1
EXHIBIT 99(a)
BEARINGS, INC.
DEFERRED COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
(EFFECTIVE JULY 19, 1991)
ARTICLE I
PURPOSE OF THE PLAN
The purpose of the Bearings, Inc. (the "Company") Deferred Compensation
Plan for Non-Employee Directors is to provide any Non-Employee Director of the
Company the option to defer receipt of the compensation payable to him or her
for services as a Director and to help build loyalty to the Company through
increased investment in Company stock.
ARTICLE II
DEFINITIONS
As used herein, the following words shall have the meaning stated after
them unless otherwise specifically provided:
2.1. "CHANGE OF CONTROL" shall mean the occurrence of either of the
following events:
(1) If any "Person" (as such term is used in Sections 13(d)(3) and 14
(d) (2) of the Exchange Act) becomes the "beneficial owner" (as such term is
used in Rule 13d-3 under the Exchange Act) of securities of the Company
representing 40 percent or more of the combined voting power of the Company's
then outstanding securities and exercises, or indicates intent to exercise,
such voting power on any issue contrary to the recommendations of management;
or
(2) When individuals who, at the beginning of any two-year period,
constitute the Board of Directors of the Company cease for any reason to
constitute at least three-fourths thereof unless the election, or the
nomination for election by the Company's shareholders, of each new director was
approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of such period.
2.2. "Committee" shall mean the Committee described in Section 7.1
hereof.
2.3. "Company" shall mean Bearings, Inc.
2.4. "Director" shall mean any non-employee director of the Company.
1
2
2.5. "Fiscal year" shall mean the fiscal year of the Company,
currently the twelve month period July 1 through June 30.
2.6. "Trust Agreement" shall mean the Trust Agreement dated as of
August 30, 1991 entered into between the Company and the Trustee in connection
with the Plan.
2.7. "Trustee" shall mean Society National Bank, any corporate
successor to a majority of its trust business, or any successor Trustee
hereunder.
ARTICLE III
ELECTIONS BY DIRECTORS
3.1. ELECTION TO DEFER. No later than January 1 of any year, a
Director may elect to defer receipt of the compensation payable to him or her
for future services as a Director commencing July 1 of that Fiscal Year. If a
Director becomes a Director after the beginning of any Fiscal Year, the
Director may elect to defer receipt of the compensation payable to him or her
for future services as a Director. Such election must be made within thirty
days after he or she becomes a Director and shall be made on an election form
specified by the Committee ("Election Form"). Such election shall indicate the
portion of the Director's compensation to be invested in a money market fund
and the portion of such compensation to be invested in Company stock.
Notwithstanding the foregoing, from the effective date of the Plan until
December 31, 1991, a Director may elect, prior to the date on which he or she
becomes entitled to such compensation, to defer receipt of compensation payable
to him or her for future services.
3.2 EFFECTIVENESS OF ELECTIONS. Elections 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 amounts deferred hereunder are invested in Company
stock shall be not less than six months after the date of such election.
Subject to the provisions of Article V, amounts deferred pursuant to such
elections shall be distributed at the time and in the manner set forth in such
election.
3.3. AMENDMENT AND TERMINATION OF ELECTIONS. A Director may terminate
or amend his or her election to defer receipt of compensation with respect to
subsequent Fiscal Years in a written notice delivered to the Committee prior to
the commencement of the Fiscal Year with respect to which such compensation
will be earned. Amendments which serve only to change the beneficiary
designation shall be permitted at any time and as often as necessary. Amounts
credited to a Director's account pursuant to Section 4.2 hereof prior to the
effective date of any termination or amendment shall not be affected thereby
2
3
and shall be paid at the time and in the manner specified in the
election form in effect when the deferral occurred.
ARTICLE IV
ACCOUNTS AND INVESTMENTS
4.1. CONTRIBUTIONS. The Company shall transfer to the Trustee the
cash or securities provided for herein. If the Director elects to have
deferred compensation invested in a money market fund, the Company shall
transfer an amount equal to one hundred percent (100%) of the compensation
deferred pursuant to this Plan to the Trustee. In the event that a Director
elects to have some or all of his or her compensation invested in Company
stock, then the Company shall transfer to the Trustee either in cash or Company
stock an amount equal to one hundred twenty five percent (125%) of such
amounts. Such transfer shall be made in the case of cash contributions within
thirty days after such deferred amounts would otherwise have been paid to the
Director and in the case of contributions in Common Stock on a date that is the
later of the date such deferred amounts would otherwise have been paid to the
Director or six months after the date of the election referred to in Section
3.2 hereof. Company stock transferred to the Trustee shall be valued at its
Fair Market Value. As used herein, the Fair Market Value of Company stock
shall be the average of the high and low prices of the Company's Common Stock
as reported on the composite tape for securities listed on the New York Stock
Exchange for the date immediately preceding the date of transfer, provided that
if no sales of Common Stock were made on said exchange on that date, the
average of the high and low prices of Common Stock as reported on said
composite tape for the preceding day on which sales of Common Stock were made
on said Exchange.
4.2. ESTABLISHMENT OF ACCOUNTS. The Trustee shall establish a
separate "Deferred Compensation Account" for each Director who defers
compensation pursuant to the Plan.
4.3. ADJUSTMENT OF ACCOUNTS. As of June 30 of each Fiscal Year and on
such other dates as the Committee directs, the fair market value of the assets
of the Trust allocated to each Deferred Compensation Account shall be
determined by the Trustee.
4.4. INVESTMENT OF ASSETS. The assets of the Trust Fund shall be held
by the Trustee in the name of the Trust. As cash or securities are received by
the Trustee, it shall hold and invest the funds pursuant to the Trust
Agreement.
ARTICLE V
PAYMENT OF ACCOUNTS
5.1. TIME OF PAYMENT. Distribution of a Director's account shall
commence upon a date which is not more than thirty days after the earlier of (i)
the Director's termination as a director due to resignation, retirement, death
or otherwise, <ii) the Director's attainment of the age specified (not younger
than age 55) in his Election Form, or (iii) upon a Change of Control.
3
4
5.2. METHOD OF DISTRIBUTION. Each deferred Compensation Account shall
be distributed to the Director either in a lump sum or in equal annual
installments over a period of not more than ten years as specified in each
Director's Election Form. Deferred Compensation Accounts shall be distributed
in kind.
5.3. HARDSHIP DISTRIBUTION. Prior to the time a Director's account
becomes payable, the Committee, in its sole discretion, may elect to distribute
all or a portion of the Director's account in the event such Director requests
a distribution on account of severe financial hardship. For purposes of this
Plan, severe financial hardship shall be deemed to exist in the event the
Committee determines that a Director needs a distribution to meet immediate and
heavy financial needs resulting from a sudden or unexpected illness or accident
of the Director or a member of his or her family, loss of the Director's
property due to casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the Director.
A distribution based on financial hardship shall not exceed the amount required
to meet the immediate financial need created by the hardship.
5.4. DESIGNATION OF BENEFICIARY. Upon the death of a Director, his or
her account shall be paid to the beneficiary or beneficiaries designated by him
or her. If there is no designated beneficiary, or no designated beneficiary
surviving at a Director's death, payment of a Director's account shall be made
to his or her estate. Beneficiary designations shall be made in writing. A
Director may designate a new beneficiary or beneficiaries at any time by
notifying the Committee.
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 Trustee shall deduct
such amounts from such payments and shall transmit the withheld amounts to the
appropriate taxing authority.
ARTICLE VI
CREDITORS AND INSOLVENCY
6.1. CLAIMS OF THE COMPANY'S CREDITORS. All assets held in trust
pursuant to the provisions of this Plan, and any payment to be made by the
Trustee pursuant to the terms and conditions of the Trust, shall be subject to
the claims of general creditors of the Company, including judgment creditors
and bankruptcy creditors. The rights of a Director or his or her beneficiaries
to any assets of the Trust Fund shall be no greater than the rights of an
unsecured creditor of the Company.
6.2. NOTIFICATION OF INSOLVENCY. In the event the Company becomes
insolvent, the Board of Directors of the Company and the Chief Executive
Officer of the Company shall immediately notify the Trustee of that fact. The
Trustee shall not make any payments from the Trust Fund to any Director or
any beneficiary under the Plan after such notification is received or at any
time after the Trustee has knowledge of such insolvency. Under any such
circumstance, the Trustee shall deliver to satisfy the claims of the Company's
creditors any property held in the Trust Fund only as a court of competent
jurisdiction may direct. For purposes of this Plan, the Company shall be
deemed to be insolvent
4
5
if the Company is subject to a pending voluntary or involuntary proceeding as a
debtor under the United States Bankruptcy Code, as amended, or is unable to pay
its debts as they mature.
ARTICLE VII
ADMINISTRATION
7.1. APPOINTMENT OF COMMITTEE. The Board of Directors of the Company
shall appoint a Committee consisting of not less than three persons to
administer the Plan. Members of the Committee shall hold office at the
pleasure of the Board of Directors and may be dismissed at any time with or
without cause. Such persons serving on the Committee need not be members of the
Board of Directors of the Company.
7.2. POWERS OF THE COMMITTEE. The Committee shall administer the Plan
and resolve all questions of interpretation arising under the Plan with the
help of legal counsel, if necessary. Whenever directions, designations,
applications, requests or other notices are to be given by a Director under the
Plan, they shall be filed with the Committee. The Committee shall have no
discretion with respect to Plan contributions or distributions but shall act in
an administrative capacity only.
ARTICLE VIII
MISCELLANEOUS
8.1. TERM OF 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 rights of Directors to amounts previously credited
to their accounts pursuant to Section 4.2. The Trust shall remain in effect
until such time as the entire corpus of the Trust Fund has been distributed
pursuant to the terms of the Plan.
8.2. ASSIGNMENT. No right or interest of any Director (or any person
claiming through or under such Director) in any benefit or payment herefrom
other than the surviving spouse of such Director after he or she is deceased,
shall be assignable or transferable in any manner or be subject to alienation,
anticipation, sale, pledge, encumbrance or other legal process or in any manner
be liable for or subject to the debts or liabilities of such Director. If any
Director or any such person (other than the surviving spouse of such Director
after he or she is deceased) shall attempt to or shall transfer, assign,
alienate, anticipate, sell, pledge or otherwise encumber his or her benefits
hereunder or any part thereof, or if by reason of his or her bankruptcy or
other event happening at any time such benefits would devolve upon anyone else
or would not be enjoyed by him or her, then the Committee, in its discretion,
may terminate his or her interest in any such benefit to the extent the
Committee considers necessary or advisable to prevent or limit the effects of
such occurrence. Termination shall be effected by filing a written "termination
declaration" with the Committee records and making reasonable efforts to
deliver a copy to such Director or his or her legal representative.
5
6
As long as any Director is alive, any benefits affected by the
termination shall be retained by the Trust and, in the Committee's sole and
absolute judgment, may be paid to or expended for the benefit of such Director,
his or her spouse, his or her children or any other person or persons in fact
dependent upon him or her in such a manner as the Committee shall deem proper.
Upon the death of any Director, all benefits withheld from him or her and not
paid to others in accordance with the preceding sentence shall be distributed
to such Director's estate or to his or her creditors and if such Director
shall have descendants, including adopted children, then living, distribution
shall be made to such Director's then living descendants, including adopted
children, per stirpes.
In addition, a Director or beneficiary shall have no rights against or
security interest in the assets of the Trust Fund and shall have only the
Company's unsecured promise to pay benefits. All assets of the Trust Fund
shall remain subject to the claims of the Company's general creditors.
8.3. TAXES. This Plan is intended to be treated as an unfunded
deferred compensation Plan under the Internal Revenue Code. It is the
intention of the Company that the amounts deferred pursuant to this Plan shall
not be included in the gross income of the Directors 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 the Directors or their beneficiaries, the Trust shall
terminate and any amounts held in the Trust fund shall be distributed
immediately to the Directors or their beneficiaries.
8.4. EFFECTIVE DATE OF PLAN. The Plan shall be effective as of July
19, 1991, subject to approval by the shareholders of the Company. Any
contributions made prior to such shareholder approval shall be contingent on
such approval.
6