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EXHIBIT 4.6
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DURAMETALLIC CORPORATION
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EXECUTIVE INCENTIVE BONUS PLAN,
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AS AMENDED
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SECTION I
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PURPOSE
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1.1 The purpose of this Plan is to provide additional
compensation as an incentive to Key Executives upon whose efforts the
continued successful and profitable operations of the Corporation and
its subsidiaries are largely dependent, and to insure the continued
availability of their services to the Corporation.
SECTION
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DEFINITIONS
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For purposes of this Plan:
2.1 "Adjusted Consolidated Income" means the Corporation's
consolidated income before provisions for income taxes and minority
interests and before deduction of the Bonus, as shown on the
consolidated statement of income contained in the Corporation's annual
report to stockholders.
2.2 "Adjusted Income Portion Points" mean the points awarded
to Key Executives by the Committee with respect to the Adjusted Income
Portion of the Bonus as described in Section 5.1.
2.3 "Beginning of the Year Stockholders' Equity" means the
stockholders' equity at the end of the preceding Year, as shown on the
consolidated balance sheet contained in the Corporation's annual report
to stockholders.
2.4 "Board" means the board of directors of the Corporation.
2.5 "Bonus" means any bonus awarded to a Key Executive
pursuant to the Plan.
2.6 "Committee" means the Incentive Bonus Committee
appointed under Section 3.1 to administer the Plan.
2.7 "Common Shares" mean the common shares of the
Corporation.
2.8 "Corporation" means Durametallic Corporation.
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2.9 "Disability" means a mental or physical illness or
condition rendering a Key Executive incapable of performing his normal
duties with the Corporation for a period of six months.
2.10 "Key Executive" means an employee of the Corporation who
is selected by the Committee to participate in the Plan.
2.11 "Long Term Portion Points" mean the points awarded to Key
Executives by the Committee with respect to the Long Term Portion of the
Bonus as described in Section 5.1.
2.12 "Partial Bonus" means an amount obtained by multiplying
the Bonus that the Key Executive would have received if he had been
employed for a full Year by a ratio equal to the calendar days prior to
the employment termination date over the total calendar days in the
Year.
2.13 "Plan" means this Executive Incentive Bonus Plan, as
amended.
2.14 "Retirement" means retirement as defined in the
Corporation's R. D. Hall Employee Stock Ownership Plan, as it may from
time to time be amended.
2.15 "Return on Equity" means an amount obtained by dividing
the Corporation's consolidated net income, as shown on the consolidated
statement of income, by consolidated stockholders' equity as of the end
of the preceding Year, as shown on the consolidated balance
sheet contained in the Corporation's annual report to stockholders.
2.16 "Return on Equity Bonus Amount" means an amount calculated
each Year according to the following schedule:
If Return on Return on
Equity Equity Bonus
Equals: Amount Shall be:
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20% or above $50,000
19% 45,000
18% 40,000
17% 35,000
16% 30,000
15% 25,000
14% 20,000
13% 15,000
12% 14,000
11% 12,500
10% 10,000
Less than 10% -0-
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For purposes of calculating Return on Equity Bonus Amounts under this
section, Return on Equity amounts shall be rounded to the nearest whole
percentage.
2.17 "Year" means the fiscal year of the Corporation ending
December 31.
SECTION 3
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ADMINISTRATTON
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3.1 The Board shall, appoint an Incentive Bonus Committee
which shall serve at the pleasure of the Board. The President shall be
an EX OFFICIO member of the Committee but shall have no voting rights.
The Committee is authorized to construe, interpret and administer the
Plan and may from time to time adopt such rules and regulations for the
administration of the Plan as it may deem appropriate. No voting member
of the Committee shall be eligible to receive a Bonus under the Plan for
any period during which he served as a member of the Committee. All
decisions and selections made by the Committee shall be final and binding
upon all parties. No member of the Committee shall be liable for any
action or determination made in good faith with respect to the Plan.
3.2 The selection of employees to receive Bonuses and the
determination of the number of points to be awarded to each Key
Executive shall be entirely within the discretion of the Committee.
SECTION 4
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SELECTTON OF KEY EXECUTIVES
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4.1 As soon as practicable after the beginning of each Year,
the Committee shall select employees eligible to participate in the Plan
and determine the number of Adjusted Income Portion Points and Long Term
Portion Points to be awarded to each Key Executive for that Year. In
making such selections, the Committee shall consider the recommendations
of management.
4.2 The Committee shall notify each Key Executive of his
selection as a participant in the Plan, the number of Adjusted Income
Portion Points and Long Term Portion Points awarded to him and the total
number of Adjusted Income Portion Points and Long Term Portion Points
awarded to Key Executives for that Year.
4.3 The selection of an employee to be a Key Executive for a
particular Year shall not constitute him a Key Executive for another Year
unless he is selected to be a Key Executive for such other Year.
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SECTION 5
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COMPUTATTON OF BONUS
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5.1 The Bonus shall consist of an Adjusted Income Portion
and a Long Term Portion as computed below. Each Key Executive shall be
entitled to receive the same percentage of the total Adjusted Income
Portion as his Adjusted Income Portion Points are to the total Adjusted
Income Portion Points of all Key Executives and the same percentage of
the total Long Term Portion as his Long Term Portion Points are to the
total Long Term Portion Points of all Key Executives.
5.2 The Adjusted Income Portion of the Bonus for each Year
shall be an amount equal to five percent (5%) of the balance remaining
after deducting eight percent (8%) of the Beginning of the Year
Stockholders' Equity from the Adjusted Consolidated Income.
5.3 The Long Term Portion of the Bonus for each Year shall be
an amount equal to the sum of the Return on Equity Bonus Amounts for the
last five Years.
5.4 The Corporation's independent public accountants shall
determine and report to the Committee the amount available for the Plan
for each Year as promptly after the close of such Year as practicable
following completion of their review and audit of the accounts of the
Corporation for the purpose of certification of the financial statements
appearing in the annual report to shareholders for the Year. This Plan
refers to the date that the Corporation receives the accountant's report
as the "Determination Date."
SECTION 6
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METHOD AND TIME OF PAYMENT OF BONUS
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6.1 The Corporation shall pay the Adjusted Income Portion of
the Bonus in cash. The Corporation shall distribute the Adjusted Income
Portion as soon as possible after the Determination Date.
6.2 The Corporation shall pay the Long Term Portion of the
Bonus fifty percent (50%) in cash and fifty percent (50%) in Common
Shares. The Corporation shall pay the cash portion of the Long Term
Portion in annual installments of twenty-five percent (25%), the first
installment payable the Year following the Year the Corporation selects
the employee as a Key Executive and the remaining installments payable
in each of the succeeding three Years. The Corporation shall pay the
first cash installment within ninety (90) days after the Determination
Date. The Corporation shall pay each subsequent cash installment
within one hundred fifty (150) days of the beginning of each succeeding
year.
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6.3 The Corporation shall pay the Common Share portion of
the Long Term Portion of the Bonus as soon as possible after the
Corporation has determined the market value of the Common Shares as set
forth in Section 7.2. The Corporation shall issue in the name of the
Key Executive all of the Common Shares payable under the Long Term
Portion of the Bonus. All of the Common Shares (the "Restricted
Stock") shall be subject to the restrictions set forth in Section
8.6.
SECTION 7
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STOCK BONUS
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7.1 Common Shares to be delivered in partial payment of
Bonuses shall be made available from authorized and unissued stock of
the Corporation.
7.2 The Common Share portion of the Long Term Portion of
the Bonus shall consist of the number of Common Shares having an
aggregate market value, determined within ninety (90) days of the
Determination Date, equal to fifty percent (50%) of the Key Executive's
share of the Long Term Portion as determined under Section 5.1. If
payment of Common Shares would require the delivery of a fractional
share, then in lieu of the fractional share the Corporation shall pay
to the Key Executive the cash value thereof. Market value shall be
determined by independent appraisers or such other valuation methods as
the Corporation may from time to time adopt.
7.3 The Key Executive shall represent and warrant that he
is acquiring the Common Shares for his own account and investment and
without any intention to resell, or distribute the Common Shares. The
Key Executive shall agree not to resell or distribute the Common Shares
except upon the conditions as the Corporation may reasonably specify to
insure compliance with federal and state securities laws. The Key
Executive shall execute an agreement in the form of EXHIBIT A, or such
other form as the Committee may from time to time adopt.
7.4 (a) Any certificate issued under this Plan and
representing Common Shares which are Restricted Stock shall
bear the following legend:
The Corporation has not registered these shares under
federal and state securities laws. The holder of these
shares may not sell or otherwise transfer the shares
unless the sale or other transfer is (A) registered or
exempt from registration under federal and applicable
state securities laws and (B) in accordance with an
agreement with the company dated [insert date of
employee's letter agreement] a copy of which is on file
with the Corporation. Under the agreement, the
shares represented by this certificate are subject to
forfeiture upon the occurrence of certain events.
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(b) Any certificate issued under this Plan and
representing Common Shares which, by the terms of Section 8.6
and the written agreement described in Section 7.3 hereof, are
no longer subject to a termination of rights and interests as
Restricted Stock shall bear the following legend:
The Corporation has not registered these shares under
federal and state securities laws. The holder of these
shares may not sell or otherwise transfer the shares
unless the sale or other transfer is (a) registered or
exempt from registration under federal and applicable
state securities laws and (b) in accordance with an
agreement with the Corporation dated [insert date of
employee's letter agreement], a copy of which is on file
with the Corporation.
SECTION 8
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TERMINATION OF EMPLOYMENT
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8.1 A Key Executive whose employment terminates by dismissal
for cause or who voluntarily terminates his employment shall forfeit all
rights to any Bonus for the Year in which he terminates employment, any
unpaid Bonus awarded for the Year prior to the Year in which he
terminates employment, and any unpaid cash installments of the Long Term
Portion of any Bonus awarded in any previous Year. As set forth in
Section 8.6, the termination of employment shall also terminate the
Key Executive's right to and interest in any Restricted Stock the Key
Executive has received. For purposes of this Plan, "cause" shall
include conviction of a crime involving moral turpitude, neglect of
duties, incompetence, disobedience of reasonable directives of the
Board, or activities in direct competition with the Corporation or in
aid of its competitors, or any other activities which operate to the
detriment of the Corporation.
8.2 A Key Executive whose employment terminates after the end
of any Year in which he was designated a Key Executive, but before the
Bonus for the Year is paid, because of death, Disability, Retirement, or
any other reason except for dismissal for cause or voluntary
termination, shall be entitled to the Bonus for the prior Year and shall
be entitled to continue to receive any unpaid cash installments of the
Long Term Portion of any Bonus awarded in any previous Year. The
Corporation shall pay the Bonus to the Key Executive in the same manner
as if he were still employed, or in the event of death, in the same
manner as if he were living, PROVIDED, that the Corporation shall pay
the Long Term Portion of the Bonus entirely in cash.
8.3 A Key Executive whose employment terminates during a Year
in which he was designated a Key Executive because of death, Disability,
Retirement, or any other reason except for dismissal for cause or
voluntary termination, shall be entitled to a Partial Bonus for the
Year. The Corporation shall pay the Bonus to the Key Executive in the
same manner as if he were still employed, or in the event of death in
the same manner as if he were living, provided, that the Corporation
shall pay the Long Term Portion of the Bonus entirely in cash.
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8.4 The Corporation shall reallocate among the remaining Key
Executives on a pro rata basis any bonus forfeited or reduced pursuant to
Section 8.1 or Section 8.3, PROVIDED, that any unpaid installments of
the Long Term Portion of any Bonus awarded for any Year prior to the
Year of termination, which unpaid installments are forfeited pursuant to
Section 8.1, shall not be reallocated nor inure to the benefit of any
other Key Executives.
8.5 Each Key Executive may file a written notice with the
Committee designating a beneficiary or beneficiaries to receive any
Bonus payable pursuant to Section 8.2 or Section 8.3 at the death of the
Key Executive. The Key Executive may change the designation from time
to time; provided, however, that any change shall not be effective until
received in writing by the Committee. If no beneficiary has been
designated or survives the Key Executive, any such Bonus shall be paid
to the estate of the Key Executive.
8.6 Each award of Restricted Stock under this Plan shall be
subject to the following terms and conditions. The agreement referenced
in Section 7.3 shall contain these terms and conditions.
(a) EMPLOYMENT. The Corporation shall award
Restricted Stock on the condition that the Key Executive remain
in the employ of the Corporation, or one or more of its
subsidiaries, for a period of three (3) years following the
date of the award of the Restricted Stock (the "Restricted
Period"). This condition shall not affect the right of the
Corporation or any subsidiary to terminate the Key Executive's
employment at any time for any reason. An award of Restricted
Stock in any Year shall not affect the length of the Restricted
Period which applies to previously awarded Restricted Stock.
(b) TERMINATION OF RIGHTS AND INTERESTS. In
the event the Corporation terminates the Key Executive's
employment for cause (as defined in Section 8.1), the Key
Executive voluntarily terminates his or her employment or a
Transfer (as defined in Section 8.6(d)) occurs or is proposed
to occur during a Restricted Period (collectively referred to
as a "Terminating Event"), the Key Executive's rights to and
interests in the shares of Restricted Stock the subject of the
Restricted Period shall terminate as of the date of
Terminating Event and the Key Executive shall promptly
surrender to the Corporation those shares of Restricted Stock
as to which the Key Executive's rights and interests have
terminated.
(c) DEATH OR NORMAL RETIREMENT. In the event
employment terminates during a Restricted Period by reason of
death, Disability or Retirement, or the Corporation terminates
employment without cause, the Key Executive's right to all
of the Key Executive's Restricted Stock the subject of the
Restricted Period shall vest as of the date that the employment
terminates and the Key Executive may then transfer the
Restricted Stock free of the restrictions under this Plan,
except for those restrictions that Section 7.3 describes.
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(d) TRANSFER RESTRICTIONS. The Key Executive may
not sell, assign, exchange, transfer, pledge or otherwise
dispose of the shares of Restricted Stock during the applicable
Restricted Period other than to the Corporation pursuant to
Section 8.6(b) or by will or by the laws of descent or
distribution.
If the Key Executive sells, assigns, exchanges,
pledges, transfers or otherwise voluntarily or involuntarily
disposes of or attempts to take any such action to dispose of
any shares of Restricted Stock during the Restricted Period
applicable to the shares, or if the shares of Restricted Stock
are subject to any attachment, garnishment, lien, execution of
judgment or other involuntary transfer during an applicable
Restricted Period (collectively referred to as a "Transfer"),
except as provided above in Section 8.6(b), the Key Executive's
rights to and interests in the Restricted Stock the subject of
the Restricted Period shall terminate as set forth in Section
8.6(b), the Key Executive shall promptly surrender to the
Corporation those Shares of Restricted Stock and any Transfer
of Shares the subiect of the Restricted Period shall be void
and not binding on the Corporation. The Key Executive shall
grant the Corporation a security interest in the Restricted
Stock and shall authorize the Corporation to retain during the
Restricted Period the certificates which evidence the
Restricted Stock.
(e) SHAREHOLDER RIGHTS. During the Restricted
Period applicable to any Restricted Stock, the Key Executive
shall have all rights of a shareholder with respect to the
Restricted Stock the subject of the Restricted Period including
(i) the right to vote any shares at shareholders' meetings,
(ii) the right to receive, without restriction, all cash
dividends paid on the Restricted Stock, and (iii) the right to
participate with respect to the Restricted Stock in any stock
dividend, stock split, recapitalization, or other adjustment in
the Common Shares of the Corporation or any merger,
consolidation or other reorganization involving an increase,
decrease or adjustment in the Common Shares of the Corporation.
Any new, additional or different shares or other security
received by the Key Executive pursuant to the stock dividend,
stock split, recapitalization or reorganization shall be
subject to the same terms, conditions and restrictions as those
relating to the Restricted Stock for which the shares were
received.
SECTION 9
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AMENDMENTS
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9.1 The Board may from time to time amend, suspend, or
terminate, in whole or in part, any or all of the provisions of this
Plan, effective as of the beginning of any Year commencing after the
date of adoption of such action by the Board; provided, that no such
action shall affect the rights of any Key Executive or the operation of
this Plan with respect to any Bonus to which the Key Executive may have
become entitled hereunder prior to the effective date of the action.
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SECTION 10
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GENERAL
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10.1 Neither the action of the Corporation in establishing this
Plan nor any action taken by it or the Committee shall be construed as
giving any Key Executive the right to be retained in the employ of the
Corporation.
10.2 The expense of administering this Plan shall be borne by
the Corporation.
10.3 The effective date of this amended Plan shall be January
1, 1993. For purposes of calculating the Long Term Portion of the Bonus
under Section 5.3, the Corporation shall use the results of the
Corporation's operations for the five Years ending December 31, 1992.
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________________Total Shares
End of
Restricted
________________Period
EXHIBIT A
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Durametallic Corporation
2104 Factory Street
Kalamazoo, Michigan 49001
Gentlemen:
I understand that Durametallic Corporation (the
"Corporation") has chosen me as a Key Executive under the Corporation's
Executive Incentive Bonus Plan, as amended (the "Plan"). A portion of
my Bonus is payable in shares of Common Stock of the Corporation (the
"Shares"). I agree that any Shares which I will receive under the
Plan or have received under the Plan prior to any amendment (the
"Restricted Stock") are subject to the terms and conditions of this
letter, and the Shares and my rights under this letter are subject to the
terms, conditions and definitions of the Plan which are incorporated
herein by reference. I agree that as of the date of this letter, the
Corporation has awarded to me Shares under the Plan.
(a) CONTINUED EMPLOYMENT. I agree that any
Restricted Stock awarded to me will be subject to the condition
that I remain in the employ of the Corporation or one or more of
its subsidiaries for three (3) years from the date that the
Restricted Stock is issued to me (the three year period
applicable to each Share is referenced herein as a "Restricted
Period"). Neither this condition nor the award or the Restricted
Stock shall impose upon the Corporation or any subsidiary any
obligation to retain me in their employ for any given period or
upon any specific terms of employment. I acknowledge that,
except as the Corporation or one of its subsidiaries may
otherwise agree in a signed written agreement, approved by its
board of directors, my employment is "at will" and terminable by
me or the Corporation at any time and for any reason.
(b) TERMINATION OF RIGHTS AND INTERESTS. In the
event the Corporation or any subsidiary terminates my employment
for cause (as defined in Section 8.1 of the Plan), I voluntarily
terminate my employment or a Transfer (as defined below) occurs
or is proposed to occur during a Restricted Period
(collectively referred to as a "Terminating Event"), all my
rights to and interests in the Shares of Restricted Stock the
subject of the Restricted Period shall immediately terminate
as of the date of the Terminating Event and I shall promptly
surrender to the Corporation those Shares of Restricted Stock in
which my rights and interests have terminated.
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(c) DEATH OR NORMAL RETIREMENT. In the
event my employment terminates during a Restricted Period by
reason of death, Disability or Retirement, or the Corporation
terminates my employment without cause, my right to all of my
Restricted Stock the subject of the Restricted Period shall
vest as of the date that my employment terminates and I may
then transfer the Restricted Stock free of the restrictions
under the Plan, except for those restrictions that Section 7.3
of the Plan describes or as set forth in this Agreement.
(d) TRANSFER RESTRICTIONS. I may not sell, assign,
exchange, transfer, pledge or otherwise dispose of the Shares
of Restricted Stock during the applicable Restricted Period
other than to the Corporation pursuant to Paragraph (b) above
or by will or by the laws of descent or distribution.
If I sell, assign, exchange, pledge, transfer
or otherwise voluntarily or involuntarily dispose of or attempt
to take any such action to dispose of the Restricted Stock
during the Restricted Period applicable to the Shares, or if
the Shares of Restricted Stock are subject to any attachment,
garnishment, lien, execution of judgment or other involuntary
transfer during an applicable Restricted Period (collectively
referred to as a "Transfer"), except as provided above in
Paragraph (b), my rights to and interests in the Restricted
Stock the subject of the Restricted Period shall terminate as
set forth in Paragraph (b) above, I shall promptly surrender to
the Corporation those Shares of Restricted Stock and any
Transfer of Shares the subiect of the Restricted Period shall
be void and not binding on the Corporation. I hereby grant the
Corporation a security interest in the Restricted Stock and
authorize the Corporation to retain during the applicable
Restricted Period the certificates which evidence the
Restricted Stock.
(e) SHAREHOLDER RIGHTS. During the Restricted
Period, I shall have all rights of a shareholder with respect
to the Restricted Stock the subject of the Restricted Period
including (i) the right to vote any Shares at shareholders'
meetings, (ii) the right to receive, without restriction, all
cash dividends paid on the Restricted Stock, and (iii) the
right to participate with respect to the Restricted Stock in
any stock dividend, stock split, recapitalization, or other
adjustment in the Common Shares of the Corporation or any
merger, consolidation or other reorganization involving an
increase, decrease or adjustment in the Common Shares of the
Corporation. Any new, additional or different Shares or other
security received by me pursuant to the stock dividend, stock
split, recapitalization or reorganization shall be subject to
the same terms, conditions and restrictions as those
relating to the Restricted Stock for which the Shares were
received.
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(f) Corporations's Options.
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(1) For Shares which are not Restricted
Stock subject to a termination of rights and interests
upon a Transfer, I hereby grant the Corporation the
option to purchase the Shares in the event (i) I desire
to sell, assign, exchange, transfer or otherwise
disclose of all or any portion of the Shares pursuant to
a bona fide offer or (ii) the Shares are subject to an
involuntary transfer.
(A) I shall give written notice to the
Corporation of any proposed voluntary
transfer. The written notice shall specify the
number of Shares I desire to transfer, the
name, address, and telephone number of the
proposed transferee, the proposed price and
other terms of the transfer (the "Offer").
The Corporation shall have the right to
purchase the number of Shares which are the
subject of the Offer upon the terms and
conditions contained in the Offer. The
Corporation's option shall be exercisable for
thirty (30) days following receipt of the
written notice. The Corporation shall exercise
its option by written notice to me. If the
Corporation does not exercise its option, I
agree that I shall have a period of sixty (60)
days after the expiration of Corporation's
option to transfer the Shares to the proposed
transferee named in the notice, on terms no
more favorable and at a price not less than
those stated in the notice.
(B) The Corporation's option to
purchase any Shares which are the subject of an
involuntary transfer shall be exercisable for
thirty (30) days following the Corporation's
receipt of notice of the involuntary transfer.
The purchase price for the Shares shall be
their market value as of the date of the
involuntary transfer. The Corporation shall
exercise the option by written notice to any
successor(s) in interest. Market value shall
be determined by independent appraisers or such
other valuation methods as may from time to
time be adopted by the Corporation.
(2) For Shares which are not Restricted
Stock subject to a termination of rights and interests
upon my employment termination, I hereby grant the
Corporation the option to purchase the Shares upon
termination of my employment by the Corporation or any
of its subsidiaries for any reason whatsoever, including
the employer's termination, my voluntary termination,
death, Disability, or Retirement. The purchase price for
the Shares shall be their market value as of the date of
employment termination. The Corporation's
option shall be exercisable for thirty (30) days
following my employment termination date. The
Corporation shall exercise its option by written notice
to me or my successor(s) in interest. Market value shall
be determined by independent appraisers or such other
valuation methods as may from time to time be adopted by
the Corporation.
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In consideration of being chosen as a Key Executive, I
hereby represent and warrant to the Corporation that I am acquiring the
Shares for my own account for investment, and without any view or
present intention of reselling or engaging in any other distribution
thereof. In particular, but without limiting the foregoing, I warrant
that I am not acquiring the Shares wholly or partly for the benefit of
or pursuant to any understanding or agreement with, any other person or
persons.
I further agree that I will not sell, assign, encumber
or otherwise transfer or offer for sale any of the Shares except (a)
pursuant to effective registration and qualification under all
applicable federal or state securities laws; or (b) in such
circumstances that, in the opinion of counsel for the Corporation, such
registration or qualification is not required, I may sell or otherwise
transfer without violating any federal or state securities laws, and the
sale or transfer is consistent with my investment representation.
I agree that the stock certificate or certificates to be
issued to me may bear an appropriate legend reflecting the foregoing
restrictions on transfer. In the event any provision of law or the
regulations of any stock exchange upon which the common stock of the
Corporation may be listed shall at any time in the future be changed so
as to require any different or additional legend with respect to such
investment undertaking, I further agree to deliver to the Corporation
the certificates evidencing the Shares so that the Corporation may amend
or supplement the legend thereon in accordance with the laws or
regulations. I further agree that the Corporation may give appropriate
stop transfer instructions to any transfer agent or registrar of the
Corporation's common stock (including the Corporation as its own
transfer agent), to give effect to the foregoing investment
representations and restrictions. I further agree that in the event I
attempt any sale or other disposition of the Shares in violation of the
foregoing representations or restrictions, the Corporation may refuse
to register the transfer.
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(Employee's Signature)
Dated:-------------- --------------------------------------------
(Print Name)