or removal under paragraphs (a) and (b) of this Section. If no
such appointment has been made, Trustee may apply to a court of competent
jurisdiction for appointment of a successor or for instructions. All
expenses of Trustee in connection with the proceeding shall be allowed as
administrative expenses of the Trust.
SECTION 10. APPOINTMENT OF SUCCESSOR
(a) If Trustee resigns or is removed in accordance with Section
9(a) or (b) hereof, Company may appoint any third party, including a bank
trust department or other party that may be granted corporate trustee powers
under state law, as a successor to replace Trustee upon resignation or
removal. The appointment shall be effective when accepted in writing by the
new trustee, who shall have all of the rights and powers of the former
Trustee, including ownership rights in the Trust assets. The former Trustee
shall execute any instrument necessary or reasonably requested by Company or
the successor trustee to evidence the transfer.
(b) If Trustee resigns or is removed and, pursuant to the
provisions of Section 9(d) hereof, a successor trustee is selected, such
successor trustee may be any third party, including a bank trust department
or other party that may be granted corporate trustee powers under state law.
The appointment of a successor trustee shall be effective when accepted in
writing by the new trustee. The new trustee shall have all the rights and
powers of the former Trustee, including ownership rights in Trust assets.
The former Trustee shall execute any instrument necessary or reasonably
requested by the successor trustee to evidence the transfer.
(c) The successor trustee need not review the records and acts of
any prior Trustee and may retain or dispose of existing Trust assets, subject
to Sections 4, 6 and 7 hereof. The successor trustee shall not be
responsible for any claim or liability resulting from any action or inaction
of any prior Trustee or from any other past event, or any condition existing
at the time it becomes successor trustee.
SECTION 11. AMENDMENT OR TERMINATION
(a) This Trust Agreement may be amended by a written instrument
executed by Trustee and Company. Notwithstanding the foregoing, no such
amendment shall conflict with the terms of the Plan or violate this
Section 11.
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(b) The Trust shall not terminate until the date on which Plan
participants and their beneficiaries are no longer entitled to benefits
pursuant to the terms of the Plan. Upon termination of the Trust, any assets
remaining in the Trust shall be returned to Company.
(c) No Section of this Trust Agreement may be amended by Company
for one (1) year following a Change of Control, as defined herein.
SECTION 12. MISCELLANEOUS
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
(b) Benefits payable to Plan participants and their beneficiaries
under this Trust Agreement may not be anticipated, assigned (either at law or in
equity), alienated, pledged, encumbered or subjected to attachment, garnishment,
levy, execution or other legal or equitable process.
(c) This Trust Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
(d) For purposes of this Trust, Change of Control shall mean any of
the following events:
(1) Acquisitions in one or more transactions by any person or
group, directly or indirectly, which in the aggregate cumulatively result in
transfer of beneficial ownership of fifty percent (50%) or more of the combined
voting power of the outstanding voting securities of Company entitled to vote
generally in the election of directors, provided, however, that any acquisition
by Company or any of its subsidiaries, or any employee benefit plan (or related
trust) sponsored or maintained by Company or any of its subsidiaries shall not
constitute a Change of Control;
(2) A liquidation or dissolution of Company or the sale of all
or substantially all of Company's assets; or
(3) The reorganization, merger or consolidation of Company into
or with another person or entity, by which reorganization, merger or
consolidation the shareholders of Company having beneficial ownership, directly
or indirectly, of the combined voting power of the then outstanding voting
securities of Company entitled to vote generally in the election of directors
receive less than fifty percent (50%) of the outstanding voting shares of the
new or continuing corporation.
SECTION 13. EFFECTIVE DATE
The effective date of this Trust Agreement shall be June 13, 1997.
IN WITNESS WHEREOF, Company and Trustee have executed and delivered
this Trust Agreement on the date set forth above.
ATTEST DECORATOR INDUSTRIES, INC.
__________________________ By: ___________________________
Title: Vice President
________________________________
William A. Bassett, as Trustee
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