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EXHIBIT 12
CBI 1983 RESTRICTED STOCK AWARD PLAN
(As Amended December 6, 1983)
1. Purpose. The purpose of this CBI 1983 Restricted Stock Award Plan
(the "Plan") is to provide an incentive for Participants to contribute to the
continued growth and profitability of the Company by encouraging stock
ownership. The Plan is intended to further the interest of the Company by
enabling it to attract and retain the services of highly qualified and motivated
persons to serve the Company and its subsidiaries.
2. Definitions. As used in the Plan, the following terms shall have the
following meanings:
Award--The grant of Common Stock subject to the restrictions and
pursuant to the terms of the Plan.
Award Date--The date on which an Award is approved by the Board as
provided by paragraph 4.3 below.
Board--The Board of Directors of the Company, as from time to time
constituted.
Committee--The Compensation Committee of the Board, no member of which
shall be eligible to participate in the Plan while serving as such
member.
Common Stock--Common shares of the Company, par value $2.50 per share.
Company--CBI Industries, Inc., a Delaware corporation.
Disability--That condition of a Participant, including but not limited
to a physical or mental condition, which makes a Participant unable to
perform the regular duties of his employment, as determined by the
Committee, provided, however, that Disability shall not consist of a
condition resulting from a cause which the Committee, in its rules, has
excluded.
Effective Date--May 1, 1983.
Participant--An employee or former employee who has received an Award
under the Plan.
Retirement--The termination of employment of a Participant with the
Company and all subsidiaries on or after attaining age 60, or after
qualifying for any retirement as defined under the terms of the CBI
Pension Plan as amended, or such earlier termination with the Company's
consent and as may be determined by the Committee to constitute early
retirement, provided, however, that no termination of such employment by
reason of dishonesty, fraud or breach of trust against the Company or
any of its subsidiaries, as determined by the Committee, shall
constitute Retirement.
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3. Common Stock Subject to Plan. There will be reserved for issue upon
the granting of Awards during the term of the Plan an aggregate of 500,000
shares of Common Stock, as adjusted by the Committee as required to reflect any
stock dividend, stock split, reclassification or similar change in
capitalization. If any such adjustment shall result in a fractional share such
fraction shall be disregarded. Upon the granting of an Award, the number of
shares reserved for Award shall be reduced by the number of shares so awarded,
and upon the forfeiture to the Company of any shares awarded hereunder the
number of shares reserved for Award shall be increased by such number of shares,
and such forfeited shares may again be the subject of an Award. Awards may be
made from authorized but unissued shares or from treasury shares. All
authorized but unissued shares awarded hereunder shall be fully paid and
nonassessable shares.
4. Eligibility and Awards.
4.1 Eligibility. All management employees (including officers but
not directors unless also employees) of the Company and of its present and
future subsidiaries are eligible to be selected by the Committee and
approved by the Board as Participants.
4.2 Making of Awards. Subject to the express provisions of the Plan,
the Committee shall in its discretion determine the employees to whom, and
the time or times at which, Awards shall be made pursuant to the Plan and
the number of shares to be awarded. In making such determinations, the
Committee shall take into account the recommendations of the Management
Committee of the Company and the nature of the services rendered by the
respective employees, their present and potential contributions to the
Company's success and such other factors as the Committee in its discretion
shall deem relevant. Awards to any employee will not be made more
frequently than once in each calender year.
4.3 Form of Award. As soon as reasonably practicable after making a
determination as provided in paragraph 4.2 above, the Committee shall
submit such determination to the Board which shall approve or disapprove
the Award. Promptly upon the approval of an Award by the Board, the
Committee shall advise the Participant in writing of the making of such
Award, the number of shares awarded, the restrictions thereon and incidents
of forfeiture thereof, and any other terms and conditions relating thereto.
5. Restrictions on Awarded Stock.
5.1 Rights of Participants as Shareholders. Shares awarded hereunder
shall forthwith be duly issued and identified on the books of the Company
in the Participant's name. The Participant shall thereupon be a
shareholder with respect to all such shares and shall have all the rights
of a shareholder with respect to all such shares, including the right to
vote such shares and to receive all dividends and other distributions
(subject to the provisions of paragraph 5.2 below) paid with respect to
such shares, provided, however, that such shares shall be subject to the
restrictions hereinafter described, and to such additional or more severe
restrictions (including more severe provisions relating the the lapsing of
restrictions) as may be imposed by the Committee in making any individual
award. In aid of
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such restrictions, such shares shall be held by the Company in its control
for the account of such Participant until such restrictions lapse as
provided in paragraph 5.4 below or such shares are theretofore forfeited to
the Company as provided by paragraph 5.3 below.
5.2 Changes in Capitalization. In the event that, as the result of a
stock dividend, stock split, reclassification or similar change in
capitalization, the Participant shall, as the owner of shares subject to
restrictions hereunder, be entitled to new or additional or different
shares of stock or securities, the certificate or certificates for, or
other evidences of, such new or additional or different shares or
securities, shall also be held by the Company in its control for the
account of such Participant as provided in paragraph 5.1 above, and all
provisions of the Plan relating to restrictions and lapse or restrictions
herein set forth shall thereupon be applicable to such new or additional or
different shares or securities to the extent they were distributed;
provided, however, that if the Participant shall receive rights, warrants
or fractional interests in respect of any of such shares, such rights or
warrants may be held, exercised, sold or otherwise disposed of, and such
fractional interests may be settled, by the Participant free and clear of
the restrictions hereafter set forth.
5.3 Imposition of Restrictions. Each share awarded under the Plan
shall be subject to the following restrictions except to the extent that
such restrictions have lapsed pursuant to paragraph 5.4 below:
5.3.1 Transfer Restrictions. None of such shares shall be sold,
exchanged, transferred, pledged, hypothecated, or otherwise disposed
of in any manner, whether voluntarily or involuntarily.
5.3.2 Forfeitures. All of such shares shall be forfeited to the
Company without notice immediately upon the occurrence of any of the
following events:
a. The termination of the employment of the Participant with
the Company and all subsidiaries for any reason other than Retirement,
Disability, or death, or
b. The performance of services by the Participant, while an
employee of the Company or any subsidiary or within two (2) years
following his Retirement, as an employee, consultant or independent
contractor for, or the acquisition of an ownership interest in excess
of five percent (5%) in, any competitor of the Company or any
subsidiary without the express written consent of the Company, or
c. The failure of the Participant (for any reason other than
Disability or death), within two (2) years following his Retirement,
to render such consulting services, advice, and counsel to the
Company or any subsidiary as the Company may reasonably request, or
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d. An attempt to transfer or cause to transfer such shares,
whether voluntarily or involuntarily, in violation of Paragraph 5.3.1
above, or
e. A violation of such additional or more severe restrictions
imposed by the Committee pursuant to paragraph 5.1.
5.4 Release of Restrictions. The restrictions set forth in paragraph
5.3 above on shares awarded under the Plan, to the extent such shares have
not been forfeited pursuant to paragraph 5.3 above, shall lapse on the first
to happen of (i) the date of the participant's death, (ii) the termination
of the Participant's employment by reason of his Disability, (iii) the
second anniversary of his Retirement, or (iv) such earlier date as to any
Participant as the Board may fix by resolution; and shall lapse prior
thereto either (a) as to fifty percent (50%) of the shares in such Award, on
the fifth anniversary of the Award Date, or (b) pursuant to such additional
or more severe restrictions imposed by the Committee pursuant to paragraph
5.1.
6. Miscellaneous.
6.1 Administration. Subject to the express provisions of the Plan,
the Committee shall have complete authority to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to it, and to
make all other determinations necessary or advisable for the administration
of the Plan. The Committee's determinations on the matters referred to
herein shall be conclusive.
6.2 Limitations. Nothing in the Plan or in any Award shall confer on
any employee the right to continue in the employ of the Company or any of
its subsidiaries nor interfere in any way with the right of the Company or
its subsidiaries to terminate the employment of that employee at any time.
6.3 Amendment and Termination. The Board may suspend or terminate
the Plan, or amend the Plan in such respect as it shall deem advisable,
provided, however, that such amendment shall not, without the consent of the
Participant to whom any Award shall theretofore have been granted under the
Plan, adversely affect the rights of such Participant under such Award, and
further provided that such amendment shall not change the maximum number of
shares available for awarding to all Participants or which may be awarded to
any Participant as a Supplemental Award.
6.4 Effectiveness of the Plan. The Plan shall become effective on May
1, 1983. No stock shall be awarded under the Plan after April 30, 1989, or
such earlier date as the Plan may have been terminated pursuant to paragraph
6.3.
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CBI RESTRICTED STOCK AWARD PLAN
BRIEF DESCRIPTION OF FEDERAL INCOME TAX EFFECTS
The Plan is not qualified under Section 401(a) of the Internal Revenue Code
(hereinafter called "the Code") nor subject to the requirements of the Employee
Retirement Income Security Act of 1974. The Company is advised by counsel that
under the present laws and regulations, the Federal Income tax consequences to
the Company and participants in the Plan will be as follows:
Participants in the Plan will incur no income for Federal income tax purposes at
the time they receive an award of restricted stock unless they affirmatively
elect under Section 83(b) of the Code to incur income then. Otherwise, each
participant will realize taxable income (and the Company will be entitled to a
corresponding deduction) as risk of forfeiture of the awarded stock lapses. The
amount of income will equal the fair market value of the stock at that time.
Thereafter, the participant will realize capital gain or loss upon the sale or
taxable exchange of the stock equal to the difference between the aggregate
income incurred under the foregoing rules and the price received for the shares.
The holding period for determining whether the gain or loss is long or short
term will begin on the date on which the restrictions lapse.
The risk of forfeiture after an individual has attained age 60 or retires, as
defined in the Plan, depends upon certain events, such as, the failure to
provide consulting services or the performance of services to a competitor.
Counsel believes that under Section 83 of the Code, these events will normally
be sufficient to prevent a lapse of restrictions (and concomitant incurring of
income) after an individual has attained age 60 or has retired. However, this
determination will depend on the facts and circumstances as to each individual
participant at that time.
In the event a participant makes the election under Section 83(b) referred to
above (within 30 days of his receipt of the award), the participant will realize
income (and the Company is entitled to a corresponding deduction) at the time of
the award in an amount equal to the fair market value without regard to the
restrictions on the stock at that time. If the participant thereafter forfeits
the stock, no deduction will be allowed. Upon the lapse of restriction, the
participant will not incur income. Thereafter the participant will realize
capital gain or loss upon the sale or other taxable exchange of the stock equal
to the difference between the aggregate income incurred under the foregoing
rules and the price received for the stock. The holding period for determining
whether the gain or loss is long or short term will begin on the date on which
the stock was awarded.
The foregoing tax analysis is intended to assist in the understanding of the
operation and tax consequences of the Plan. The Company assumes no
responsibility with respect to the income taxes of its employees or how such
taxes should be computed, reported or paid. It is also pointed out that tax laws
and regulations are subject to change at any time.
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SAMPLE LETTER - 83(b) ELECTION
Date
Send to: The Internal Revenue Service Center where you will file your
1985 U.S. Individual Income Tax Return
Attn: Internal Revenue Service Director
RE: Election of Gross Income in year of
Transfer Pursuant to Section 83(b) of
Internal Revenue Code
The undersigned hereby makes an election pursuant to 83(b) of Internal Revenue
Code with respect to the property described below and supplies the following
information in accordance with the regulations thereunder.
(1) Name, address and tax identification number of undersigned are:
Charles B. Iron
2960 South Street
Anytown, Illinois 60613
Social Security # 999-99-9999
(2) Description of the property with respect to which the election is being
made:
One hundred (100) shares of common stock par value $2.50 per share of CBI
Industries, Inc.
(3) Date on which property was transferred is June 1, 1985.
(4) Taxable year to which this election relates is calendar year 1985.
(5) The nature of the restricted award is the following:
AA. Imposition of Restrictions. Each share awarded under the Plan shall
be subject to the following restrictions except to the extent that
such restrictions have lapsed pursuant to paragraph BB below:
A. Transfer Restriction. None of such shares shall be sold,
exchanged, transferred, pledge, hypothecated, or otherwise
disposed of in any manner, whether voluntarily or involuntarily.
B. Forfeitures. All of such shares shall be forfeited to the Company
without notice immediately upon the occurrence of any of the
following events:
B1 The termination of the employment of the Participant with the
Company and all subsidiaries for any reason other than
Retirement, Disability, or death, or
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Sample Letter - 83(b) Election
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B2 The performance of services by the Participant, while an
employee of the Company or any subsidiary or within two (2)
years following his Retirement, as an employee, consultant
or independent contractor for, or the acquisition of an
ownership interest in excess of five percent (5%) in any
competitor of the Company or any subsidiary, without the
express written consent of the Company, or
B3 The failure of the Participant (for any reason other than
Disability or death), within two (2) years following his
Retirement, to render such consulting services, advice, and
counsel to the Company or any subsidiary as the Company may
reasonably request, or
B4 An attempt to transfer or cause to transfer such shares,
whether voluntarily or involuntarily, in violation of
Paragraph A above, or
B5 A violation of such additional or more severe restrictions
imposed by the Company.
BB. Release of Restrictions. The restrictions set forth in paragraph B
above on the shares awarded under the Plan, to the extent such shares
have not been forfeited pursuant to paragraph AA above shall lapse on
the first to happen of (i) the date of the Participant's death (ii)
the termination of the Participant's employment by reason of his
Disability, (iii) the second anniversary of his Retirement, or (iv)
such earlier date as to any Participant as the Board may fix by
resolution; and shall lapse prior thereto either (a) as to fifty
percent (50%) of the shares in such Award, on the fifth anniversary of
the Award Date, or (b) pursuant to such additional or more severe
restrictions imposed by the Company.
(6) The fair market value at the time of transfer of the property with respect
to which this election is being made is $______ per share. (Insert CBI
stock closing price per share on May 31, 1985).
(7) The amount paid by the taxpayer for said property is $0.00 per share.
(8) A copy of this statement has been furnished to CBI Industries, Inc.
(9) Date_______________ Signature_______________________________________
(10) Copies to: CBI Industries, Inc.
800 Jorie Blvd.
Oak Brook, IL 60521
(i) Attn: Mr. R. G. Douglass
Employee Benefit Plans
(ii) Attn: Mr. G. B. Fenn
Tax Department
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A meeting of the Board of Directors of CBI Industries, Inc. was held at the
office of the Company in Oak Brook, Illinois at 8:45 A.M. on August 6, 1985.
All the directors were present except for Mr. C. W. Lake, Jr. Messrs.
R. L. Brunot and B. T. Adams were present for part of the meeting. Mr. Pogue
presided and Mr. Craigmile acted as secretary.
On motion made, seconded and carried, the minutes of the Board meeting held
June 4, 1985 were approved.
Mr. Pogue said that formal action needed to be taken on management's
recommendation that people terminated as a result of the Company's recent force
reduction do not forfeit shares awarded pursuant to the Company's restricted
stock award plan. After discussion, and on motion made, seconded and carried,
the following resolution was adopted:
RESOLVED, that the release of restrictions on stock awarded to a
Participant under the CBI 1983 Restricted Stock Award Plan ("the 1983
Plan") or under the CBI Restricted Stock Award Plan ("the 1978 Plan") who
may be involuntarily terminated pursuant to a program or plan of work force
reduction, as determined by the Salary and Benefits Committee, shall occur
under the terms of the 1983 Plan as though such Participant had Retired;
provided, however, in the event such Participant is reemployed prior to the
second anniversary of the date of such termination by CBI Industries, Inc.,
or any of its subsidiaries, the release of such restrictions shall occur in
accordance with the otherwise applicable provisions of the 1978 Plan or the
1983 Plan, as the case may be, as though such termination had not occurred.
There was a discussion concerning the cost of termination benefits
resulting from the Company's recent force reduction and the fact that funds
were available in the pension trust to cover such costs and, additionally, pay
for retiree medical benefits. After discussion, and on motion made, seconded
and carried, the following resolution was adopted:
RESOLVED, that the officers of the Company, the General Counsel, and
the Manager of Employee Benefits, as Plan Administrator of the CBI Pension
Plan, are jointly authorized to amend the CBI Pension Plan and CBI Pension
Trust, as necessary, effective January 1, 1985, to provide for the
following:
1. Payment of special severance pay benefits from the Trust to
Company or Participating Affiliate employees terminated from
employment under a formal work force reduction program conducted over
a specified time period, as designated by the Board.
2. Payment from the Trust of retired Participants' medical costs
under the Company's health care program for retired employees, net of
such Participants' own contributions to payment of such costs, and
securing such Internal Revenue Service or other governmental
approvals, or filing such notices or other documents, as necessary to
implement such payments.
Mr. Brunot presented management's recommendation with respect to
adjustments to the carrying value of certain assets. There was a review of the
recommended adjustments considering future business prospects in the energy and
energy service markets, the effects of the recently implemented restructuring
and the redirection of the Company's efforts in the construction services
segment, and the estimated realizable values in the event some of
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Board of Directors Meeting
CBI Industries, Inc.
August 6, 1985 - Page 2
the specified assets were ultimately sold, the primary purpose of the
adjustments being to establish appropriate recoverable values considering
expected future operations. On motion made, seconded and carried, the Board
approved adjustments to the carrying value of certain assets of the Company and
its subsidiaries in the total amount of approximately $153,000,000, as set forth
in the summary thereof attached to these minutes and identified by the Secretary
of the Company.
On motion made, seconded and carried, a quarterly dividend of 35 cents per
share was declared, payable September 13, 1985 to shareholders of record as of
the close of business August 20, 1985.
The remainder of the meeting was devoted to a discussion of the business of
the Company, its subsidiaries and affiliates.
There was no further business to come before the meeting and, accordingly,
on motion made, seconded and carried, the meeting adjourned at 11:25 A.M.
/s/ D.H. Craigmile
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Secretary