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EXHIBIT 10.21.1
1996 SUPPLEMENT
TO
TCC INDUSTRIES INC.
ANNUAL INCENTIVE PLAN
BASIC PLAN TEXT AND OPERATING RULES
On January 11, 1996, the Compensation Committee ("Compensation
Committee") of the Board of Directors of TCC Industries, Inc. (the "Company")
approved certain modifications to the Annual Incentive Plan (the "Plan") of the
Company which have been incorporated into the Basic Plan Text and the Operating
Rules of the Plan. In addition, on that date, the Compensation Committee
approved changes in the Incentive Awards, described below, with respect to the
calendar year 1996 only. Accordingly, effective with respect to and for the
1996 Plan Year only, the following provisions shall be read in conjunction with
the Plan, but shall govern and supersede any inconsistent provisions in the
Plan (Basic Plan Text and Operating Rules):
1. For purposes of this 1996 Supplement, Section VII of the Basic
Plan Text, captioned "Payment of Individual Incentive Compensation Awards,"
shall read as follows:
"The Incentive Award shall, subject to provisions of the Plan not
inconsistent herewith, be paid as follows:
(i) for Participants who have 50 Incentive Units or less,
the Incentive Award will be paid in cash (or, at the
Participant's option, up to forty percent (40%) of
the Incentive Award can be paid in shares ("TCC
Shares") of Common Stock of TCC Industries, Inc., in
the manner described below); and
(ii) for Participants who have more than 50 Incentive
Units, (i) sixty percent (60%) of the Incentive Award
will be paid in cash, and the remaining forty percent
(40%) of the Incentive Award will be paid in TCC
Shares if the Distribution Date Market Value (as
defined below) is $2.50 or less, and (ii) seventy
percent (70%) of the Incentive Award will be paid in
cash, and the remaining thirty percent (30%) of the
Incentive Award will be paid in TCC Shares if such
Distribution Date Market Value is more than $2.50.
Participants who have 50 Incentive Units or less and have elected to
receive TCC Shares as part of their Incentive Award and Participants who have
more than 50 Incentive Units, shall be entitled to receive payments in the
manner and subject to the limitations described as follows. Payment of the
Incentive Award shall be made on a date (the "Distribution Date") determined by
the Company that is within forty-five (45) days following the date (the "Audit
Date") of the report of the independent accountants with respect to the audited
financial statements of the Company which report the results of operations for
the fiscal year in which the award is earned. For the portion (the "Stock
Portion Amount") of the Incentive Award payable in TCC Shares, the number
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of TCC Shares issuable to the Participant will be determined as follows. First,
the Stock Portion Amount will be divided by $2.05 (which is the average closing
price per share for the TCC Shares on the New York Stock Exchange for the seven
successive trading days preceding the end of calendar year 1995), and the
result will be the number of TCC Shares distributable, except that the
Participant will only be entitled to receive a whole number of TCC Shares. No
fractional TCC Shares will be issued, and no cash in lieu of a fractional share
will be paid. The number of TCC Shares issuable pursuant to the 1996
Supplement to the Plan shall not exceed 56,000 shares (the "Maximum 1996
Shares") in the aggregate. In the event that the aggregate number of TCC
Shares to which the Participants, including those Participants who have 50 or
less Incentive Units, are otherwise entitled exceeds the Maximum 1996 Shares,
then the number of TCC Shares to which each Participant is entitled will be
reduced pro rata until the aggregate number of TCC Shares issuable in the
aggregate are equal to or less than the Maximum 1996 Shares and each such
Participant shall receive cash in lieu of the TCC Shares he or she would
otherwise have received, based on the Stock Portion Amount for such
Participant. The "Distribution Date Market Value" per share shall equal the
average closing price per share for the TCC Shares on the New York Stock
Exchange for the seven successive trading days immediately preceding the
Distribution Date.
EXAMPLE
Assume, for purposes of the following example, that a Participant
received 60 Incentive Units and that the Incentive Unit Value is determined to
be $100 per Incentive Unit. This would result in an Incentive Award for that
Participant of $6,000. Assume further that the Distribution Date Market Value
is $3.00 (more than 25% above the Prior Year End Market Value).
1. Total Incentive Award $6,000.00
2. Less cash portion of Incentive
Award 4,200.00
3. Stock Portion Amount 1,800.00*
4. 1995 Year End Market Value (Average
of the closing market price of TCC
Shares for the seven trading days
ending December 31, 1995) 2.05
5. Number of whole TCC Shares to which
the Participant is entitled (divide
$1,800 by $2.05, or 878.05) 878 shares
* Since the market value on the date of the distribution of the TCC
shares in the above example is $2,634, federal income tax will be
payable on that amount plus the cash portion of the Incentive Award
($4,200 in this example, or a total taxable amount of $6,834), instead
of the Incentive Award amount ( $6,000 in the above example).
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If an Interim Payment(s) of Incentive Award (as described in Section
IV of the Operating Rules) is directed by the Compensation Committee, such
Interim Payment(s) will be payable in cash only and considered "advance(s)"
against the cash portion of the Incentive Award earned for the entire year
based on the computation based on the year- end audited financial statements,
and, accordingly, will be credited against, and reduce the amount of the
Incentive Award to be paid after receipt of the audited financial statement.
The issuance of TCC Shares pursuant to the Annual Incentive Plan is
subject to the approval by the affirmative vote of the holders of a majority of
the outstanding shares of Common Stock of the Company voting in person or by
proxy at a duly held shareholders' meeting. In the event that such approval is
not obtained, the Incentive Award will be made and governed according to the
Plan the same as if no provision whatsoever had been made in this 1996
Supplement for the issuance of TCC Shares.
The TCC Shares issuable pursuant to this 1996 Supplement will not be
registered under the Securities Act of 1933, as amended (the "Act'), and the
Company has no obligation to register such shares under the Act. As a
condition to the issuance of TCC Shares to any Participant, such Participant
will be required to sign and deliver to the Company a letter from such
Participant in a form satisfactory to the Company, agreeing that the
Participant will not sell, transfer or otherwise dispose of such shares in
violation of the Act and unless the Company shall have first received an
opinion of legal counsel satisfactory to the Company that registration under
the Act is not required in connection with such sale, transfer or other
disposition.
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ANNUAL INCENTIVE PLAN
OPERATING RULES
Section IV "Calculating the Individual Incentive Award" is
amended to read as follows:
Each Participant is assigned a "target" number of Incentive Units
based upon a combination of both his/her ability to impact end results
and competitive incentive amounts. At Targeted performance levels,
Participants will receive the targeted number of incentive units, the
value of which is $100 each. Net Income and Gross Revenue performance
which does not meet the Targeted levels will result in a downward
adjustment of both the number of Incentive Units received and the
value of each Incentive Unit; conversely, Net Income and Gross Revenue
performance which exceeds targeted levels will result in the number of
Incentive Units and the value of each Incentive Unit being increased.
To calculate a Participant's (potential) Incentive Award, before any
variable adjustment, complete the worksheet labeled Exhibit I to the
Operating Rules.
In order to encourage the attainment of quarterly profit goals, the
Compensation Committee, in its sole discretion, may request that an
"Interim Calculation" be completed. An "Interim Calculation" will be
computed as provided on Exhibit III of the Operating Rules. For
purposes of the Interim Calculation,
"Projected Gross Revenue" will be computed as follows:
Gross Revenue as reported on the
Company's/Subsidiary's interim financial
statement for the period covered by the
Interim Calculation $____________________
Plus projected revenue for the balance of
the Plan year (subject to review and
approval of the Committee)
$____________________
Equals Projected Gross Revenue for the plan
year (Insert on line 4 of Exhibit III)
$____________________
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"Projected Net Income" will be computed as follows:
Net income (as defined in the Plan) as
reported on the Company's/ Subsidiary's
interim financial statement for the period
covered by the Interim Calculation
$____________________
Plus Projected Net Income (as defined in
the Plan) for the balance of the Plan year
(subject to review and approval of the
Compensation Committee) $____________________
Equals Projected Net Income for the plan
year (Insert on line 1 of Exhibit III to
the Operating Rules) $____________________
After review of the Interim Calculation, the Compensation Committee,
at its sole discretion, will decide whether an "Interim Payment" is to
be made pursuant to the Interim Calculation. Any such Interim Payment
will be made solely in cash. The total amount of Interim Payment(s)
made during the year, if any, will be considered an interim
payment(s), or advance(s), against the cash portion of the Incentive
Award earned based on the computation based on the year-end audited
financial statements, and, accordingly, will be credited against and
reduce the amount of the year-end payment of the cash portion of the
Incentive Award earned for the Plan year pursuant to the calculation
as provided on Exhibit I to the Operating Rules.
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