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<SEC-DOCUMENT>0000065201-03-000004.txt : 20030428
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<ACCEPTANCE-DATETIME>20030428130908
ACCESSION NUMBER: 0000065201-03-000004
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 14
CONFORMED PERIOD OF REPORT: 20030131
FILED AS OF DATE: 20030428
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: MET PRO CORP
CENTRAL INDEX KEY: 0000065201
STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL & COMMERCIAL FANS & BLOWERS & AIR PURIFYING EQUIP [3564]
IRS NUMBER: 231683282
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0131
FILING VALUES:
FORM TYPE: 10-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-07763
FILM NUMBER: 03666272
BUSINESS ADDRESS:
STREET 1: 160 CASSELL ROAD
CITY: HARLEYSVILLE
STATE: PA
ZIP: 19438
BUSINESS PHONE: 2157236751
MAIL ADDRESS:
STREET 1: 160 CASSELL ROAD
STREET 2: BOX 144
CITY: HARLEYSVILLE
STATE: PA
ZIP: 19438
FORMER COMPANY:
FORMER CONFORMED NAME: MET PRO INC
DATE OF NAME CHANGE: 19661026
FORMER COMPANY:
FORMER CONFORMED NAME: MET PRO WATER TREATMENT CORP
DATE OF NAME CHANGE: 19740924
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For fiscal year ended: January 31, 2003 Commission file number 001-07763
MET-PRO CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 23-1683282
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
160 Cassell Road, P. O. Box 144
Harleysville, Pennsylvania 19438
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 723-6751
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- ----------------
Common Stock, par value $0.10 per share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.10 per share
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-K or any
amendment to this Form 10-K. X
---
Indicate by check mark whether the registrant is an accelerated filer (as
defined by Rule 12b-2 of the Act). Yes X No
--- ---
State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the
common equity was last sold, or the average of the bid and asked price of such
common equity, as of the last business day of the registrant's most recently
completed second fiscal quarter: $78,291,983
The number of shares outstanding of the Registrant's Common Stock was
6,216,369 as of April 18, 2003.
DOCUMENTS INCORPORATED BY REFERENCE
Form 10-K
Part Number
-----------
Portions of Registrant's Definitive Proxy Statement filed
pursuant to Regulation 14A in connection with Registrant's Annual
Meeting ofStockholders to be held on June 11, 2003.......................III
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
INDEX
Page
PART I ----
<S> <C> <C> <C>
Item 1. Business................................................................................................. 1
Item 2. Properties............................................................................................... 8
Item 3. Legal Proceedings........................................................................................ 9
Item 4. Submission of Matters to a Vote of Security Holders...................................................... 9
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.................................... 10
Item 6. Selected Financial Data.................................................................................. 11
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.................... 12
Item 7A. Quantitative and Qualitative Disclosure About Market Risks............................................... 16
Item 8. Financial Statements and Supplementary Data.............................................................. 16
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure..................... 37
PART III
Item 10. Directors and Executive Officers of the Registrant....................................................... 37
Item 11. Executive Compensation................................................................................... 37
Item 12. Security Ownership of Certain Beneficial Owners and Management........................................... 37
Item 13. Certain Relationships and Related Transactions........................................................... 37
PART IV
Item 14. Controls and Procedures.................................................................................. 38
Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K.......................................... 38
SIGNATURES................................................................................................................. 39
</TABLE>
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
FACTORS THAT MAY AFFECT FUTURE RESULTS
Met-Pro's prospects are subject to certain uncertainties and risks. This Annual
Report on Form 10-K also contains certain forward-looking statements within the
meaning of the Federal securities laws. Met-Pro's future results may differ
materially from its current results and actual results could differ materially
from those projected in the forward-looking statements as a result of certain
risk factors. Readers should pay particular attention to the considerations
described in the section of this report entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Factors that May
Affect Future Results." Readers should also carefully review the risk factors
described in the other documents Met-Pro files from time to time with the
Securities and Exchange Commission.
- --------------------------------------------------------------------------------
PART I
Item 1. Business:
General:
Met-Pro Corporation ("Met-Pro" or the "Company"), incorporated in the
State of Delaware on March 30, 1966, manufactures and sells product
recovery/pollution control equipment for purification of air and liquids, and
fluid handling equipment for corrosive, abrasive and high temperature liquids.
The Company, which operates through ten divisions and five wholly-owned
subsidiaries, markets and sells its products through its own personnel,
distributors, representatives and agents based on the division or subsidiary
involved. The Company's products are sold worldwide primarily in industrial
markets. The Company was taken public on April 6, 1967 and traded on the
American Stock Exchange from July 25, 1978 until June 18, 1998, at which time
the Company's Common Stock began trading on the New York Stock Exchange, where
it currently trades under the symbol "MPR".
The Company's principal executive offices are located at 160 Cassell
Road, Harleysville, Pennsylvania and the telephone number at that location is
(215) 723-6751. Our web site address is www.met-pro.com.
We will endeavor to make available on our web site our Annual Reports on
Form 10-K, our Quarterly Reports on Form 10-Q, and our Current Reports on Form
8-K, as soon as reasonably practicable after we electronically file these
reports with the Securities and Exchange Commission ("SEC"), beginning with this
Annual Report on Form 10-K, which is being filed on April 28, 2003. Other
reports that we filed during our fiscal year ended January 31, 2003 with SEC
under the Securities Exchange Act of 1934 may at present be accessed through our
web site.
Except where otherwise indicated by the context used herein, references
to the "Company", "we", "our" and "us" refer to Met-Pro Corporation, its
divisions and its wholly-owned subsidiaries.
Products, Services and Markets:
The Company operates in two segments, the Product Recovery/Pollution
Control Equipment Segment and the Fluid Handling Equipment Segment. For
financial information concerning the Company's industry segments, reference is
made to "Consolidated Business Segment Data" contained within the Company's
Consolidated Financial Statements that form a part of this Report on Form 10-K.
A narrative description of the Company's operations within these two segments is
as follows:
Product Recovery/Pollution Control Equipment Segment
This segment is composed of the following seven divisions and/or
subsidiaries of the Company: Flex-Kleen Division; Stiles-Kem Division; Pristine
Hydrochemical Inc.; Sethco Division; Strobic Air Corporation; Duall Division;
and Systems Division.
Flex-Kleen Division, located in Itasca, Illinois, operating with the
Company's wholly-owned subsidiary, Flex-Kleen Canada Inc., is a leading supplier
of product recovery and dry particulate collectors that are used primarily in
the process of manufacturing food products and pharmaceuticals. While some of
Flex-Kleen's products are also used for nuisance collection of particulates to
conform to environmental concerns, the overwhelming portion of its sales
activity is for product collection and is process driven. At present,
Flex-Kleen's products are sold through 77 manufacturer's representatives in 37
offices located across the United States and 12 manufacturer's representatives
located in four offices throughout Canada.
1
<PAGE>
Stiles-Kem Division, located in Waukegan, Illinois, is a leading
manufacturer of safe and reliable water treatment compounds which have been used
in the public drinking water industry for 48 years. Stiles-Kem products are
designed to eliminate problems created by high iron and manganese levels in
municipal water systems and to reduce scaling and general corrosion tendencies
within water distribution piping systems. These food grade products are NSF/ANSI
approved for health considerations in municipal drinking water supplies and are
certified to meet existing state and federal guidelines. The products are sold
both directly through regional sales representatives and through a network of
distributors located in the United States and Canada.
Pristine Hydrochemical Inc., located in Williston, North Dakota, sells
the Pristine Polymer product line with its patented chlorine dioxide treatment
program. This product line improves water clarity, reduces sludge volume and
also helps customers reduce trihalomethane, as required by the EPA. In addition,
Pristine sells boiler and water cooling chemicals and services to industrial and
commercial markets allowing customers to maximize their heat transfer efficiency
and save operating revenues through energy conservation. The products are sold
directly through regional sales representatives located in the United States.
The business of Pristine was acquired by the Company in May 2002.
Sethco Division, located on Long Island, New York, designs, manufactures
and sells corrosion resistant pumps, filter chambers and filter systems with
flow rates to about 200 gallons per minute. These products are used in
wastewater treatment systems and fume scrubbers for pollution control. They are
also widely used in the metal finishing, electronics and chemical processing
industries. Sethco's products are sold through a network of non-exclusive
distributors, as well as to catalog houses and original equipment manufacturers.
Our products are sold internationally through our Mefiag B.V. subsidiary.
Strobic Air Corporation, located in Harleysville, Pennsylvania, designs,
manufactures and holds patents on specialty blowers and industrial fans for
industrial applications including university laboratories, hospitals,
semiconductor manufacturers, government laboratories, pharmaceutical, chemical,
petrochemical plants and other testing laboratory facilities. Sales, engineering
and customer service are provided through a network of 225 manufacturer's
representatives located throughout the United States and Canada.
Duall Division, located in Owosso, Michigan, is a leading manufacturer
of industrial and municipal air and water quality control systems. The
Division's major products include odor control systems, fume and emergency gas
scrubbers, particulate collectors, air strippers, ducting and exhaust fans. All
equipment is fabricated from corrosion resistant materials. Duall's support
services include pilot studies, engineering, installation and performance
testing. Duall products are sold both domestically and internationally to the
metal finishing, wastewater treatment, composting, food processing, chemical,
printed circuit, semiconductor, steel pickling, pharmaceutical, battery
manufacturing and groundwater remediation markets. At present, 90 factory
trained manufacturer's representatives sell Duall's engineered systems to
industrial and municipal clients.
Systems Division, located in Kulpsville, Pennsylvania, is a leader in
the supply of custom designed and manufactured air and water pollution control
equipment. Systems Division's air pollution control capabilities include: carbon
adsorption systems for the concentration and recovery of volatile solvents,
thermal and catalytic oxidation systems and the supply of abatement catalysts.
These systems are custom engineered for clients in the automotive, aerospace and
furniture industries. Additional applications include painting, pharmaceutical,
chemical, electronics, food processing and printing industries. Systems Division
also offers a full range of catalyst products for the oxidation of pollutants,
which include catalysts for the oxidation of chlorinated solvents, low
temperature oxidation catalysts and a catalyst specially designed for
regenerative catalytic oxidizer applications.
Fluid Handling Equipment Segment
This segment is composed of the following four divisions and/or
subsidiaries of the Company: Mefiag; Keystone Filter Division; Dean Pump
Division; and Fybroc Division.
Mefiag(R), operating with the Company's wholly-owned subsidiary, Mefiag
B.V., located in Heerenveen, Holland, and the Mefiag Division, located in
Harleysville, Pennsylvania, designs and manufactures filter systems utilizing
horizontal disc technology for superior performance, particularly in high
efficiency and high-flow applications. Mefiag(R) filters are used in tough,
corrosive applications in the plating, metal finishing and printing industries.
Worldwide sales are accomplished through qualified, market-based distributors
and original equipment manufacturers located throughout Europe, the United
States, Asia and other major markets throughout the world.
Keystone Filter Division, located in Hatfield, Pennsylvania, is an
established custom pleater and cartridge manufacturer in the United States. The
Division provides custom designed and engineered products which are currently
used in a diversity of applications such as the nuclear power industry,
components in medical equipment and in indoor air quality equipment. Keystone
Filter also provides standard filters for water purification and industrial
applications. Sales and customer service are provided through a non-exclusive
distributor network.
2
<PAGE>
Dean Pump Division, located in Indianapolis, Indiana, designs and
manufactures high quality pumps that handle a broad range of industrial
applications. Users such as the chemical, petrochemical, refinery,
pharmaceutical, plastics, pulp and paper, and food processing industries choose
Dean Pump products particularly for their high temperature applications. The
Division's products are sold worldwide through an extensive network of
distributors.
Fybroc Division, located in Telford, Pennsylvania, is a world leader in
the manufacture of fiberglass reinforced plastic ("FRP") centrifugal pumps.
These pumps provide excellent corrosion resistance for tough applications
including pumping of acids, brines, caustics, bleaches, seawater and a wide
variety of waste liquids. Fybroc's second generation epoxy resin, EY-2, allows
the Company to offer the first corrosion resistant and high temperature FRP
thermoset pumps suitable for solvent applications. The EY-2 material also
expands Fybroc's pumping capabilities to include certain acid applications such
as high concentration sulfuric acid (75-98%). During the year, Fybroc continued
to expand the FRP centrifugal magnetic drive pump line which now offers five
sizes available in both our standard vinyl ester resin and our EY-2 epoxy resin.
We have also added three additional sizes to the metric version of this pump in
order to attract and expand our international product coverage. Fybroc pumps are
sold to many markets including the chemical, steel, pulp and paper, electric
utility, aquaculture, aquarium, and industrial and municipal waste treatment
industries. Fybroc's EY-2 material is expected to allow it to enter new markets
such as pharmaceutical, petrochemical, fertilizer and pesticides. A worldwide
distributor network provides sales, engineering and customer service.
United States Sales versus Foreign Sales:
The following table sets forth certain data concerning total net sales
to customers by geographic area in the past three years:
Percentage of Net Sales
Fiscal Year Ended January 31,
2003 2002 2001
---------------------------------
United States 84.7% 84.3% 79.5%
Foreign 15.3% 15.7% 20.5%
---------------------------------
Net Sales 100.0% 100.0% 100.0%
=================================
Customers:
During each of the past three fiscal years, no single customer accounted
for 10% or more of the total net sales of the Company in any year. The Company
does not believe that it would be materially adversely affected by the loss of
any single customer.
Seasonality:
The Company does not consider its business to be seasonal in nature.
Competition:
The Company experiences competition from a variety of sources with
respect to virtually all of its products. The Company knows of no single entity
that competes with it across the full range of its products and systems. The
lines of business in which the Company is engaged are highly competitive.
Competition in the markets served is based on a number of considerations, which
may include price, technology, applications experience, know-how, reputation,
product warranties, service and distribution.
With respect to the Fluid Handling Equipment segment, specifically the
pump manufacturing operations, several companies, including Ingersoll-Dresser
Pumps Co. (a subsidiary of Flowserve Corporation), Goulds Industrial Pumps, Inc.
(a subsidiary of ITT Industries), and Durco Pumps, Inc. (a subsidiary of
Flowserve Corporation), dominate the industry with several smaller companies,
including Met-Pro, competing in selected product lines and niche markets.
With respect to the Product Recovery/Pollution Control Equipment
segment, there are numerous competitors of both comparable and larger size which
may have greater resources than the Company, but there are no companies that
dominate the market.
3
<PAGE>
The Company is unable to state with certainty its relative market
position in all aspects of its businesses.
Research and Development:
The Company engages in research and development on an operational basis.
Due to the wide range of the Company's products, the research and development
effort is not centralized. Research is directed towards the development of new
products related to current product lines, and the improvement and enhancement
of existing products.
The principal goals of the Company's research programs are maintaining
the Company's technological capabilities in the production of product
recovery/pollution control equipment, and fluid handling equipment; developing
new products; and providing technological support to the manufacturing
operations.
Research and development expenses were $0.6 million, $1.0 million and
$0.8 million for each of the years ended January 31, 2003, 2002 and 2001,
respectively.
Patents and Trademarks:
The Company has a small number of patents and trademarks. The Company
considers these rights important to its business, although it considers no
individual right material to its business.
Regulatory Matters:
The Company is subject to environmental laws and regulations concerning
air emissions, discharges to water processing facilities, and the generation,
handling, storage and disposal of waste materials in all operations. All of the
Company's production and manufacturing facilities are controlled under permits
issued by federal, state and local regulatory agencies. The Company believes it
is presently in compliance in all material respects with these laws and
regulations. To date, compliance with federal, state and local provisions
relating to protection of the environment has had no material effect upon
capital expenditures, earnings or the competitive position of the Company.
Backlog:
Generally, the Company's customers do not enter into long-term
contracts, but rather issue purchase orders that are accepted by the Company.
The rate of booking new orders varies from month to month. In addition, the
orders have varying delivery schedules, and the Company's backlog as of any
particular date may not be representative of actual revenues for any succeeding
period. The dollar amount of the Company's backlog of orders, considered to be
firm, totalled $7,375,383 and $9,931,016 as of January 31, 2003 and 2002,
respectively. This does not include an additional $8,422,701 and $4,319,024 of
orders in-house as of January 31, 2003 and 2002, respectively, which, according
to our longstanding policy, are not included in the backlog until completed
drawings have been approved. The Company expects that substantially all of the
backlog that existed as of January 31, 2003 will be shipped during the ensuing
fiscal year.
Raw Materials:
The Company procures its raw materials and supplies from various
sources. The Company believes it could secure substitutes for the raw materials
and supplies should they become unavailable, but there are no assurances that
the substitutes would perform as well or be priced competitively. The Company
has not experienced any significant difficulty in securing raw materials and
supplies, and does not anticipate any significant difficulty in procurement in
the coming year or foreseeable future.
Employees:
As of January 31, 2003, the Company employed 328 people, of whom 129
were involved in manufacturing, and 199 were engaged in administration, sales,
engineering, supervision and clerical work. The Company has had no work
stoppages during the past 20 years and considers its employee relations to be
good.
4
<PAGE>
Foreign Operations:
Most of the Company's operations and assets are located in the United
States. The Company also owns a manufacturing operation in Heerenveen, Holland
through its wholly-owned subsidiary, Mefiag B.V., and operates a sales office
and warehouse in Markham, Ontario, Canada through its wholly-owned subsidiary,
Flex-Kleen Canada Inc.
Large export sales are typically made on the basis of confirmed
irrevocable letters of credit or time drafts to selected customers in U.S.
dollars. The Company believes that currency fluctuation and political and
economic instability do not constitute substantial risks to its business.
For information concerning foreign net sales on a segment basis,
reference is made to the Consolidated Business Segment Data contained on page
22.
5
<PAGE>
Executive Officers of the Company:
The following table sets forth certain information regarding the
Executive Officers of the Company:
William L. Kacin, age 71, is Chairman of the Board of Directors of the
Company, a position he has held since June 1999. Mr. Kacin served as President
and Chief Executive Officer of the Company and from February 1993 to March 2003.
Prior to that, he was Vice President and General Manager of the Company's Sethco
Division for seventeen years.
Raymond J. De Hont, age 49, is President, Chief Executive Officer and
Director of the Company. He was elected President and Chief Executive Officer in
March 2003 and a Director of the Company in February 2003. Mr. De Hont served as
the Chief Operating Officer of the Company from June 2000 to March 2003 and Vice
President and General Manager of the Company's Fybroc Division from June 1995 to
June 2000. In October 1999, he also assumed the responsibilities of General
Manager for the Company's Dean Pump Division. Prior to joining Met-Pro
Corporation, Mr. De Hont's management positions at Air and Water Technologies
included Vice President and General Manager of Flex-Kleen Corporation, which is
now a division of Met-Pro Corporation.
Gary J. Morgan, CPA, age 48, is Vice President-Finance, Chief Financial
Officer, Secretary, Treasurer and a Director of the Company. He was elected Vice
President-Finance, Chief Financial Officer, Secretary and Treasurer in October
1997, and a Director of the Company in February 1998. Mr. Morgan joined the
Company in 1980 and served as the Company's Corporate Controller immediately
prior to October 1997.
Mark A. Betchaver, age 53, is Vice President of the Company and General
Manager of the Sethco Division, to which offices he was elected in June 1993. He
joined the Company in 1972.
James G. Board, age 49, is Vice President of the Company and General
Manager of Dean Pump and Fybroc Divisions, to which offices he was elected in
December 2000. For more than five years prior thereto, Mr. Board was employed by
Tuthill Energy Systems since September 1997, as Director of Sales and prior to
joining Tuthill Energy Systems held the position as Salesman for Oliver and
Laughten Equipment Company, Inc. since September 1982.
Thomas V. Edwards, age 49, is Vice President of the Company and General
Manager of the Systems Division, to which offices he was elected in December
1998. Mr. Edwards joined the Company in June 1995 and prior to his present
position, held the position of Assistant to the President. For more than five
years prior thereto, Mr. Edwards was employed by Lockheed Martin as Engineering
Manager.
Sonja M. Haggert, age 49, is Vice President of the Company and General
Manager of the Keystone Filter Division, to which offices she was elected in
February 1993. She joined the Company in 1978, and prior to her present
position, held the position of Distributor Sales Manager of the Division.
Hans J. D. Huizinga, age 52, is the Managing Director of Mefiag B.V., a
wholly-owned subsidiary of the Company, located in Heerenveen, Holland, an
office to which he was elected in August 1993. He was employed by Mefiag B.V.
for over five years as Managing Director for the predecessor of Mefiag B.V.
prior to becoming an employee of the Company's subsidiary on June 30, 1993, when
we acquired that company.
Gregory C. Kimmer, age 48, is Vice President of the Company and General
Manager of the Duall Division, to which offices he was elected in October 1989.
For more than five years prior thereto, Mr. Kimmer was employed by Duall
Industries, Inc. in various capacities.
William F. Mersch, age 49, is Vice President of the Company and General
Manager of the Stiles-Kem Division and Vice President and General Manager of
Pristine Hydrochemical Inc. to which offices he was elected in October 1996 and
May 2002, respectively. He joined the Company in June 1995 as National Sales
Manager. For more than five years prior thereto, Mr. Mersch was employed by ANCO
Corporation, in which his last position was Vice President Sales and Marketing.
Robert P. Replogle, age 62, is Vice President of the Company and
Director of the International Sales Division and the Mefiag Division, to which
offices he was elected in December 1995. He joined the Company in December 1973
and prior to his present position, held the position of Director of the
International Sales Division and the Mefiag Division.
Paul A. Tetley, age 44, is Vice President of the Company and General
Manager of Strobic Air Corporation, to which offices he was elected in December
1999. Mr. Tetley joined the Company in 1996 in connection with the Company's
acquisition of Strobic Air Corporation and prior to his present position held
the position of Director of Operations. For more than five years prior thereto,
Mr. Tetley was employed by the predecessor entity as a Plant Manager.
6
<PAGE>
Dennis M. Wierzbicki, age 45, is Vice President of the Company, General
Manager of the Flex-Kleen Division and Vice President and General Manager of
Flex-Kleen Canada Inc., to which offices he was elected in February 2003. For
more than five years prior thereto, Mr. Wierzbicki was employed by American Air
Filter, as Vice President and General Manager of its Air Quality Equipment
Division since October 2000 and as Vice President of Marketing and Sales of its
Global Air Filtration Division since April 1996.
There are no family relationships between any of the Directors or
Executive Officers of the Company. Each officer serves at the pleasure of the
Board of Directors.
7
<PAGE>
Item 2. Properties:
The following manufacturing and production facilities were owned or leased
by the Company at January 31, 2003:
<TABLE>
<CAPTION>
Name Structure Property/Location Status
<S> <C> <C> <C>
Executive Offices, 73,000 square feet, cement 17 acres in Harleysville, Owned
International Division, building, with finestone facing, Pennsylvania
Mefiag Division and built 1976
Strobic Air Corporation
Sethco Division 30,000 square feet, cement 4 acres in Hauppauge, Owned
block with brick facing Long Island, New York
built 1982
Fybroc Division 47,500 square feet, cement 8 acres in Telford, Owned
building with brick facing, Pennsylvania
built 1991
Keystone Filter Division 31,000 square feet, cement 2.3 acres in Hatfield, Owned
block, built 1978 Pennsylvania
Systems Division 3,375 square feet, Kulpsville, Pennsylvania Leased(1)
brick building
Dean Pump Division 66,000 square feet, metal 17.1 acres in Owned
building Indianapolis, Indiana
Duall Division 63,000 square feet, metal 7 acres in Owosso, Owned
and masonry building Michigan
Stiles-Kem Division 22,000 square feet, cement 2.55 acres in Owned
block building, built 1996 Waukegan, Illinois
Pristine Hydrochemical Inc. 1,500 square feet office and Williston, North Dakota Leased
warehouse facility
Flex-Kleen Division 13,760 square feet, brick Itasca, Illinois Leased(2)
building
37,320 square feet, metal Sharpsburg, North Carolina Leased(3)
building
Mefiag B.V. 17,200 square feet, metal 1.1 acres in Owned
and masonry building Heerenveen, Holland
Vacant land 3 acres in Heerenveen, Holland Owned
Flex-Kleen Canada Inc. 5,880 square feet, masonry Markham, Ontario, Canada Leased(4)
building
</TABLE>
(1) Systems Division's lease for the Sales and Engineering facility in
Kulpsville, Pennsylvania expi res on February 9, 2005.
(2) Flex-Kleen Division's lease for the operation in Itasca, Illinois expires on
December 31, 2007.
(3) Flex-Kleen Division's lease for the warehouse in Sharpsburg, North Carolina
expires on October 29, 2004.
(4) Flex-Kleen Canada Inc.'s lease for the sales and warehouse facility in
Markham, Ontario, Canada expires on March 31, 2005.
8
<PAGE>
Item 3. Legal Proceedings:
Recently there appears to have been a significant increase, in certain
states, in asbestos-related litigation claims against numerous industrial
companies, particularly companies in the pump and fluid handling industries.
During the last year, the Company was named as one of many defendants in a
number of such cases filed in one of these states, Mississippi. The Company,
along with the other defendants, is alleged to have sold products containing
asbestos, although as of January 31, 2003, none of the Company's products have
been specifically identified by any plaintiff in any case as a cause of the
alleged injuries. The Company believes that it has defenses to the claims that
have been asserted. Although the Company is vigorously defending all of the
cases, the amount expended by the Company to date in responding to these cases
has not been material, as most of the costs have been paid by insurance. Given
the current status of these cases, it is not possible to determine the Company's
potential liability, if any, and no provision has been made in the Company's
financial statements for any such claims.
In addition, the Company is party in a small number of legal proceedings
arising out of the ordinary course of business. Management does not currently
believe that these proceedings will materially impact the Company's results of
operations, liquidity or financial condition.
Item 4. Submission of Matters to a Vote of Security Holders:
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year ended January 31, 2003.
9
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters:
(a) Market Information. The Company's Common Stock is traded on the New York
Stock Exchange under the symbol "MPR". The high and low selling prices of the
Common Stock for each quarterly period for the last two fiscal years, as
reported on the New York Stock Exchange, are shown below.
<TABLE>
<CAPTION>
Quarter ended
Year ended January 31, 2003 April July October January
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Price range of common stock:
High $15.55 $16.02 $14.30 $14.50
Low 13.05 12.45 12.50 13.00
Cash dividend paid .085 .085 .085 .09
Year ended January 31, 2002 April July October January
- -------------------------------------------------------------------------------------------------------
Price range of common stock:
High $13.17 $15.25 $14.08 $13.44
Low 11.00 12.65 9.90 11.17
Cash dividend paid .085 .085 .085 .085
</TABLE>
(b) Holders. There were 527 registered stockholders at January 31, 2003, and
the Company estimates that there are approximately 2,000 additional stockholders
with stock held in street name.
(c) Dividends. The Board of Directors declared quarterly dividends of $.085
per share payable on March 8, 2002, June 7, 2002, and September 6, 2002 to
stockholders of record at the close of business on February 22, 2002, May 24,
2002 and August 23, 2002, respectively. The Board of Directors declared
quarterly dividends of $.09 per share payable on December 9, 2002 and March 10,
2003 to stockholders of record as of November 29, 2002 and February 21, 2003,
respectively.
We expect to continue to pay comparable dividends during at least the next
fiscal year.
(d) Securities Authorized For Issuance under Equity Compensation Plans. Set
forth below is information aggregated as of January 31, 2003 with respect to two
equity compensation plans previously approved by the Company's stockholders,
being the 1997 Stock Option Plan and 2001 Equity Incentive Plan. Also shown is
information with respect to the Company's Year 2000 Employee Stock Purchase
Plan. The data does not include any options under the 1992 Stock Option Plan,
insofar as there were no options issued and outstanding as of January 31, 2003
nor were any options available for issuance as of such date.
<TABLE>
<CAPTION>
Number of Securities
Remaining Available
Number of Securities For Future Issuance
to be Issued Upon Weighted-Average Under Equity
Exercise of Exercise Price of Compensation Plans
Outstanding Options, Outstanding Options, (Excluding Securities
Plan Category Warrants and Rights Warrants and Rights Reflected in Column (A))
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(A) (B) (C)
Equity compensation plans approved by
security holders 260,550 $11.97 559,425
Equity compensation plans not approved
by security holders - - -
</TABLE>
10
<PAGE>
(e) Recent Sales of Unregistered Securities. In May 2002, the Company issued
to one person an aggregate of 113,475 shares of Common Stock valued at
$1,600,000 as part of the purchase price for the stock of Pristine
Hydrochemical, Inc. These shares were not registered under the Securities Act of
1933 and were issued in reliance upon the exemption from registration afforded
by Section 4(2) of the Securities Act. The purchaser of these shares represented
to his investment intent in connection with such acquisition.
(f) Stock Repurchases. During the fiscal year ended January 31, 2003, the
Company repurchased an aggregate of 19,941 shares, at a total cost of $0.3
million, pursuant to a 300,000 share stock repurchase program authorized on
December 15, 2000. To date, an aggregate of 69,032 shares have been repurchased
through such repurchase program.
Item 6. Selected Financial Data:
<TABLE>
<CAPTION>
Years ended January 31,
2003 2002 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Selected Operating Statement Data
Net sales $69,619,382 $70,088,446 $81,203,550 $78,449,992 $67,390,488
Income from operations 9,154,986 9,451,925 12,513,886 11,410,679 11,199,867
Net income 5,888,379 6,189,317 7,773,720 7,072,642 7,151,052
EBITDA (a) 10,714,343 11,497,932 14,736,541 13,826,535 13,287,878
Earnings per share, basic .95 1.01 1.26 1.08 1.04
Earnings per share, diluted .95 1.01 1.26 1.08 1.03
Selected Balance Sheet Data
Current assets $40,631,745 $37,411,679 $37,412,259 $35,722,971 $38,683,453
Current liabilities 9,750,309 10,151,149 12,957,995 13,681,578 14,387,868
Working capital 30,881,436 27,260,530 24,454,264 22,041,393 24,295,585
Current ratio 4.2 3.7 2.9 2.6 2.7
Total assets 73,754,671 68,070,192 69,151,341 68,641,983 72,888,641
Long-term obligations 7,111,995 7,125,195 8,100,000 9,933,014 11,941,954
Total stockholders' equity 56,045,885 50,279,394 47,061,366 44,206,333 45,925,107
Total capitalization 63,157,880 57,404,589 55,161,366 54,139,347 57,867,061
Return on average total assets, % 8.3 9.0 11.3 10.0 10.9
Return on average stockholders' equity, % 11.1 12.7 17.0 15.7 15.9
Other Financial Data
Net cash flows from operating activities $5,831,186 $8,301,567 $10,047,845 $10,204,749 $7,990,115
Capital expenditures 752,125 1,631,356 1,023,682 1,193,559 1,191,616
Stockholders' equity per share 9.02 8.27 7.73 6.92 6.76
Cash dividends paid per share (b) .345 .34 .32 .48 .30
Average common shares, basic 6,179,618 6,109,141 6,152,325 6,542,210 6,907,654
Average common shares, diluted 6,221,496 6,143,837 6,173,437 6,576,820 6,955,892
Shares of common stock outstanding 6,216,369 6,083,172 6,090,155 6,391,242 6,794,898
==============================================================================================================================
</TABLE>
(a) EBITDA represents income from operations before taxes, interest expense,
interest income, and depreciation and amortization expenses.
(b) Fiscal year ended January 31, 2000 included an annual dividend of $.32 per
share payable on April 23, 1999 and quarterly dividends of $.08 per share
payable on September 10, 1999 and December 10, 1999, resulting from the
Company's change from an annual to a quarterly dividend.
11
<PAGE>
Item7. Management's Discussion and Analysis of Financial Condition and Results
of Operations:
The following discussion should be read in conjunction with the
Company's Consolidated Financial Statements and Notes thereto included elsewhere
in this Form 10-K together with "Factors that May Affect Future Results"
elsewhere in this Management's Discussion and Analysis of Financial Condition
and Result of Operations.
Results of Operations:
The following table sets forth for the periods indicated the percentage
of total net sales that such items represent in the Consolidated Statement of
Operations.
<TABLE>
<CAPTION>
Years ended January 31,
2003 2002 2001
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Cost of goods sold 65.3% 65.7% 65.6%
- -------------------------------------------------------------------------------------------
Gross profit 34.7% 34.3% 34.4%
Selling, general and administrative expense 21.6% 20.8% 19.0%
- -------------------------------------------------------------------------------------------
Income from operations 13.1% 13.5% 15.4%
Interest expense (.7%) (.8%) (.8%)
Other income, net .4% 1.2% .6%
- -------------------------------------------------------------------------------------------
Income before taxes 12.8% 13.9% 15.2%
Provision for taxes 4.4% 5.1% 5.6%
- -------------------------------------------------------------------------------------------
Net income 8.4% 8.8% 9.6%
===========================================================================================
</TABLE>
FYE 2003 vs FYE 2002:
Net sales for the fiscal year ended January 31, 2003 were $69.6 million
compared to $70.1 million for the fiscal year ended January 31, 2002, a decrease
of $0.5 million. Sales in the Product Recovery/Pollution Control Equipment
segment increased to $46.1 million, 3.6% higher than the prior year due
primarily to increased demand for our fume and odor control equipment. Sales in
the Fluid Handling Equipment segment were $23.5 million, 8.1% lower than the
prior fiscal year due to decreased demand for our specialty pump equipment.
Foreign sales decreased to $10.7 million for the fiscal year ended
January 31, 2003, compared to $11.0 million for the same period last year, a
3.2% decrease. Foreign sales decreased 10.5% in the Fluid Handling Equipment
segment from the prior fiscal year, and the Product Recovery/Pollution Control
Equipment segment foreign sales were 7.7% higher than the prior fiscal year due
to higher demand for our fume and odor control equipment.
Net income for the fiscal year ended January 31, 2003 was $5.9 million
compared to $6.2 million for the fiscal year ended January 31, 2002, a decrease
of $0.3 million. The decrease in net income is principally related to a $0.4
million net gain on the sale of property and equipment associated with the
Systems Division's operations during the fiscal year ended January 31, 2002,
combined with lower sales in the Company's Fluid Handling Equipment segment
during the current fiscal year.
The gross margin for the fiscal year ended January 31, 2003 increased to
34.7% versus 34.3% for the prior year. This increase can be attributed to higher
gross margins experienced in the Product Recovery/Pollution Control Equipment
segment.
Selling expense was $7.1 million for the fiscal year ended January 31,
2003 or an increase of $0.1 million over the prior year. Selling expense as a
percentage of net sales was 10.3% compared to 10.0% for the prior fiscal year.
12
<PAGE>
General and administrative expense was $7.9 million for the fiscal year
ended January 31, 2003 compared to $7.6 million in the prior fiscal year.
General and administrative expense as a percentage of net sales was 11.3% for
the fiscal year ended January 31, 2003 compared to 10.8% for the prior fiscal
year. This increase, in dollars, is principally related to increased pension and
health care costs, offset by the reduction in amortization expense for goodwill
that is no longer being amortized per Statement of Financial Accounting
Standards ("SFAS") No. 142.
Interest expense was $0.5 million for the fiscal year ended January 31,
2003 compared to $0.6 million in the prior fiscal year.
Other income, net was $0.3 million for the fiscal year ended January 31,
2003 compared to $0.9 million for the same period in the prior year, a decrease
of $0.6 million. The reduction is the result of recording a $0.4 million net
gain on the sale of property and equipment associated with the Systems
Division's operations in West Chester, Pennsylvania during the fiscal year ended
January 31, 2002, combined with the reduction in interest rates on our
short-term investments during the current fiscal year.
The effective tax rate decreased to 34.0% for the fiscal year ended
January 31, 2003 from 36.5% for the prior year.
FYE 2002 vs FYE 2001:
Net sales for the fiscal year ended January 31, 2002 were $70.1 million
compared to $81.2 million for the fiscal year ended January 31, 2001, a decrease
of $11.1 million. Sales in the Product Recovery/Pollution Control Equipment
segment were $44.5 million, $7.2 million lower than the same period last year.
Sales in the Fluid Handling Equipment segment were $25.6 million, $4.0 million
lower compared to the fiscal year ended January 31, 2001. We believe that the
decreased demand in both business segments is attributed to a slowing economy.
Foreign sales decreased to $11.0 million for the fiscal year ended
January 31, 2002, compared to $16.6 million for the same period last year.
Foreign sales decreased 25.4% in the Fluid Handling Equipment segment from the
prior fiscal year, and the Product Recovery/Pollution Control Equipment segment
foreign sales were 43.0% lower than the prior fiscal year due to lower demand
for our fume and odor control equipment.
Net income for the fiscal year ended January 31, 2002 was $6.2 million
compared to $7.8 million for the fiscal year ended January 31, 2001, a decrease
of $1.6 million. The decrease in net income is principally related to lower
sales in both business segments during the period.
The gross margin for the fiscal year ended January 31, 2002 decreased
slightly to 34.3% versus 34.4% for the prior year.
Selling expense was $7.0 million for the fiscal year ended January 31,
2002 or a slight decrease from the prior fiscal year. Selling expense as a
percentage of net sales was 10.0% compared to 8.7% for the prior fiscal year.
General and administrative expense was $7.6 million for the fiscal year
ended January 31, 2002 compared to $8.4 million for the same period last year.
General and administrative expense as a percentage of net sales was 10.8% for
the fiscal year ended January 31, 2002 compared to 10.3% for the prior fiscal
year. This reduction, in dollars, is related to the overall reduction in
compensation expense and amortization expenses for certain intangible assets
which are fully amortized.
Interest expense was $0.6 million for the fiscal year ended January 31,
2002 compared to $0.7 million in the prior fiscal year. During the fiscal year
ended January 31, 2002, the Company reduced its long-term debt by $1.7 million.
Other income totaling $0.9 million for the fiscal year ended January 31,
2002 consisted of interest income on short-term investments and a $0.5 million
gain on the sale of property and equipment. In September 2001, the Company sold
property and equipment associated with the Systems Division's operations in West
Chester, Pennsylvania resulting in the majority of this gain. These operations
were relocated to a leased facility in Kulpsville, Pennsylvania. Other income of
$0.5 million for the fiscal year ended January 31, 2001 consisted primarily of
interest income on short-term investments.
The effective tax rate decreased to 36.5% for the fiscal year ended
January 31, 2002 from 37.0% for the prior year.
13
<PAGE>
Liquidity:
Cash and cash equivalents were $13.4 million on January 31, 2003, an
increase of $1.6 million over the previous year. This increase is the net result
of positive cash flows provided by operating activities of $5.8 million,
proceeds from the exercise of stock options amounting to $0.4 million, offset by
the payment of cash dividends amounting to $2.0 million (net of $0.1 million of
dividends returned to the Company in the form of stock purchases under the
Company's Dividend Reinvestment Plan), payments of scheduled debt totalling $1.2
million, purchase of treasury stock amounting to $0.3 million, a cash payment of
$0.4 million as part of the purchase price for Pristine Hydrochemical, and
investment in property and equipment amounting to $0.8 million.
Accounts receivable were $12.2 million at January 31, 2003, an increase
of $1.8 million compared to the prior year. The timing and size of shipments and
retainage on contracts, especially in the Product Recovery/Pollution Control
Equipment segment, will influence accounts receivable balances at any point in
time.
Inventories totalled $13.4 million at January 31, 2003, a decrease of
$0.3 million compared to the prior year. Inventory balances will fluctuate
depending on the size and timing of orders and market demand, especially when
major systems and contracts are involved.
Current liabilities decreased from $10.2 million at January 31, 2002 to
$9.8 million at January 31, 2003, or $0.4 million. A reduction in accounts
payable and customer advances, offset by an increase in the current portion of
long-term debt and accrued expenses, accounted for the decrease.
The Company has consistently maintained a high current ratio and has not
utilized either the domestic line of credit or the foreign line of credit
totalling $5.0 million which are available for working capital purposes. Cash
flows, in general, have exceeded the current needs of the Company. The Company
presently foresees no change in this situation in the immediate future. As of
January 31, 2003 and January 31, 2002, working capital was $30.9 million and
$27.3 million, respectively, and the current ratio was 4.2 and 3.7,
respectively.
Capital Resources and Requirements:
Cash flows provided by operating activities during the fiscal year ended
January 31, 2003 amounted to $5.8 million compared to $8.3 million during the
prior fiscal year. This decrease in cash flows from operating activities was due
principally to an increase in accounts receivable and a decrease in net income
(of which $0.4 million in the fiscal year ended January 31, 2002 was due to the
net gain on the sale of property and equipment associated with the Systems
Division's operations) and customer advances for the fiscal year ended January
31, 2003, offset by a reduction in inventory balances. Per share, our cash flows
from operating activities decreased to $.94 per share compared to $1.35 per
share for the prior year.
Cash flows used in investing activities during the fiscal year ended
January 31, 2003 amounted to $1.2 million compared to $0.5 million during the
fiscal year ended January 31, 2002. The Company's investing activities for the
fiscal year ended January 31, 2003, principally represent the acquisition of a
business during the fiscal year ended January 31, 2003 and the purchase of
property, plant and equipment in the two operating segments during both years.
The Company continues to invest in machinery and equipment, tooling, patterns
and molds to improve efficiency and maintain our position as leaders in the
markets that we serve.
Financing activities during the fiscal year ended January 31, 2003 used
$3.2 million of available resources compared to $4.4 million during the prior
fiscal year. The 2003 activity is the result of the payment of quarterly cash
dividends amounting to $2.0 million (net of $0.1 million of dividends returned
to the Company in the form of stock purchases under the Company's Dividend
Reinvestment Plan), reduction of long-term debt totalling $1.2 million, and the
purchase of treasury stock totalling $0.3 million, offset by proceeds received
by the exercise of stock options amounting to $0.4 million.
The Company paid $1.2 million of scheduled debt during the current
fiscal year. The percentage of long-term debt to equity at January 31, 2003
decreased to 12.7% compared to 14.2% at January 31, 2002.
During the fiscal year ended January 31, 2003, the Company repurchased
an aggregate of 19,941 shares at a cost of $0.3 million under the 300,000 share
stock repurchase program authorized on December 15, 2000.
14
<PAGE>
The Board of Directors declared quarterly dividends of $.085 per share
payable on March 8, 2002, June 7, 2002 and September 6, 2002 to stockholders of
record at the close of business on February 22, 2002, May 24, 2002 and August
23, 2002, respectively, and a quarterly dividend of $.09 per share payable on
December 9, 2002 to stockholders of record as of November 29, 2002. On December
19, 2002, the Board of Directors declared a quarterly dividend of $.09 per
share, which was paid on March 10, 2003 to stockholders of record at the close
of business on February 21, 2003.
The Company accounts for its defined benefit plans in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 87, "Employers'
Accounting for Pensions". SFAS No. 87 requires a liability ("minimum pension
liability") be recorded when the accumulated benefit obligation exceeds the fair
value of plan assets. The Company has recently experienced a decline in the fair
market value of assets in the Company's non-contributory defined benefit pension
plan trust. This decline is due, in large part, to the generally weak economy
and general declines in the market value of investments. In connection with the
decline in the fair market value of these assets, at January 31, 2003, the
Company recorded an after-tax charge to stockholders' equity of $0.1 million.
As part of our commitment to the future, the Company expended $0.6
million and $1.0 million on research and development for the fiscal years ended
January 31, 2003 and 2002, respectively.
The Company will continue to invest in new product development to
maintain and enhance its competitive position in the markets in which we
participate. Capital expenditures will be made to support operations and expand
our capacity to meet market demands. The Company intends to finance capital
expenditures in the coming year through cash flows from operations and will
secure third party financing, when deemed appropriate.
Recent Accounting Pronouncements:
In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure", which provides
alternative methods of transition for a voluntary change to fair value based
method of accounting for stock-based employee compensation as prescribed in SFAS
No. 123. Additionally, SFAS No. 148 requires more prominent and more frequent
disclosures in financial statements about the effects of stock-based
compensation. The provisions of this Statement are effective for fiscal years
ending after December 15, 2002. Management does not expect the adoption of this
Statement to have a material impact on the Company's financial condition or
results of operations.
Critical Accounting Policies and Estimates:
Management's discussion and analysis of its financial position and
results of operations are based upon the Company's consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States. The preparation of these financial
statements requires management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenue and expenses and related
disclosure of contingent assets and liabilities. The significant accounting
policies which we believe are the most critical to aid in fully understanding
and evaluating our reported financial results include the following:
The Company's revenues are recognized when products are shipped to
unaffiliated customers. The Securities and Exchange Commission's Staff
Accounting Bulletin ("SAB") No. 101, "Revenue Recognition", provides guidance on
the application of generally accepted accounting principles to selected revenue
recognition issues. The Company has concluded that its revenue recognition
policy is appropriate and in accordance with generally accepted accounting
principles and SAB No. 101.
Property, plant and equipment, intangible and certain other long-lived
assets are depreciated and amortized over their useful lives. Useful lives are
based on management's estimates of the period that the assets will generate
revenue. Intangible assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. In accordance with SFAS No.142, "Goodwill and Other Intangible
Assets", which supersedes Accounting Principles Board ("APB") No.17, "Intangible
Assets", effective February 1, 2002, the Company's unamortized goodwill balance
is not being amortized over its estimated useful life; rather, it is being
assessed at least annually for impairment.
The determination of our obligation and expense for pension benefits is
dependent on our selection of certain assumptions used by actuaries in
calculating such amounts. Those assumptions are described in Note 10 to the
consolidated financial statements and include, among others, the discount rate,
expected long-term rate of return on plan assets and rates of increase in
compensation. In accordance with generally accepted accounting principles,
actual results that differ from our assumptions are accumulated and amortized
over future periods and therefore, generally affect our recognized expense and
recorded obligation in such future periods.
15
<PAGE>
While we believe that our assumptions are appropriate, significant differences
in our actual experience or significant changes in our assumptions may
materially affect our pension obligations and our future expense.
Factors that May Affect Future Results:
Met-Pro's prospects are subject to certain uncertainties and risk. This
Annual Report on Form 10-K also contains certain forward-looking statements
within the meaning of the Federal securities laws. Met-Pro's results may differ
materially from its current results and actual results could differ materially
from those suggested in the forward-looking statements as a result of certain
risk factors, including but not limited to those set forth below, other one time
events, other important factors disclosed previously and from time to time in
Met-Pro's other filings with the Securities and Exchange Commission.
The following important factors, along with those discussed elsewhere in
this Annual Report, could affect future results and could cause those results to
differ materially from those expressed in the forward-looking statements:
o materially adverse changes in economic conditions in the markets served by
us or in significant customers of ours;
o material changes in available technology;
o changes in our accounting rules promulgated by regulatory agencies,
including the SEC, which could result in an impact on earnings;
o the write-down of costs in excess of net assets of businesses acquired
(goodwill), as a result of the determination that the acquired business is
impaired;
o unexpected results in our product development activities;
o loss of key customers;
o changes in product mix;
o changes in our existing management;
o exchange rate fluctuations;
o changes in federal, state laws and regulations;
o lower than anticipated return on investments, which could affect the amount
of the Company's pension liabilities;
o the assertion of litigation claims that the Company's products, including
products produced by companies acquired by the Company, infringe third party
patents or have caused injury, loss or damage;
o adverse developments in the asbestos cases that have been filed against the
Company, including without limitations adverse developments in the
availability of insurance coverage in these cases;
o the effect of acquisitions and other strategic ventures;
o failure to properly quote and/or execute customer orders, including
misspecifications, design, engineering or production errors;
o losses related to international sales; and/or
o failure in execution of acquisition strategy.
Item 7A. Quantitative and Qualitative Disclosure About Market Risks:
We have no disclosure to make with respect to this Item.
Item 8. Financial Statements and Supplementary Data:
Index to Consolidated Financial Statements and Supplementary Data:
<TABLE>
<CAPTION>
Page
Consolidated Financial Statements: ----
<S> <C>
Independent Auditor's Report ............................................................................... 17
Consolidated Statement of Operations........................................................................ 18
Consolidated Balance Sheet.................................................................................. 19
Consolidated Statement of Cash Flows........................................................................ 20
Consolidated Statement of Stockholders' Equity.............................................................. 21
Consolidated Business Segment Data ......................................................................... 22
Notes to Consolidated Financial Statements ................................................................. 23
Supplementary Data:
Quarterly Financial Data ................................................................................... 37
</TABLE>
16
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
Met-Pro Corporation
Harleysville, Pennsylvania
We have audited the accompanying consolidated balance sheet of Met-Pro
Corporation and its wholly-owned subsidiaries as of January 31, 2003 and 2002,
and the related consolidated statements of operations, stockholders' equity, and
cash flows for each of the three years in the period ended January 31, 2003.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Met-Pro Corporation
and its wholly-owned subsidiaries as of January 31, 2003 and 2002, and the
results of their operations and their cash flows for each of the three years in
the period ended January 31, 2003 in conformity with accounting principles
generally accepted in the United States of America.
As discussed in Note 1 to the consolidated financial statements, effective
February 1, 2002, the Company adopted Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets".
/s/ Margolis & Company P.C.
---------------------------
Bala Cynwyd, Pennsylvania
February 21, 2003
17
<PAGE>
<TABLE>
<CAPTION>
MET-PRO CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
Years ended January 31,
2003 2002 2001
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $69,619,382 $70,088,446 $81,203,550
Cost of goods sold 45,439,557 46,060,214 53,242,396
- -------------------------------------------------------------------------------------------------------------
Gross profit 24,179,825 24,028,232 27,961,154
- -------------------------------------------------------------------------------------------------------------
Operating expenses
Selling 7,139,082 6,998,234 7,043,540
General and administrative 7,885,757 7,578,073 8,403,728
- -------------------------------------------------------------------------------------------------------------
15,024,839 14,576,307 15,447,268
- -------------------------------------------------------------------------------------------------------------
Income from operations 9,154,986 9,451,925 12,513,886
Interest expense (505,394) (557,855) (694,112)
Other income, net 278,126 852,885 524,729
- -------------------------------------------------------------------------------------------------------------
Income before taxes 8,927,718 9,746,955 12,344,503
Provision for taxes 3,039,339 3,557,638 4,570,783
- -------------------------------------------------------------------------------------------------------------
Net income $5,888,379 $6,189,317 $7,773,720
=============================================================================================================
Earnings per share
Basic $.95 $1.01 $1.26
Diluted $.95 $1.01 $1.26
=============================================================================================================
Average number of common and
common equivalent shares outstanding
Basic 6,179,618 6,109,141 6,152,325
Diluted 6,221,496 6,143,837 6,173,437
=============================================================================================================
</TABLE>
The notes to consolidated financial statements are an integral part of the above
statement.
18
<PAGE>
MET-PRO CORPORATION
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
January 31,
ASSETS 2003 2002
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets
Cash and cash equivalents $13,429,367 $11,832,260
Accounts receivable, net of allowance for
doubtful accounts of approximately
$263,000 and $229,000, respectively 12,217,315 10,465,069
Inventories 13,374,128 13,701,676
Prepaid expenses, deposits and other current assets 979,714 911,457
Deferred income taxes 631,221 501,217
- --------------------------------------------------------------------------------------------------------------
Total current assets 40,631,745 37,411,679
Property, plant and equipment, net 11,950,422 12,505,114
Costs in excess of net assets of businesses acquired, net 20,798,913 17,780,767
Other assets 373,591 372,632
- --------------------------------------------------------------------------------------------------------------
Total assets $73,754,671 $68,070,192
==============================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------------------------------------
Current liabilities
Current portion of long-term debt $1,536,926 $1,231,469
Accounts payable 2,810,002 3,094,300
Accrued salaries, wages and expenses 4,827,241 4,558,576
Dividend payable 559,167 517,070
Customers' advances 16,973 749,734
- --------------------------------------------------------------------------------------------------------------
Total current liabilities 9,750,309 10,151,149
Long-term debt 7,111,995 7,125,195
Other non-current liabilities 36,621 34,424
Deferred income taxes 809,861 480,030
- --------------------------------------------------------------------------------------------------------------
Total liabilities 17,708,786 17,790,798
- --------------------------------------------------------------------------------------------------------------
Commitments
Stockholders' equity
Common stock, $.10 par value; 18,000,000 shares
authorized, 7,226,303 and 7,219,165 shares issued,
of which 1,009,934 and 1,135,993 shares were reacquired
and held in treasury at the respective dates 722,630 721,916
Additional paid-in capital 8,196,782 7,879,368
Retained earnings 59,705,267 55,990,079
Accumulated other comprehensive loss (541,959) (827,737)
Treasury stock, at cost (12,036,835) (13,484,232)
- --------------------------------------------------------------------------------------------------------------
Total stockholders' equity 56,045,885 50,279,394
- --------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $73,754,671 $68,070,192
==============================================================================================================
</TABLE>
The notes to consolidated financial statements are an integral part of the above
statement.
19
<PAGE>
<TABLE>
<CAPTION>
MET-PRO CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
Years ended January 31,
2003 2002 2001
- -----------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<S> <C> <C> <C>
Cash flows from operating activities
Net income $5,888,379 $6,189,317 $7,773,720
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,559,357 2,046,007 2,222,655
Deferred income taxes 379,874 155,419 256,998
(Gain) loss on sales of property and equipment, net (5,247) (472,895) 12,656
Allowance for doubtful accounts 34,188 10,721 (6,576)
(Increase) decrease in operating assets,
net of acquisition
Accounts receivable (1,420,024) 3,658,676 (515,006)
Inventories 591,932 (687,317) 631,810
Prepaid expenses and other current assets (52,207) 115,808 92,357
Other assets (8,408) (8,092) (52,309)
Increase (decrease) in operating liabilities,
net of acquisition
Accounts payable and accrued expenses (406,094) (2,933,944) (181,137)
Customers' advances (732,761) 140,289 (270,987)
Other non-current liabilities 2,197 87,578 83,664
- -----------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 5,831,186 8,301,567 10,047,845
- -----------------------------------------------------------------------------------------------------------
Cash flows from investing activities
Proceeds from sales of property and equipment 19,347 1,095,456 2,000
Acquisitions of property and equipment (752,125) (1,631,356) (1,023,682)
Payment for purchase of acquisition (465,673) - -
- -----------------------------------------------------------------------------------------------------------
Net cash (used in) investing activities (1,198,451) (535,900) (1,021,682)
- -----------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Proceeds from new borrowing 16,373 - -
Reduction of debt (1,235,974) (1,741,711) (2,008,940)
Exercise of stock options 353,229 1,092,253 -
Payment of dividends (2,029,579) (1,934,132) (1,806,361)
Purchase of treasury shares (289,218) (1,793,435) (3,018,786)
- -----------------------------------------------------------------------------------------------------------
Net cash (used in) financing activities (3,185,169) (4,377,025) (6,834,087)
- -----------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash 149,541 (66,427) (13,587)
- -----------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 1,597,107 3,322,215 2,178,489
Cash and cash equivalents at beginning of year 11,832,260 8,510,045 6,331,556
- -----------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $13,429,367 $11,832,260 $8,510,045
===========================================================================================================
</TABLE>
The notes to consolidated financial statements are an integral part of the above
statement.
20
<PAGE>
<TABLE>
<CAPTION>
MET-PRO CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Accumulated
Additional Other
Common Paid-in Retained Comprehensive Treasury
Stock Capital Earnings Income/(Loss) Stock Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balances, January 31, 2000 $718,919 $7,973,873 $46,087,476 ($403,993) ($10,169,942) $44,206,333
Comprehensive income:
Net income - - 7,773,720 - -
Cumulative translation adjustment - - - (87,170) -
Total comprehensive income 7,686,550
Dividends paid, $.32 per share - - (1,462,727) - - (1,462,727)
Dividend declared, $.085 per share - - (517,669) - - (517,669)
Proceeds from issuance of common
stock under dividend reinvestment
plan (17,389 shares) 1,739 165,926 - - - 167,665
Purchase of 318,476 shares of
treasury stock - - - - (3,018,786) (3,018,786)
- ------------------------------------------------------------------------------------------------------------------------------------
Balances, January 31, 2001 720,658 8,139,799 51,880,800 (491,163) (13,188,728) 47,061,366
Comprehensive income:
Net income - - 6,189,317 - -
Cumulative translation adjustment - - - (231,570) -
Interest rate swap, net of tax of $60,357 - - - (105,004) -
Total comprehensive income 5,852,743
Dividends paid, $.34 per share - - (1,562,968) - - (1,562,968)
Dividend declared, $.085 per share - - (517,070) - - (517,070)
Proceeds from issuance of common
stock under dividend reinvestment
plan (12,582 shares) 1,258 145,247 - - - 146,505
Stock option transactions - (405,678) - - 1,497,931 1,092,253
Purchase of 145,590 shares of
treasury stock - - - - (1,793,435) (1,793,435)
- ------------------------------------------------------------------------------------------------------------------------------------
Balances, January 31, 2002 721,916 7,879,368 55,990,079 (827,737) (13,484,232) 50,279,394
Comprehensive income:
Net income - - 5,888,379 - -
Cumulative translation adjustment - - - 617,563 -
Interest rate swap, net of tax of $109,056 - - - (202,802) -
Minimum pension liability adjustment,
net of tax of $70,991 - - - (128,983) -
Total comprehensive income 6,174,157
Issuance of treasury stock for acquisition
of business - 250,782 - - 1,349,218 1,600,000
Dividends paid, $.345 per share - - (1,614,024) - - (1,614,024)
Dividend declared, $.09 per share - - (559,167) - - (559,167)
Proceeds from issuance of common
stock under dividend reinvestment
plan (7,138 shares) 714 100,801 - - - 101,515
Stock option transactions - (34,169) - - 387,397 353,228
Purchase of 19,941 shares of
treasury stock - - - - (289,218) (289,218)
- ------------------------------------------------------------------------------------------------------------------------------------
Balances, January 31, 2003 $722,630 $8,196,782 $59,705,267 ($541,959) ($12,036,835) $56,045,885
====================================================================================================================================
</TABLE>
The notes to consolidated financial statements are an integral part of the above
statement.
21
<PAGE>
<TABLE>
<CAPTION>
MET-PRO CORPORATION
CONSOLIDATED BUSINESS SEGMENT DATA
Years ended January 31,
2003 2002 2001
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales to unaffiliated customers
Product recovery/pollution control equipment $46,094,834 $44,498,316 $51,650,730
Fluid handling equipment 23,524,548 25,590,130 29,552,820
- -------------------------------------------------------------------------------------------------
$69,619,382 $70,088,446 $81,203,550
Includes foreign sales of:
Product recovery/pollution control equipment $4,777,495 $4,437,309 $7,787,437
Fluid handling equipment 5,907,012 6,598,746 8,846,889
- -------------------------------------------------------------------------------------------------
$10,684,507 $11,036,055 $16,634,326
=================================================================================================
Income from operations
Product recovery/pollution control equipment $6,039,173 $5,144,940 $7,066,793
Fluid handling equipment 3,115,813 4,306,985 5,447,093
- -------------------------------------------------------------------------------------------------
$9,154,986 $9,451,925 $12,513,886
=================================================================================================
Depreciation and amortization expense
Product recovery/pollution control equipment $859,590 $1,303,761 $1,450,025
Fluid handling equipment 699,767 742,246 772,630
- -------------------------------------------------------------------------------------------------
$1,559,357 $2,046,007 $2,222,655
=================================================================================================
Capital expenditures
Product recovery/pollution control equipment $301,437 $675,435 $442,662
Fluid handling equipment 315,409 746,241 448,685
- -------------------------------------------------------------------------------------------------
616,846 1,421,676 891,347
Corporate 135,279 209,680 132,335
- -------------------------------------------------------------------------------------------------
$752,125 $1,631,356 $1,023,682
=================================================================================================
Identifiable assets at January 31
Product recovery/pollution control equipment $41,396,626 $38,945,179 $40,274,449
Fluid handling equipment 18,417,187 18,209,157 18,785,577
- -------------------------------------------------------------------------------------------------
59,813,813 57,154,336 59,060,026
Corporate 13,940,858 10,915,856 10,091,315
- -------------------------------------------------------------------------------------------------
$73,754,671 $68,070,192 $69,151,341
=================================================================================================
</TABLE>
The Company follows the practice of allocating general corporate expenses,
including depreciation and amortization expense, between the segments.
22
<PAGE>
MET-PRO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 2003, 2002 AND 2001
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of operations:
The Company manufactures and sells product recovery/pollution control
equipment for purification of air and liquids, and fluid handling
equipment for corrosive, abrasive and high temperature liquids.
Basis of presentation:
The consolidated financial statements include the accounts of Met-Pro
Corporation ("Met-Pro" or the "Company") and its wholly-owned
subsidiaries, Mefiag B.V., Flex-Kleen Canada Inc., Strobic Air
Corporation ("Strobic Air"), MPC Inc. and Pristine Hydrochemical Inc.
Significant intercompany accounts and transactions have been eliminated.
Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Foreign currency translation:
Assets and liabilities of the Company's foreign subsidiaries are
translated at current exchange rates, while income and expenses are
translated at average rates for the period. Translation gains and losses
are reported as a component of other comprehensive income in the
Statement of Stockholders' Equity.
Inventories:
Inventories generally are stated at the lower of cost (principally
first-in, first-out) or market except for the inventory at the Dean Pump
Division which is determined on the last-in, first-out basis (see Note
4).
Property, plant and equipment:
Property, plant and equipment are stated at cost. Depreciation is
computed principally by the straight-line method over estimated useful
lives. Expenditures for maintenance and repairs are charged to expense
as incurred. Renewals and betterments are capitalized (see Note 5).
Costs in excess of net assets of businesses acquired:
In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations", and SFAS No. 142, "Goodwill and Other Intangible Assets".
SFAS No. 141, which was effective for business combinations completed
after June 30, 2001, requires, among other things, that (1) the purchase
method of accounting be used for all business combinations, (2) specific
criteria be established for the recognition of intangible assets
separately from goodwill and (3) additional information about acquired
intangible assets be provided. SFAS No. 142, which became effective for
the Company as of February 1, 2002, primarily addresses the accounting
for goodwill and intangible assets subsequent to their acquisition.
Among other things it requires that goodwill not be amortized for
financial statement purposes; instead, management is required to test
goodwill for impairment at least annually. The Company performed its
annual impairment test in the second quarter of the fiscal year ended
January 31, 2003 using a fair value approach. No impairment was present
upon performing this test. At January 31, 2003, costs in excess of net
assets of businesses acquired associated with the Company's reportable
business segments totalled $20,798,913. The Company cannot predict the
occurrence of certain events that might adversely affect the reportable
value of costs in excess of net assets of businesses acquired.
23
<PAGE>
<TABLE>
<CAPTION>
MET-PRO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 2003, 2002 AND 2001 (Continued)
If SFAS No. 142 had been in effect during the years ended January 31,
2002 and 2001, the Company's earnings would have been improved because
of reduced amortization, as described below:
January 31,
2003 2002 2001
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------------------
Net income as reported $5,888,379 $6,189,317 $7,773,720
Add: amortization - 314,775 312,294
---------------------------------------------------------------------------------------------------------
Adjusted net income $5,888,379 $6,504,092 $8,086,014
=========================================================================================================
Basic earnings per share as reported $.95 $1.01 $1.26
Add: amortization - .05 .05
---------------------------------------------------------------------------------------------------------
Adjusted basic earnings per share $.95 $1.06 $1.31
=========================================================================================================
Diluted earnings per share as reported $.95 $1.01 $1.26
Add: amortization - .05 .05
---------------------------------------------------------------------------------------------------------
Adjusted diluted earnings per share $.95 $1.06 $1.31
=========================================================================================================
</TABLE>
The changes in the carrying amount of costs in excess of net assets of
businesses acquired by business segment for the fiscal year ended
January 31, 2003 are as follows:
<TABLE>
<CAPTION>
Product Recovery/
Pollution Control Fluid Handling
Equipment Equipment Total
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------------------
Balance as of February 1, 2002 $16,048,285 $1,732,482 $17,780,767
Goodwill acquired during the period 3,018,146 - 3,018,146
---------------------------------------------------------------------------------------------------------
Balance as of January 31, 2003 $19,066,431 $1,732,482 $20,798,913
=========================================================================================================
</TABLE>
Revenue recognition:
Revenues are generally recognized when products are shipped.
Advertising:
Advertising costs are charged to operations in the year incurred and
were $1,299,908, $1,403,366 and $1,344,231 for the years ended January
31, 2003, 2002 and 2001, respectively.
Research and development:
Research and development costs are charged to operations in the year
incurred and were $624,098, $979,813 and $788,777 for the years ended
January 31, 2003, 2002 and 2001, respectively.
Earnings per share:
Basic earnings per share are computed based on the weighted average
number of common shares outstanding during each year.
Diluted earnings per share are computed based on the weighted average
number of shares outstanding plus all potential dilutive common shares
outstanding (stock options) during each year.
24
<PAGE>
MET-PRO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 2003, 2002 AND 2001 (Continued)
Dividends:
On December 19, 2002, the Board of Directors declared a $.09 per share
quarterly cash dividend payable on March 10, 2003 to stockholders of
record on February 21, 2003, amounting to $559,167.
Stock options:
The Company accounts for stock options under the provisions of
Accounting Principles Board Opinion ("APB") No. 25, "Accounting for
Stock Issued to Employees" and related interpretations. Accounting for
the issuance of stock options under the provisions of APB No. 25
typically does not result in compensation expense for the Company since
the exercise price of options is normally established at the market
price of the Company's Common Stock on the date granted. SFAS No. 123,
"Accounting for Stock-Based Compensation", provides that the related
expense may be recorded in the basic financial statements or the pro
forma effect on earnings may be disclosed in the financial statements.
Pro forma information regarding net income and earnings per share is
required by SFAS No. 123, which requires that the information be
determined as if we had accounted for our stock options under the
fair value method. The fair value for these options was estimated at the
date of grant using the Black-Scholes pricing model with the following
assumptions: risk-free interest rates ranging from 2.5% to 5.9%,
dividend yield ranging from 2.8% to 3.9%, expected volatility of the
market price of the Company's Common Stock ranging from 26% to 30%, and
an expected option life of five years.
The risk-free interest rate is based on five-year treasury bill rates.
For the purposes of pro forma disclosures, the estimated fair value of
the options is amortized to expense over the options' vesting periods.
The pro forma information compared to reported information for the three
years ended January 31 is presented in the following table:
<TABLE>
<CAPTION>
2003 2002 2001
-----------------------------------------------
<S> <C> <C> <C>
Net income:
As reported $5,888,379 $6,189,317 $7,773,720
Pro forma 5,788,478 6,097,825 7,709,076
Basic earnings per share:
As reported $.95 $1.01 $1.26
Pro forma .94 1.00 1.25
Diluted earnings per share:
As reported $.95 $1.01 $1.26
Pro forma .93 .99 1.25
===============================================
</TABLE>
The pro forma effects of applying SFAS No. 123 to fiscal 2003, 2002 and
2001 may not be representative of the pro forma effects in future years.
Based on the vesting schedule of the Company's stock option grants, the
pro forma effects on earnings are most pronounced in the early years
following each grant. The timing and magnitude of any future grants is
at the discretion of the Company's Board of Directors and cannot be
assured.
Non-employee directors of the Company are eligible to receive stock
options for Common Stock. These stock options are accounted for the same
as stock options granted to employees.
25
<PAGE>
MET-PRO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 2003, 2002 AND 2001 (Continued)
Concentrations of credit risk:
Financial instruments which potentially subject the Company to
concentrations of credit risk consist of cash and cash equivalents (see
Note 2), and trade accounts receivable. The Company believes
concentrations of accounts receivable credit risk are limited due to the
number of customers, and dispersion among the business segments and
geographic areas. It is the policy of management to review the
outstanding accounts receivable at the end of each reporting period, as
well as the bad debt write-offs experienced in the past, and establish
an allowance for doubtful accounts for uncollectable amounts.
Supplemental cash flow information:
2003 2002 2001
-----------------------------------------------------------------------
Cash paid during the year for:
Interest $465,728 $560,697 $819,054
Income taxes $2,732,862 $3,431,219 $3,689,100
=======================================================================
Recent accounting pronouncements:
In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure", which provides
alternative methods of transition for a voluntary change to a fair value
based method of accounting for stock-based employee compensation as
prescribed in SFAS No. 123. Additionally, SFAS No. 148 requires more
prominent and more frequent disclosures in financial statements about
the effects of stock-based compensation. The provisions of this
Statement are effective for fiscal years ending after December 15, 2002.
Management does not expect the adoption of this Statement to have a
material impact on the Company's financial condition or results of
operations.
Reclassifications:
Certain reclassifications have been made to the financial statements for
the fiscal year ended January 31, 2002 to conform with the presentation
of the financial statements for the fiscal year ended January 31, 2003.
Such reclassifications did not have any impact on stockholders' equity
and net income as of and for the year ended January 31, 2002.
NOTE 2: FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash and cash equivalents:
Short-term investments at January 31, 2003 and 2002 were valued at cost
(approximating market) and amounted to $12,526,044 and $10,686,472,
respectively. Short-term investments consist principally of commercial
paper with an original maturity of six months or less, and money market
funds, both of which are considered to be cash equivalents. The Company
evaluates the creditworthiness of the financial institutions and
financial instruments in which it invests.
26
<PAGE>
MET-PRO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 2003, 2002 AND 2001 (Continued)
Debt:
The fair value and carrying amount of long-term debt was as follows:
January 31,
2003 2002
----------------------------------------------------------------------
Fair value $8,693,870 $8,350,325
Carrying amount 8,648,921 8,356,664
======================================================================
Valuations for long-term debt are determined based on borrowing rates
currently available to the Company for loans with similar terms and
maturities.
The Company uses an interest rate swap (see Note 6) to minimize its
exposure to fluctuations in interest rates. The interest rate
differential to be paid or received under this agreement is recognized
over the term of the loan and is included in interest expense.
The Company's financial instruments are not held for trading purposes.
NOTE 3: ACQUISITION OF BUSINESS
Effective May 22, 2002, the Company, pursuant to an Agreement and Plan
of Merger, acquired 100% of the Common Stock of Pristine Hydrochemical
Inc. ("Pristine") for a purchase price of approximately $3,200,000. The
results of Pristine's operations have been included in the consolidated
financial statements since that date. The acquisition was accounted for
as a purchase transaction. Pristine sells water treatment chemicals and
services to municipal water utilities, and boiler and water cooling
chemicals and services to industrial and commercial markets. It is
expected that Pristine will complement the operations of the Company's
Stiles-Kem Division.
The acquisition was completed by issuing Common Stock from the treasury
valued at $1,600,000 (113,475 shares), a cash payment of $400,000,
promissory notes payable for $1,200,000, plus acquisition costs. The
notes are payable over a four-year period in installments of $300,000
annually, plus interest at a fixed rate of 4.75% (see Note 6). Goodwill
totalling approximately $3,018,000 was acquired.
The following unaudited pro forma summary presents the consolidated
results of operations for the fiscal years ended January 31, 2003 and
2002 as if the Company had acquired Pristine on February 1, 2001:
January 31,
2003 2002
-------------------------------------
Net sales $70,391,540 $72,306,135
Income before taxes 9,085,238 10,199,364
Net income 5,996,257 6,476,596
Earnings per share, basic $.97 $1.06
Earnings per share, diluted $.96 $1.05
=====================================
27
<PAGE>
MET-PRO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 2003, 2002 AND 2001 (Continued)
NOTE 4: INVENTORIES
Inventories consisted of the following:
January 31,
2003 2002
----------------------------------------------------------------------
Raw materials $7,066,298 $7,369,965
Work in process 1,366,127 1,559,273
Finished goods 4,941,703 4,772,438
----------------------------------------------------------------------
$13,374,128 $13,701,676
======================================================================
At January 31, 2003 and 2002, inventories valued at the last-in,
first-out method ("LIFO") were $2,257,859 and $2,211,522, respectively.
The LIFO value of inventories was lower than replacement cost by
$942,516 and $909,793 at January 31, 2003 and 2002, respectively.
The book basis of LIFO inventories exceeded the tax basis by
approximately $1,026,000 at both January 31, 2003 and 2002 as a result
of applying the provisions of Accounting Principles Board Opinion No.
16, "Business Combinations", to an acquisition completed in a prior
year.
NOTE 5: PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
January 31,
2003 2002
------------------------------------------------------------
Land $2,057,581 $1,963,882
Buildings and improvements 11,040,510 10,808,463
Machinery and equipment 11,324,083 10,391,578
Furniture and fixtures 4,485,052 4,300,390
Automotive equipment 982,895 1,016,212
Construction in progress 87,059 619,089
------------------------------------------------------------
29,977,180 29,099,614
Less accumulated depreciation 18,026,758 16,594,500
------------------------------------------------------------
$11,950,422 $12,505,114
============================================================
Depreciation of property, plant and equipment charged to operations
amounted to $1,486,083, $1,461,478 and $1,454,467 for the years ended in
2003, 2002 and 2001, respectively.
28
<PAGE>
MET-PRO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 2003, 2002 AND 2001 (Continued)
NOTE 6: DEBT
Short-term debt:
The Company has available both domestic and foreign unsecured lines of
credit totalling $5,000,000 which can be used for working capital. The
lines of credit were not used during either year.
Long-term debt:
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
January 31,
2003 2002
----------------------------------------------------------------------------
<S> <C> <C>
Note payable, bank, payable in
quarterly installments of $300,000,
plus interest at a fixed rate swap of
5.98%, maturing October, 2008 $6,900,000 $8,100,000
Various equipment notes, payable in monthly
installments ranging from $455 to
$1,074, maturing November
2004 through March 2005, no
interest 71,702 91,303
Notes payable, payable in annual
installments of $300,000, plus
interest at a fixed rate of 4.75%,
maturing May, 2006 1,200,000 -
-----------------------------------------------------------------------------
8,171,702 8,191,303
Less current portion 1,536,926 1,231,469
-----------------------------------------------------------------------------
6,634,776 6,959,834
Fair market value of interest rate
swap liability 477,219 165,361
-----------------------------------------------------------------------------
Long-term portion $7,111,995 $7,125,195
=============================================================================
</TABLE>
The note payable, bank is subject to certain covenants, including
maintenance of prescribed amounts of leverage and fixed charge coverage
ratios.
29
<PAGE>
MET-PRO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 2003, 2002 AND 2001 (Continued)
Maturities of long-term debt are as follows:
Year Ending
January 31,
---------------------------------------------------------------
2004 $1,536,926
2005 1,533,866
2006 1,500,910
2007 1,500,000
2008 1,200,000
Thereafter 900,000
---------------------------------------------------------------
$8,171,702
===============================================================
Interest expense was $505,394, $557,855 and $694,112 for the years ended
in 2003, 2002 and 2001, respectively.
NOTE 7: STOCKHOLDERS' EQUITY
On December 15, 2000, the Company announced a 300,000 share stock
repurchase program, which began after the Company's February 21, 2000
stock repurchase program was completed. During the fiscal year ended
January 31, 2003, the Company repurchased 19,941 shares of its Common
Stock at a cost of $0.3 million. At January 31, 2003, the Company had
the authority to repurchase 230,968 shares under the December 15, 2000
stock repurchase program.
The Company has a Shareholders' Rights Plan, under which the Company's
Board of Directors declared a dividend of one Right for each share of
Company Common Stock owned. The Plan provides, under certain conditions
involving acquisition of the Company's Common Stock, that holders of
Rights, except for the acquiring entity, would be entitled to purchase
shares of Common Stock of the Company, or acquiring company, having a
value of twice the Rights' exercise price. The Rights under the Plan
expire in 2010.
NOTE 8: INCOME TAXES
The provision for income taxes was comprised of the following:
2003 2002 2001
-----------------------------------------------------------------------
Current
Federal $2,291,842 $2,675,479 $3,408,005
State 275,729 552,851 662,757
Foreign 91,894 173,889 243,023
-----------------------------------------------------------------------
2,659,465 3,402,219 4,313,785
Deferred 379,874 155,419 256,998
-----------------------------------------------------------------------
$3,039,339 $3,557,638 $4,570,783
=======================================================================
30
<PAGE>
MET-PRO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 2003, 2002 AND 2001 (Continued)
Deferred income taxes reflect the net tax effect of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. Significant components of the net deferred tax assets
(liabilities) were as follows:
<TABLE>
<CAPTION>
2003 2002
-------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets
Inventory cost capitalization $152,674 $163,501
Pension cost 639,327 597,996
Non-compete agreements 395,783 463,236
Excess of tax over book basis of
property acquired in acquisition 8,954 -
Other 449,226 181,374
-------------------------------------------------------------------------------
Total deferred tax assets 1,645,964 1,406,107
-------------------------------------------------------------------------------
Deferred tax liabilities
Accelerated depreciation 478,219 308,424
Inventory - Dean Pump Division 364,438 374,706
Excess of book over tax basis of
property acquired in acquisitions - 8,893
Goodwill 981,947 692,897
-------------------------------------------------------------------------------
Total deferred tax liabilities 1,824,604 1,384,920
-------------------------------------------------------------------------------
Net deferred tax assets/(liabilities) ($178,640) $21,187
===============================================================================
</TABLE>
A reconciliation of the federal statutory rate and the Company's
effective tax rate is presented as follows:
<TABLE>
<CAPTION>
2003 2002 2001
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Computed expected
tax expense
(federal) $3,035,424 34.0% $3,313,965 34.0% $4,197,131 34.0%
State income taxes,
net of federal
income tax benefit 188,981 2.1 306,012 3.2 403,528 3.2
Other (185,066) (2.1) (62,339) (.7) (29,876) (.2)
----------------------------------------------------------------------------------------------------------------------
Effective income taxes $3,039,339 34.0% $3,557,638 36.5% $4,570,783 37.0%
======================================================================================================================
</TABLE>
NOTE 9: LEASES AND OTHER COMMITMENTS
The Company has various real estate operating leases for warehouse space
and office space for sales, general and administrative purposes. Future
minimum lease payments under these non-cancelable operating leases at
January 31, 2003 were as follows:
2004 $260,829
2005 201,419
2006 147,761
2007 119,189
2008 107,206
Rental expense for the above operating leases during the years ended in
2003, 2002 and 2001 was $466,911, $474,910 and $411,929, respectively.
31
<PAGE>
MET-PRO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 2003, 2002 AND 2001 (Continued)
NOTE 10: EMPLOYEE BENEFIT PLANS
Pension Plans:
The Company has several defined benefit pension plans covering eligible
employees in the United States. The Company contributes amounts to the
plans equal to the amounts that are tax deductible.
A minimum pension liability adjustment was recorded in the fourth
quarter of the fiscal year ended January 31, 2003 as a liability with a
corresponding decrease to stockholders' equity. At January 31, 2003, the
Company recorded an after-tax charge to stockholders' equity of
$128,983.
Net periodic pension cost (income) included the following components:
<TABLE>
<CAPTION>
2003 2002 2001
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits earned
during the period $574,129 $570,695 $583,387
Interest cost on projected
benefit obligation 881,278 836,860 788,141
Expected return on assets (1,064,136) (1,178,322) (1,158,685)
Amortization 31,332 (440,135) (515,449)
--------------------------------------------------------------------------------
$422,603 ($210,902) ($302,606)
================================================================================
</TABLE>
The following table sets forth the plans' change in benefit obligations,
change in plan assets and amounts recognized in the Company's balance
sheet at January 31, 2003 and 2002:
<TABLE>
<CAPTION>
2003 2002
---------------------------------------------------------------------------------------
<S> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year $12,876,395 $10,532,088
Service cost 574,129 570,695
Interest cost 881,278 836,860
Actuarial (gain) loss (302,479) 911,170
Benefits paid (666,722) (634,258)
Other 44,698 659,840
---------------------------------------------------------------------------------------
Benefit obligation at end of year $13,407,299 $12,876,395
---------------------------------------------------------------------------------------
Change in plan assets:
Fair value of plan assets at beginning of year $12,125,268 $15,003,327
Actual loss on plan assets (1,080,918) (2,303,801)
Employer contribution 460,000 60,000
Benefits paid (666,722) (634,258)
---------------------------------------------------------------------------------------
Fair value of plan assets at end of year $10,837,628 $12,125,268
---------------------------------------------------------------------------------------
Funded status ($2,569,671) ($751,127)
Unrecognized actuarial (gain) loss 130,739 (1,766,672)
Unrecognized transition (asset) (112,920) (123,435)
Unrecognized prior service costs 936,738 988,723
Contribution after measurement date, prior year 15,000 15,000
---------------------------------------------------------------------------------------
Net amount recognized ($1,600,114) ($1,637,511)
---------------------------------------------------------------------------------------
Amounts recognized in the balance sheet consist of:
Accrued benefit liability ($1,600,114) ($1,637,511)
=======================================================================================
</TABLE>
32
<PAGE>
MET-PRO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 2003, 2002 AND 2001 (Continued)
Assumptions used in the accounting for pension costs were:
2003 2002 2001
----------------------------------------------------------------------
Discount rate 7.00% 7.00% 7.75%
Rate of increase in
compensation levels
(where applicable) 4.50% 4.50% 4.50%
Expected long-term rate of
return on assets 9.00% 9.00% 8.00%
======================================================================
Directors' Benefit Plan:
The Company also provides a non-qualified pension plan for Directors
which is presently unfunded. The plan is designed to provide pension
benefits based on the category of the Director and length of service.
The aggregate benefit obligation payable in the future under the terms
of the Plan was $711,693 and $708,881 at January 31, 2003 and 2002,
respectively. The amounts applicable are included in the tables above.
This plan was discontinued in December 1999 as to non-vested Directors.
Defined Contribution Plan:
The Company has a 401(k) profit sharing plan in which all employees of
the Company in the United States are eligible to participate in the plan
following completion of one year of service and attaining age 21.
Pursuant to this plan, employees can contribute up to 25% of their
compensation to the Plan. The Company will match, in the form of Met-Pro
Common Stock, up to 50% of the employee's contribution up to 4% of
compensation. The Company provided for cash contributions to the 401(k)
profit sharing plan of $206,257, $206,866 and $208,975, for the years
ended January 31, 2003, 2002 and 2001, respectively.
Employees' Stock Ownership Trust:
The Company sponsors an employee stock ownership plan under which it
makes discretionary contributions to the trust either in cash or in
stock of the Company for salaried employees in the United States
eligible to participate in the plan. There were no contributions to the
Employees' Stock Ownership Trust for the fiscal years ended in 2003,
2002 and 2001. All shares are considered to be allocated to participants
or to be released for allocation to participants, and are included in
the earnings per share computations.
Stock Option Plans:
In 1991, the Board of Directors of the Company approved a stock option
plan covering 100,000 shares (increased to 225,000 shares after giving
effect to stock splits and stock dividends), that was approved by the
Company's stockholders at the 1992 meeting of stockholders (the "1992
Plan"). In 1997, the Board of Directors of the Company approved a stock
option plan covering 350,000 shares that was approved by the Company's
stockholders at the 1997 meeting of stockholders (the "1997 Plan"). In
2001, the Board of Directors of the Company approved an equity incentive
plan covering 350,000 shares that was approved by the Company's
stockholders at the 2001 meeting of stockholders (the "2001 Plan"). As
of January 31, 2003, the Company had not granted any options from the
2001 Plan. All of these plans contain anti-dilution provisions that
apply to stock splits and stock dividends declared by the Company.
33
<PAGE>
MET-PRO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 2003, 2002 AND 2001 (Continued)
The status of the plans was as follows:
<TABLE>
<CAPTION>
1992 Plan 2003 2002 2001
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Options outstanding, beginning - 121,025 121,025
Grants - - -
Exercises - 113,525 -
Cancellations - 7,500 -
Options outstanding, ending - - 121,025
Options price range at January 31 - $5.00 $5.00
to to
$13.13 $13.13
Options exercisable at January 31 - - 121,025
----------------------------------------------------------------------------------------------------------
Options available for grant at January 31 0 0 0
1997 Plan 2003 2002 2001
----------------------------------------------------------------------------------------------------------
Options outstanding, beginning 203,375 132,075 134,950
Grants 93,500 83,800 1,325
Exercises 32,525 12,500 -
Cancellations 3,800 - 4,200
Options outstanding, ending 260,550 203,375 132,075
Options price range at January 31 $9.75 $9.75 $9.75
to to to
$15.50 $15.50 $15.50
----------------------------------------------------------------------------------------------------------
Options exercisable at January 31 230,781 145,655 95,324
----------------------------------------------------------------------------------------------------------
Options available for grant at January 31 9,425 102,925 186,725
==========================================================================================================
</TABLE>
The weighted average exercise prices of the Company's employee stock
option plans were as follows:
<TABLE>
<CAPTION>
2003 2002 2001
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Options outstanding, beginning $11.26 $ 9.75 $9.76
Grants $13.15 $12.08 $9.75
Exercises $10.86 $ 8.67 -
Cancellations $12.87 $13.13 $9.88
Options outstanding, ending $11.97 $11.26 $9.75
==========================================================================================================
</TABLE>
34
<PAGE>
MET-PRO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 2003, 2002 AND 2001 (Continued)
NOTE 11: OTHER INCOME, NET
Other income, net, was comprised of the following:
2003 2002 2001
------------------------------------------------------------------
Gain/(loss) on sales of property
and equipment $5,248 $472,895 ($12,656)
Other, primarily interest income 272,878 379,990 537,385
------------------------------------------------------------------
$278,126 $852,885 $524,729
NOTE 12: BUSINESS SEGMENT DATA
The Company's operations are conducted in two business segments as
follows: the manufacture and sale of product recovery/pollution control
equipment, and the manufacture and sale of fluid handling equipment.
No significant intercompany revenue is realized by either business
segment. Interest income and expense are not included in the measure of
segment profit reviewed by management. Income taxes are also not
included in the measure of segment operating profit reviewed by
management.
Financial information by business segment is shown on page 22.
NOTE 13: GEOGRAPHIC INFORMATION
Transfers between geographic areas are accounted for at cost and
consistent with rules and regulations of governing tax authorities. Such
transfers are eliminated in the consolidated financial statements.
Income from operations by geographic segment includes an allocation of
general corporate expenses. Identifiable assets are those that can be
directly associated with the geographic area. Geographic information for
the three years ended January 31 is presented in the following table:
<TABLE>
<CAPTION>
2003 2002 2001
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales:
United States $58,934,875 $59,052,391 $64,569,224
Foreign 10,684,507 11,036,055 16,634,326
---------------------------------------------------------------------------------------------------
$69,619,382 $70,088,446 $81,203,550
===================================================================================================
Income from operations:
United States $8,093,077 $8,337,026 $10,822,911
Foreign 1,061,909 1,114,899 1,690,975
---------------------------------------------------------------------------------------------------
$9,154,986 $9,451,925 $12,513,886
===================================================================================================
Total assets:
United States $69,012,399 $63,813,498 $64,620,734
Foreign 4,742,272 4,256,694 4,530,607
---------------------------------------------------------------------------------------------------
$73,754,671 $68,070,192 $69,151,341
===================================================================================================
</TABLE>
35
<PAGE>
MET-PRO CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JANUARY 31, 2003, 2002 AND 2001 (Continued)
NOTE 14: CONTINGENCIES
Recently there appears to have been a significant increase, in certain
states, in asbestos-related litigation claims against numerous
industrial companies, particularly companies in the pump and fluid
handling industries. During the last year, the Company was named as one
of many defendants in a number of such cases filed in one of these
states, Mississippi. The Company, along with the other defendants, is
alleged to have sold products containing asbestos, although as of
January 31, 2003, none of the Company's products have been specifically
identified by any plaintiff in any case as a cause of alleged injuries.
The Company believes that it has defenses to the claims that have been
asserted. Although the Company is vigorously defending all of the cases,
the amount expended by the Company to date in responding to these cases
has not been material, as most of the costs have been paid by insurance.
Given the current status of these cases, it is not possible to determine
the Company's potential liability, if any, and no provision has been
made in the Company's financial statements for any such claims.
In addition, the Company is party in a small number of legal proceedings
arising out of the ordinary course of business. Management does not
currently believe that these proceedings will materially impact the
Company's results of operations, liquidity or financial condition.
36
<PAGE>
QUARTERLY FINANCIAL DATA (Unaudited)
<TABLE>
<CAPTION>
Earnings Earnings
Per Share, Per Share,
2002 Net Sales Gross Profit Net Income Basic Diluted
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
First Quarter $17,556,044 $6,417,658 $1,635,715 $.27 $.27
Second Quarter 20,371,781 6,928,802 1,856,419 .30 .30
Third Quarter 16,363,945 5,357,408 1,355,325 .22 .22
Fourth Quarter 15,796,676 5,324,364 1,341,858 .22 .22
Earnings Earnings
Per Share, Per Share,
2003 Net Sales Gross Profit Net Income Basic Diluted
- -----------------------------------------------------------------------------------------------------------------
First Quarter $16,193,880 $5,528,831 $1,200,128 $.20 $.20
Second Quarter 18,278,083 6,176,474 1,433,166 .23 .23
Third Quarter 16,671,696 6,045,425 1,440,616 .23 .23
Fourth Quarter 18,475,723 6,429,095 1,814,469 .29 .29
</TABLE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure:
During the period since before February 1, 2001, the Company's
independent auditors have been the same firm.
PART III
Item 10. Directors and Executive Officers of the Registrant:
The information required by this Item (except for the information set
forth on page 6 with respect to Executive Officers of the Registrant) is hereby
incorporated by reference to the information set forth under the captions
"Election of Directors" and "Security Ownership of Certain Beneficial Owners and
Management" contained in the Company's definitive Proxy Statement for its 2003
Annual Meeting of Stockholders, to be filed with the Securities and Exchange
Commission within 120 days following the end of the Company's fiscal year.
Item 11. Executive Compensation:
The information required by this Item is hereby incorporated by
reference to the information set forth under the caption "Executive Compensation
and Other Information" contained in the Company's definitive Proxy Statement for
its 2003 Annual Meeting of Stockholders, to be filed with the Securities and
Exchange Commission within 120 days following the end of the Company's fiscal
year.
Item 12. Security Ownership of Certain Beneficial Owners and Management:
The information required by this Item is hereby incorporated by
reference to the information set forth under the caption "Security Ownership of
Certain Beneficial Owners and Management" contained in the Company's definitive
Proxy Statement for its 2003 Annual Meeting of Stockholders, to be filed with
the Securities and Exchange Commission within 120 days following the end of the
Company's fiscal year.
Item 13. Certain Relationships and Related Transactions:
The information required by this Item is hereby incorporated by
reference to the information set forth under the captions "Election of
Directors" and "Certain Business Relationships" contained in the Company's
definitive Proxy Statement for its 2003 Annual Meeting of Stockholders, to be
filed with the Securities and Exchange Commission within 120 days following the
end of the Company's fiscal year.
37
<PAGE>
PART IV
Item 14. Controls and Procedures:
Within the ninety (90) day period prior to the date of this Annual
Report on Form 10-K, we carried out an evaluation, under the supervision of and
with the participation of our management including the Chief Executive Officer
and Chief Financial Officer, of the effectiveness of the design and operation of
our disclosure controls and procedures pursuant to Rule 13a-14 and 15d-14 of the
Securities Exchange Act of 1934 (the "Exchange Act"). Based upon that
evaluation, the Chief Executive Officer and the Chief Financial Officer
concluded that our disclosures are effective in timely alerting them to material
information relating to us, including our consolidated subsidiaries, required to
be included in our Exchange Act filing.
There have been no significant changes in our internal controls or in
other factors that could significantly affect controls subsequent to the date we
carried out our evaluation.
Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K:
A. Financial statements:
Financial statements filed as part of this report are listed in the
Index to Consolidated Financial Statements and Supplementary Data on
page 16.
B. Reports on Form 8-K:
The Company did not file any Current Reports on Form 8-K during the
fourth quarter of the fiscal year covered by this Annual Report.
C. Exhibits, Including Those Incorporated by Reference:
See the Exhibit Index which follows.
38
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
MET-PRO CORPORATION
April 28, 2003 By: /s/ Raymond J. De Hont
- ------------------ --------------------------------
Date Raymond J. De Hont
Chief Executive Officer
and Director
Pursuant to the requirement of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ---------
/s/ William L. Kacin Chairman, April 28, 2003
- ----------------------------
William L. Kacin
/s/ Raymond J. De Hont President, April 28, 2003
- ---------------------------- Chief Executive
Raymond J. De Hont Officer and
Director
/s/ Gary J. Morgan Vice President-Finance, April 28, 2003
- ---------------------------- Secretary, Treasurer,
Gary J. Morgan Chief Financial Officer,
Chief Accounting Officer
and Director
/s/ Alan Lawley Director April 28, 2003
- ----------------------------
Alan Lawley
/s/ Nicholas DeBenedictis Director April 28, 2003
- ----------------------------
Nicholas DeBenedictis
/s/ Jeffrey H. Nicholas Director April 28, 2003
- ----------------------------
Jeffrey H. Nicholas
/s/ Michael J. Morris Director April 28, 2003
- ----------------------------
Michael J. Morris
39
<PAGE>
MET-PRO CORPORATION
CERTIFICATION UNDER SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Raymond J. De Hont, certify that:
1. I have reviewed this Annual Report on Form 10-K of Met-Pro
Corporation;
2. Based on my knowledge, this Annual Report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this Annual Report;
3. Based on my knowledge, the financial statements, and other financial
information included in this Annual Report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this Annual Report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
Annual Report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within ninety (90) days
prior to the filing date of this Annual Report (the "Evaluation
Date"); and
c) presented in this Annual Report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in
this Annual Report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
/s/ Raymond J. De Hont April 28, 2003
- -------------------------
Raymond J. De Hont
Chief Executive Officer
40
<PAGE>
MET-PRO CORPORATION
CERTIFICATION UNDER SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Gary J. Morgan, certify that:
1. I have reviewed this Annual Report on Form 10-K of Met-Pro
Corporation;
2. Based on my knowledge, this Annual Report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this Annual Report;
3. Based on my knowledge, the financial statements, and other financial
information included in this Annual Report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this Annual Report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
Annual Report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within ninety (90) days
prior to the filing date of this Annual Report (the "Evaluation
Date"); and
c) presented in this Annual Report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this Annual Report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
/s/ Gary J. Morgan April 28, 2003
- ----------------------------
Gary J. Morgan
Chief Financial Officer
41
<PAGE>
Exhibit Index
Exhibit No. Description
----------- -----------
(2)(a) Agreement and Plan of Merger dated September 12, 1996 by and
between Met-Pro Corporation, Met-Pro Acquisition Corporation,
Strobic Air Corporation, Lynn T. Secrest, Ronald H. Secrest,
Richard P. Secrest and John W. Stone, III. Incorporated by
reference to Registrant's Registration Statement on Form S-3
(File No. 333-13929), declared effective December 31, 1996.
(2)(b) Asset Purchase Agreement dated October 29, 1998 among
Flex-Kleen Corporation, Flex-Kleen Canada Limited, Aqua
Alliance, Inc., AWT Air Company Inc., 1321249 Ontario Limited
and Met-Pro Corporation. Incorporated by reference to
Company's Registration Statement on Form 8-K filed on November
13, 1998 and amended on January 12, 1999.
(3)(a) Restated Certificate of Incorporation, incorporated by
reference to Company's Registration Statement on Form 8-A
filed June 12, 1998.
(3)(b) Certificate of Amendment of Certificate of Incorporation,
incorporated by reference to Company's Annual Report on Form
10-K filed April 24, 1998.
(3)(c) By-Laws as amended through February 7, 1968, incorporated by
reference to Company's Registration Statement No. 2-26979,
declared effective October 15, 1968.
(3)(d) Amendments to By-Laws adopted June 3, 1987, July 18, 1978 and
June 15, 1977, incorporated by reference to Company's
Registration Statement on Form 8-A filed June 12, 1998.
(3)(e) Amendments to By-Laws adopted February 21, 2000, incorporated
by reference to the Company's Annual Report on Form 10-K filed
April 27, 2000.
(4) Stockholders' Rights Plan, incorporated by reference to
Company's Current Report on Form 8-K filed on January 6, 2000.
(10)(a) The 1992 Stock Option Plan, incorporated by reference to
Company's Registration Statement on Form S-8 filed June 13,
2000.*
(10)(b) The 1997 Stock Option Plan, incorporated by reference to
Company's Registration Statement on Form S-8 filed January 16,
1998.*
(10)(c) Amendment No. 1 to the 1992 Stock Option Plan, incorporated by
reference to Company's Annual Report on Form 10-K filed on May
4, 2001.*
(10)(d) Amendment No. 1 to the 1997 Stock Option Plan, incorporated by
reference to Company's Annual Report on Form 10-K filed on May
4, 2001.*
(10)(e) Key Employee Severance Agreement between Met-Pro Corporation
and William L. Kacin, incorporated by reference to Company's
Annual Report on Form 10-K filed on May 4, 2001.*
(10)(f) Key Employee Severance Agreement between Met-Pro Corporation
and Gary J. Morgan, incorporated by reference to Company's
Annual Report on Form 10-K filed on May 4, 2001.*
(10)(g) Key Employee Severance Agreement between Met-Pro Corporation
and Raymond J. De Hont, incorporated by reference to Company's
Annual Report on Form 10-K filed on May 4, 2001.*
(10)(h) Amendment to Key Employee Severance Agreement between Met-Pro
Corporation and William L. Kacin, incorporated by reference to
Company's Annual Report on Form 10-K filed on May 4, 2001.*
42
<PAGE>
Exhibit Index
Exhibit No. Description
----------- -----------
(10)(i) Amendment to Key Employee Severance Agreement between Met-Pro
Corporation and Gary J. Morgan, incorporated by reference to
Company's Annual Report on Form 10-K filed on May 4, 2001.*
(10)(j) The Company's Director's Retirement Plan, incorporated by
reference to Company's Annual Report on Form 10-K filed on May
4, 2001.*
(10)(k) Amendment No. 1 to the Company's Director's Retirement Plan,
incorporated by reference to Company's Annual Report on Form
10-K filed on May 4, 2001.*
(10)(l) Amendment No. 2 to the Company's Director's Retirement Plan,
incorporated by reference to Company's Annual Report on Form
10-K filed on May 4, 2001.*
(10)(m) Restoration Plan, effective February 1, 2000, incorporated by
reference to Company's Annual Report on Form 10-K filed on May
4, 2001.*
(10)(n) Amendment No. 1 to the Company's Restoration Plan,
incorporated by reference to Company's Annual Report on Form
10-K filed on May 4, 2001.*
(10)(o) Additional 1% Supplemental Executive Retirement Plan,
effective February 1, 2000, incorporated by reference to
Company's Annual Report on Form 10-K filed on May 4, 2001.*
(10)(p) The 2001 Equity Incentive Plan, incorporated by reference to
Company's Registration Statement on Form S-8 filed August 22,
2001.*
(10)(q) Year 2000 Employee Stock Purchase Plan, incorporated by
reference to the Company's Registration Statement on Form S-8
filed on June 13, 2000.*
(10)(r) Salaried Pension Plan Amended and Restated effective September
1, 2000.*
(10)(s) First Amendment to the Company's Salaried Pension Plan dated
August 15, 2002.*
(10)(t) Second Amendment to the Company's Salaried Pension Plan dated
October 23, 2002.*
(10)(u) Amendment No. 3 to the Company's Directors' Retirement Plan
dated as of February 24, 2003.*
(10)(v) Amendment No. 1 to the Company's Additional 1 % Supplemental
Executive Plan dated as of March 21, 2003.*
(10)(w) Directors Retirement Plan Trust dated as of February 11,
2000.*
(10)(x) Amendment No. 1 to the Company's Directors' Retirement Plan
Trust dated as of February 24, 2003.*
(10)(y) Amendment No. 2 to the Company's Directors' Retirement Plan
Trust dated as of February 24, 2003.*
(10)(z) Restoration and Supplemental Executive Retirement Plan Trust
Agreement dated as of February 11, 2000.*
(10)(aa) Amendment No. 1 to the Company's Restoration and Supplemental
Executive Retirement Plan Trust Agreement dated as of February
24, 2003.*
(11) Statement Re-computation of Per Share Earnings. See page 18 of
Item 8.
43
<PAGE>
Exhibit Index
Exhibit No. Description
----------- -----------
(21) List of Subsidiaries of Registrant:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Corporate Jurisdiction of Name under which Business
Name Incorporation is Conducted
---- ------------- ------------
Mefiag B.V. The Netherlands Mefiag B.V., a wholly-
owned subsidiary of
Met-Pro Corporation
Flex-Kleen Canada Inc. Ontario, Canada Flex-Kleen Canada Inc.,
a wholly-owned subsidiary of
Met-Pro Corporation
Strobic Air Corporation Delaware Strobic Air Corporation,
a wholly-owned subsidiary of
Met-Pro Corporation
MPC Inc. Delaware MPC Inc.,
a wholly-owned subsidiary of
Met-Pro Corporation
Pristine Hydrochemical Inc. Delaware Pristine Hydrochemical Inc.,
a wholly-owned subsidiary of
Met-Pro Corporation
</TABLE>
(23) Consent of Independent Auditors.
(99.1) Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(99.2) Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
The following exhibits required under Item 601 of Regulation S-K
promulgated by the Securities & Exchange Commission have been omitted
because they are either inapplicable or non-existent:
(9) Voting trust agreements.
(12) Statements re computation of ratios.
(13) Annual report to security holders.
(16) Letter re change in certifying accountant.
(18) Letter re change in accounting principles.
(22) Published report regarding matters submitted to vote of
security holders.
(24) Power of attorney.
* Indicates management contract or compensatory plan or arrangement.
44
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>ex10r.txt
<DESCRIPTION>EXHIBIT 10.R
<TEXT>
Exhibit (10.r)
MET-PRO CORPORATION
SALARIED PENSION PLAN
AMENDED AND RESTATED
EFFECTIVE SEPTEMBER 1, 2000
<PAGE>
MET-PRO CORPORATION
SALARIED PENSION PLAN
AMENDED AND RESTATED
EFFECTIVE SEPTEMBER 1, 2000
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Article Page
- ------- ----
<S> <C>
I. Definitions ...........................................................................................1
II. Transition and Eligibility to Participate .............................................................8
III. Service and Credited Service, Transfers ..............................................................10
IV. Eligibility for Benefits .............................................................................14
V. Calculation of Benefits ..............................................................................15
VI. Vesting ..............................................................................................20
VII. Pre-Retirement Death Benefits ........................................................................21
VIII. Distribution .........................................................................................23
IX. Limitation on Benefits ...............................................................................29
X. Funding ..............................................................................................35
XI. Administration .......................................................................................36
XII. Management of Trust Fund .............................................................................38
XIII. Benefit Claims Procedure .............................................................................39
XIV. Non-Alienation of Benefits ...........................................................................40
XV. Designation of Beneficiary ...........................................................................41
XVI. Amendment and Termination ............................................................................42
XVII. Top-Heavy Provisions .................................................................................45
XVIII. General Provisions ...................................................................................49
Appendix A ...........................................................................................51
Appendix B............................................................................................53
</TABLE>
<PAGE>
MET-PRO CORPORATION
SALARIED PENSION PLAN
WHEREAS, MET-PRO CORPORATION ("Company") adopted the Met-Pro Corporation
Salaried Pension Plan ("Plan"), effective September 1, 1968 for certain of its
employees; and
WHEREAS, under the terms of the Plan, the Company has the ability to amend the
Plan; and
WHEREAS, the Company desires at this time to amend and restate the Plan in its
entirety to incorporate amendments adopted since the previous restatement
effective September 1, 1989, and to comply with, inter alia, the Uniformed
Services Employment and Reemployment Rights Act of 1994, the Small Business Job
Protection Act of 1996, and the Taxpayer Relief Act of 1997;
NOW, THEREFORE, effective September 1, 2000, unless otherwise provided, the
Met-Pro Corporation Salaried Pension Plan is continued, amended, and restated,
as hereinafter set forth:
<PAGE>
ARTICLE I
DEFINITIONS
-----------
Except where otherwise clearly indicated by context, the masculine shall include
the feminine, the singular shall include the plural, and vice-versa.
1.1 "Actuarial Equivalent" of a given benefit shall mean a benefit payable
in a different form from such given benefit but having the same
actuarial present value of such benefit taking into account, where
applicable, the probability of surviving to receive such benefit
("Mortality") and the time value of money ("Interest"). The calculation
of actuarial present values shall be based on the actuarial assumptions
as set forth in Appendix A to this Plan.
1.2 "Actuary" shall mean the firm employing an "enrolled actuary" as defined
in Section 7701(a)(35) of the Code appointed by the Administrator.
1.3 "Administrator" shall mean the Company acting through its officers or a
Committee appointed by the Company under Article XI.
1.4 "Annuity Starting Date" shall mean the first date as of which
distribution of Retirement Benefits to a Participant is to begin under
Section 8.3 or the first date as of which distribution of Pre-Retirement
Death Benefits to a Spouse is to begin under Section 7.3.
1.5 "Average Monthly Compensation" shall mean the monthly Compensation of a
Participant averaged over the five consecutive calendar years which
produce the highest monthly average within the last ten completed
calendar years of employment. If a Participant has less than five
completed consecutive calendar years of service, his Average Monthly
Compensation will be based on his monthly Compensation during his months
of service from his date of employment to the earlier of the date he
terminates and the date he has completed 60 months of service.
1.6 "Board of Directors" shall mean the Board of Directors of the Company.
1.7 "Break in Service" shall mean any Plan Year during which an employee
suffers a Break in Service described in Article III.
1.8 "Code" shall mean the Internal Revenue Code of 1986, as it may from time
to time be amended or supplemented. References to any section of the
Code shall be to that section as it may be renumbered, amended,
supplemented or reenacted.
-1-
<PAGE>
1.9 "Committee" shall mean the persons who may be appointed by the Board of
Directors to act on behalf of the Company to supervise the
administration of the Plan, as hereinafter provided.
1.10 "Compensation" shall mean with respect to any Participant, total
Compensation paid by the Company for the calendar year excluding
reimbursement or other expense allowances, fringe benefits (cash and
non-cash), moving expenses, deferred compensation, and welfare benefits
but including any Employee deferrals pursuant to Code Sections 125 or
401(k). Compensation shall not exceed the maximum amount that may be
taken into account under Code Section 401(a)(17), adjusted as provided
under Code Section 415(d) to reflect increases in the cost of living. In
applying this limitation, for Plan Years ending on or before August 31,
1997, the family group of a highly compensated Participant who is
subject to the family member aggregation rules of Code Section 414(q)(6)
because such Participant is either a "Five Percent Owner" of the
Employer or one of the ten (10) highly compensated employees paid the
greatest "415 Compensation" during the year, shall be treated as a
single Participant, except that for this purpose family members shall
include only the affected Participant's Spouse and any lineal
descendants who have not attained age nineteen (19) before the close of
the year. If, as a result of the application of such rules the adjusted
limitation is exceeded, then the limitation shall be prorated among the
affected family members in proportion to each such family member's
compensation prior to the application of this limitation, or the
limitation shall be adjusted in accordance with any other method
permitted by Regulation.
1.11 "Company" shall mean Met-Pro Corporation, including its several
Divisions, and its successors.
1.12 "Corporation Division" shall mean the corporate headquarters unit of the
Company.
1.13 "Dean Pump Division" shall mean the Dean Pump Division of Met-Pro
Corporation.
1.14 "Defined Benefit Plan" shall mean an employee benefit plan, as defined
in Section (3)(3) of ERISA that (a) is maintained by the Company, (b) is
qualified under Sections 401 and 501 of the Code, and (c) is not a
Defined Contribution Plan.
1.15 "Defined Contribution Plan" shall mean an employee benefit plan, as
defined in Section (3)(3) of ERISA that (a) is maintained by the
Company, (b) is qualified under Sections 401 and 501 of the Code, and
(c) provides for an individual account for each Participant and for
benefits based solely on the amounts credited to those accounts.
-2-
<PAGE>
1.16 "Divisions" shall mean those divisions of the Company who are
participating in the Plan and shall include the Corporation Division,
Dean Pump Division, Fybroc Division, Keystone Filter Division, Sethco
Division, Stiles-Kem Division, Systems Division (Non-Oxy), and Systems
Division (Oxy). Effective November 1, 1989, "Divisions" shall also mean
Duall Division. Effective July 1, 1993, "Divisions" shall also mean
Mefiag Division, and effective November 1, 1998, shall also mean the
Flex Kleen Division.
1.17 "Duall Division" shall mean, effective November 1, 1989, the Duall
Division of Met-Pro Corporation.
1.18 "Early Retirement Date" shall mean the first day of the calendar month
coincident with or next following the day on which a Participant (a)
attains age 55, and (b) is credited with three Years of Service.
1.19 "Effective Date" shall mean September 1, 2000.
1.20 "Eligible Employee" shall mean any salaried Employee of the Company
employed in a Division or by a Subsidiary who is not a Leased Employee
and who is not covered by a collective bargaining agreement, unless the
same provides for participation hereunder.
1.21 "Employee" shall mean anyone who is employed by the Company or by a
Subsidiary of the Company. Solely for the requirements prescribed in
Code Section 414(n)(3), Employee shall include Leased Employees within
the meaning of Code Sections 414(n)(2) and 414(o)(2) unless such Leased
Employees are covered by a plan described in Code Section 414(n)(5) and
such Leased Employees do not constitute more than 20 percent of the
recipient's non-highly compensated work force.
The following shall not be considered an Employee: (i) any individual
who is classified by the Company or a Subsidiary as an independent
contractor or self-employed individual, whether or not such individual
is subsequently determined to have been a common-law employee, or (ii)
any individual employed by the Company for a specified limited period of
time, or for the duration of a specified project, with no expectation of
long-term employment (until and unless such individual is specifically
notified by the Company in writing that he is being reclassified as a
regular Employee).
1.22 "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as it may from time to time be amended or supplemented. References to
any section of ERISA shall be to that section as it may be renumbered,
amended, supplemented or reenacted.
1.23 "Five Percent Owner" shall mean an Employee who owns more than five
percent of the Company (within the meaning of Section 416(i)(1)(B)(i) of
the Code).
1.24 "Flex Kleen" shall mean, effective November 1, 1998, the Flex Kleen
Division of Met-Pro Corporation.
-3-
<PAGE>
1.25 "Fund" shall mean the trust fund established for this Plan, administered
under the Trust Agreement, out of which benefits payable under this Plan
shall be paid.
1.26 "Fybroc Division" shall mean Fybroc Division of Met-Pro Corporation.
1.27 "Hour of Service" shall mean an hour for which:
(a) an Employee is directly or indirectly paid or entitled to
payment by the Company for the performance of employment duties,
or
(b) back pay, irrespective of mitigation of damages, is either
awarded or agreed to, or
(c) an Employee is directly or indirectly paid or entitled to
payment by the Company on account of a period of time during
which no duties are performed due to vacation, holiday, illness,
incapacity (including disability), jury duty, lay-off, leave of
absence, or military duty.
There shall be excluded from the foregoing those periods during which payments
are made or due under a plan maintained solely for the purpose of complying with
applicable workers' compensation, unemployment compensation, or disability
insurance laws. An Hour of Service shall not be credited where an employee is
being reimbursed solely for medical or medically related expenses.
Hours of Service shall not be credited twice. Hours of Service shall be credited
in accordance with the rules set forth in U.S. Department of Labor Regulations
2530.200b-2(b) and (c).
Hours of Service shall be credited for any individual considered a Leased
Employee for purposes of this Plan under Section 414(n) of the Code.
Notwithstanding the foregoing, the Committee may, in accordance with uniform
rules nondiscriminatorily applied, elect to credit Hours of Service using one or
more of the following equivalencies:
Basis Upon Which Records Credit Granted to Individual
Are Maintained For Period
-------------- ----------
Shift Actual Hours for Full Shift
Day 10 Hours of Service
Week 45 Hours of Service
Semi-Monthly Period 95 Hours of Service
Month 190 Hours of Service
-4-
<PAGE>
1.28 "Initial Anniversary Date" shall mean September 1, 1968 for Employees of
the Corporation and Systems Division (Non-Oxy), September 1, 1975 for
Employees of Fybroc Division and Keystone Filter Division, September 1,
1977 for Employees of Sethco Division and Stiles-Kem Division, and
September 1, 1979 for Employees of Systems Division (Oxy).
1.29 "Keystone Division" shall mean Keystone Division of Met-Pro Corporation.
1.30 "Late Retirement Date" shall mean the first day of the calendar month
coincident with or next following the day on which a Participant's
employment with the Company has ceased after the Participant's Normal
Retirement Date.
1.31 "Mefiag Division" shall include, effective July 1, 1993, only those
Employees of the Mefiag Division of Met-Pro Corporation who are employed
in the United States.
1.32 "Normal Retirement Age" shall mean exact age 65.
1.33 "Normal Retirement Date" shall mean the first day of the calendar month
coincident with or next following the day on which a Participant attains
age 65.
1.34 "Participant" shall mean a participant in this Plan as determined under
Article 2.
1.35 "Past Service Date" shall mean September 1, 1975 for Employees of the
Corporation, Systems (Non-Oxy) Division, Fybroc Division and Keystone
Filter Division; September 1, 1977 for Employees of Sethco Division and
Stiles-Kem Division; September 1, 1979 for Employees of Systems Division
(Oxy); September 1, 1986 for Employees of Dean Pump Division; effective
November 1, 1989, shall mean September 1, 1990 for Employees of Duall
Division; effective July 1, 1993, shall mean September 1, 1993 for
Employees of the Mefiag Division; and shall also mean February 1, 1997
for Employees of the Strobic Air Subsidiary. "Past Service Date" shall
mean September 12, 1996 for former Employees of the Strobic Air
Corporation (see also Article VI), and shall mean November 1, 1998 for
former Employees of the Flex Kleen Division.
1.36 "Plan" shall mean the retirement plan set forth in this document as it
may from time to time be amended or supplemented.
1.37 "Plan Year" shall mean a twelve-month period which shall commence each
September 1 and end on the next following August 31.
1.38 "Pre-Retirement Death Benefit" shall mean the death benefit payable
under Article VII to the beneficiary of a Participant who dies before
his Annuity Starting Date.
-5-
<PAGE>
1.39 "Prior Plan" shall include the Fybroc, Inc. Salaried Pension Plan, the
Keystone Filter Salaried Pension Plan, and the Stiles-Kem Corporation
Defined Benefit Plan as in effect on April 14, 1978 immediately prior to
their amendment and replacement in entirety by this Plan on April 15,
1978. "Prior Plan" shall also include the Oxy-Catalyst, Inc. Employees'
Pension Plan as in effect June 30, 1980 immediately prior to its
amendment and replacement in entirety by this Plan on July 1, 1980.
1.40 "Qualified Domestic Relations Order" is a domestic relations order that
meets the requirements as defined in Section 414(p) of the Code.
1.41 "Qualified Joint and Survivor Annuity" shall mean an annuity for the
life of a Participant with a survivor annuity for the life of the
Participant's Spouse where the survivor annuity is 50 percent of the
amount of the annuity payable during the joint lives of the Participant
and the Participant's Spouse and the joint and survivor annuity is at
least the Actuarial Equivalent of the most valuable form of benefit
under the Plan payable on his Annuity Starting Date.
1.42 "Qualified Pre-Retirement Survivor Annuity" shall mean a survivor
annuity for the life of the Participant's Spouse. Each payment under the
survivor annuity shall be equal to:
(a) in the case of a Participant who dies after his Early Retirement
Date and has not had a Separation from Service, the survivor
annuity the Participant's Spouse would have received if the
Participant had a Retirement on the day before his death and
received distribution of benefits in the form of an immediate
Qualified Joint and Survivor Annuity, or
(b) in the case of a Participant who dies on or before his Early
Retirement Date or has had a Separation from Service, the
survivor annuity the Participant's Spouse would have received if
the Participant had a Separation from Service on the earlier of
his actual Separation from Service and the day of his death,
survived to the later of his Early Retirement Date and his date
of death, received distribution of benefits in the form of a
Qualified Joint and Survivor Annuity and died on the day after
the later of his Early Retirement Date and his date of death.
1.43 "Regulations" shall mean the Income Tax Regulation as promulgated by the
Secretary of the Treasury or his delegate, and amended from time to
time.
1.44 "Rehired Employee" shall mean an Employee who is re-employed by the
Company after Separation from Service.
1.45 "Retirement" shall mean a Participant's termination of employment on or
after his Normal or Early Retirement Date.
1.46 "Retirement Benefit" shall mean the monthly benefit that accrues to a
Participant under Article V.
-6-
<PAGE>
1.47 "Separation From Service" of an Employee shall mean the time when the
employer-employee relationship with the Company is terminated for any
reason, including but not limited to, a termination by resignation,
discharge, death, total disability, or retirement.
1.48 "Sethco Division" shall mean Sethco Division of Met-Pro Corporation.
1.49 "Six Months of Service" shall mean the first consecutive six-month
period after the Employee's date of hire with the Company or an acquired
company or return to service in which the Employee completes at least
500 Hours of Service.
1.50 "Spouse" shall mean the person to whom a Participant is married on the
applicable date.
1.51 "Stiles-Kem Division" shall mean Stiles-Kem Division of Met-Pro
Corporation.
1.52 "Strobic Air Subsidiary" shall mean, effective February 1, 1997, the
Strobic Air Corporation, a subsidiary of the Met-Pro Corporation.
1.53 "Subsidiary" shall mean those subsidiaries of the Company who are
participating in the Plan and shall include the Strobic Air Subsidiary.
1.54 "Systems Division (Non-Oxy)" shall include only those Employees of the
Systems Division of Met-Pro Corporation who were not employees of
Oxy-Catalyst, Inc. on the date of its acquisition by the Company.
1.55 "Systems Division (Oxy)" shall include only those Employees of Systems
Division of Met-Pro Corporation who were employees of Oxy-Catalyst, Inc.
on the date of its acquisition by the Company.
1.56 "Trust" shall mean the trust established or maintained under the Trust
Agreement.
1.57 "Trust Agreement" shall mean the agreement between the Company and the
Trustee which provides for the establishment or continuation of the
Trust in accordance with Article XII.
1.58 "Trustee" shall mean the Bank, Trust Company or Insurance Company
designated as provided under Article XI.
1.59 "Vested Interest" shall mean the nonforfeitable portion of a
Participant's Normal Retirement Benefit.
1.60 "Years of Credited Service" shall mean the number of full and partial
Plan Years counted with respect to determining a Participant's Accrued
Benefit under the Plan, as further described in Article III.
-7-
<PAGE>
1.61 "Years of Service" shall mean the number of Plan Years counted with
respect to determining a Participant's eligibility for benefits and
vested status under the Plan, as further described in Article III and
Article VI.
-8-
<PAGE>
ARTICLE II
TRANSITION AND ELIGIBILITY TO PARTICIPATE
-----------------------------------------
2.1 Rights Affected. Unless specified to the contrary, each Participant who
---------------
has retired or has terminated service with the Company before the
Effective Date shall receive no additional rights as a result of this
amended and restated Plan, but shall have his rights and benefits
determined solely under the Plan as in effect before the Effective Date.
Any former Employee who has terminated employment before the Effective
Date and who is reemployed as an Employee on or after the Effective Date
shall have the rights and benefits provided hereunder.
2.2 Preservation of Plan Benefits. Subject to the maximum benefit
---------------------------------
limitations, in no event shall the Accrued Benefit of a Participant at
any time after the Effective Date be less than the amount of the
Participant's Accrued Benefit on the day preceding the Effective Date.
2.3 Eligibility to Participate. Each Employee who was a Participant in the
---------------------------
Plan immediately prior to the Effective Date and who remains an Eligible
Employee of the Company on the Effective Date shall be a Participant
hereunder as of such date. Each other Eligible Employee shall become a
Participant on the later of (a) the September 1 coincident with or next
following the date he completed Six Months of Service, and (b) the date
he qualified as an Eligible Employee, but not later than six months
following the date he completes 1000 Hours of Service in a consecutive
twelve-month period. Effective as of September 1, 2000, an Eligible
Employee shall become a Participant on the later of his date of hire or
the date such employee qualifies as an Eligible Employee.
2.4 Cessation of Participant. A Participant shall cease to be a Participant
------------------------
on the earliest of the following three dates:
(a) his date of death,
(b) the date all distributions to the Participant have been made,
(c) the date he incurs a Break in Service provided that at that time
he has no entitlement to non-forfeitable benefits under the
Plan.
2.5 Participation Upon Reemployment. If a Rehired Employee who is not a
---------------------------------
Participant before he is rehired is an Eligible Employee as of the date
he is reemployed, and his Break in Service caused prior service to be
disregarded, then the Employee shall be treated as a new Employee. If a
Rehired Employee who was not a Participant before he is rehired or who
was a Participant before rehire is an Eligible Employee as of the date
he is reemployed and his Break in Service did not cause prior service to
be disregarded, then the employee shall again become a Participant on
the date he was rehired.
-9-
<PAGE>
2.6 Plant Shutdown. Effective December 31, 1996 the Systems Division was
---------------
shut down. Each Participant in the Met-Pro Corporation Negotiated
Pension Plan is a Participant in this Plan effective June 1, 1997. All
benefit provisions applicable to such Participants will be determined
under the Met-Pro Corporation Negotiated Pension Plan.
-10-
<PAGE>
ARTICLE III
SERVICE AND CREDITED SERVICE, TRANSFERS
---------------------------------------
3.1 Past Service shall mean full calendar years and full calendar months of
------------
service on an elapsed time basis (with a full month equal to 1/12 of a
year) completed by an Eligible Employee after his date of employment
with the Company or, if applicable, his earlier date of employment with
a company that has been acquired by the Company, and before his Past
Service Date.
3.2 Future Service for Purposes of Meeting Eligibility Requirements for
------------------------------------------------------------------------
Benefits and Vesting. An Employee shall accrue a Year of Service for
----------------------
each Plan Year commencing on or after his Past Service Date during which
he is credited with 1,000 or more Hours of Service.
3.3 Full Years of Future Credited Service for Benefit Accrual. Except as
------------------------------------------------------------
provided otherwise in this Article, an Employee shall accrue a full year
of Future Credited Service for each Plan Year commencing on or after his
Past Service Date in which he is an Eligible Employee for the full Plan
Year and is credited with 1,000 or more Hours of Service.
3.4 Partial Years of Future Credited Service for Benefit Accrual. With
-----------------------------------------------------------------
respect to any Plan Year commencing on or after an Employee's Past
Service Date and during which the Employee is an Eligible Employee for
less than the full Plan Year, the Employee shall accrue 1/12 of a year
of Future Credited Service for each month during which he is an Eligible
Employee for the full month and completes at least 83-1/3 Hours of
Service. Notwithstanding the above, a Participant who transfers out of
the Plan after the 15th day of a month shall accrue 1/12 of a year of
Future Credited Service for the month that he transfers out of the Plan
as long as he is an Employee for the full month and completes at least
83-1/3 Hours of Service, and a Participant who transfers into the Plan
before the 16th day of the month shall accrue 1/12 of a year of Future
Credited Service for the month that he transfers into the Plan, provided
that he is an Employee for the full month and completes at least 83-1/3
Hours of Service.
3.5 Credited Service shall mean the total of an Employee's Past Service and
-----------------
his full and partial years of Future Credited Service, subject to the
following adjustments for Employees of the Corporation Division (former
Strobic Air Corporation employees), Dean Pump Division, Duall Division,
Mefiag Division, Sethco Division, Stiles-Kem Division, and Systems
Division (Oxy), the Strobic Air Subsidiary and the Flex Kleen Division:
(a) Dean Pump Division - All Past Service accumulated before October
1, 1985 shall not be taken into account in determining the
amount of Credited Service.
-11-
<PAGE>
(b) Duall Division - Effective November 1, 1989, all Past Service
accumulated before July 1, 1988 shall not be taken into account
in determining the amount of Credited Service.
(c) Mefiag Division - Effective July 1, 1993, all Past Service
accumulated before July 1, 1993 shall not be taken into account
in determining the amount of Credited Service.
(d) Sethco Division - All Past Service accumulated before July 1,
1977 shall not be taken into account in determining the amount
of Credited Service.
(e) Stiles-Kem Division - All Past Service accumulated before August
1, 1970 shall not be taken into account in determining the
amount of Credited Service.
(f) Systems Division (Oxy) - All Past Service accumulated before
January 1, 1970 shall not be taken into account in determining
the amount of Credited Service.
(g) Corporation Division (former Strobic Air Corporation employees)
- All Past Service accumulated before October 1, 1996 by former
employees of Strobic Air Corporation shall not be taken into
account in determining the amount of Credited Service.
(h) Strobic Air Subsidiary - All Past Service accumulated before
February 1, 1997 shall not be taken into account in determining
the amount of Credited Service.
(i) Flex Kleen Division - All Past Service accumulated before
November 1, 1998 shall not be taken into account in determining
the amount of Credited Service.
3.6 Years of Service shall mean the total of an Employee's Past Service and
----------------
his Future Service for Eligibility for Benefits and Vesting, plus any
period of eligibility and vesting service accumulated by the Employee
under the provisions of another of the Company's pension plans or Prior
Plans, provided that, for Employees of Sethco Division, any Past Service
accumulated before August 1, 1971 shall not be taken into account in
determining Years of Service.
3.7 Transfers. When a Participant transfers to another pension plan of the
---------
Company, his continuity of service for eligibility and vesting shall not
be affected in any way whatsoever. His Years of Service, as calculated
for purposes of this Plan, shall include Years of Service as calculated
to date of transfer, plus all Years of Service subsequently earned in
the plan to which his is transferred. Similarly, his Years of Service
for purposes of the plan to which he is transferred shall include all
Years of Service earned under this Plan.
-12-
<PAGE>
3.8 Breaks in Service.
------------------
(a) Any Plan Year in which a Participant is not credited with more
than 500 Hours of Service shall constitute a one-year Break in
Service; provided, however, that if an Employee is absent for
the following reasons, he shall be credited with an Hour of
Service, for purposes of this Section only, for each Hour of
Service he would have received if he had continued in the active
employ of the Company during the following periods of absence:
(i) layoff for a period not in excess of one year;
(ii) leave of absence with the approval of the Committee for
a period not in excess of one year, unless extended by
the Committee;
(iii) military service under leave granted by the Company or
required by law, provided the absent Participant returns
to service with the Company within 90 days of his
release from active military duty or any longer period
during which his right to reemployment is protected by
law.
(b) Service credited under this Section shall not be credited for
any other purpose under the Plan unless such service is
comprised of Hours of Service.
(c) If a Participant is absent from work by reason of pregnancy,
childbirth, adoption, or for purposes of the care of such
Participant's child immediately after birth or adoption, such
Participant shall be credited solely for purposes of this
Section with sufficient Hours of Service to avoid a Break in
Service in the Plan Year in which the absence commences or, if
the Participant already has more than 500 Hours of Service in
such Plan Year, the immediately following Plan Year. Hours of
Service during such absence shall be credited in an amount equal
to the Hours of Service the Participant would have had but for
such absence or, if such hours cannot be determined, at the rate
of eight hours per normal workday.
3.9 Restoration of Service.
-----------------------
(a) A Participant who had a Vested Interest under Article VI and who
incurs a Break in Service shall have his pre-break and
post-break service with the Company aggregated for purposes of
Sections 3.5 and 3.6 on his reemployment by the Company.
(b) A Participant who does not have a Vested Interest under Article
VI and who incurs a Break in Service shall have his pre-break
and post-break service with the Company aggregated for purposes
of Sections 3.5 and 3.6 on his reemployment within a period of
less than five consecutive Breaks in Service. If the consecutive
Breaks in Service are equal to or in excess of five, he shall
receive no credit for his pre-break service for purposes of
Sections 3.5 and 3.6.
-13-
<PAGE>
3.10 Credit for Military Service. Effective as of December 12, 1994,
------------------------------
notwithstanding any provision of this Plan to the contrary,
contributions, benefits and service credit with respect to qualified
military service will be provided in accordance with Section 414(u) of
the Internal Revenue Code.
-14-
<PAGE>
ARTICLE IV
ELIGIBILITY FOR BENEFITS
------------------------
4.1 Normal Retirement Benefit. A Participant shall be eligible for normal
---------------------------
retirement benefits on his Normal Retirement Date.
4.2 Early Retirement Benefit. A Participant shall be eligible for early
--------------------------
retirement benefits as of his Early Retirement Date.
4.3 Late Retirement Benefit. A Participant shall be eligible for late
-------------------------
retirement benefits on his Late Retirement Date.
4.4 Deferred Vested Benefit. A Participant who has completed three or more
------------------------
Years of Service and who, at the time of Separation from Service, is not
eligible for a benefit under Sections 4.1, 4.2 or 4.3 of this Plan,
shall be eligible for deferred vested retirement benefits.
-15-
<PAGE>
ARTICLE V
CALCULATION OF BENEFITS
-----------------------
5.1 General. The retirement benefits for a Participant that are payable
-------
under the single life form of payment shall be determined under this
Article V subject to the limitations set forth in Article IX. Each
Participant shall be entitled to the non-forfeitable portion, as
determined under Article VI of his retirement benefit and shall have no
right to any portion of his retirement benefit which is not
nonforfeitable under Article VI. Adjustments for forms of payment other
than the single life form shall be made in accordance with the
provisions of Article VIII.
5.2 Accrued Monthly Pension. On any given date, the Accrued Monthly Pension
-----------------------
for a Participant shall be determined as follows:
For a Participant whose date of hire with the Company or an acquired
Company (or whose date of rehire in the case of a Participant who
terminates and forfeits service in accordance with Section 3.9 and is
subsequently rehired) is on or before December 15, 1982 and whose Past
Service Date is prior to September 1, 1986, such benefit shall be equal
to the greater of 1/12 of [(a) + (b)], or (c) or (d) as set forth below
in this Section 5.2.
For a Participant whose date of hire with the Company or an acquired
company (or whose date of hire in the case of a Participant who
terminates and forfeits service in accordance with Section 3.10 and is
subsequently rehired) is after December 15, 1982, or whose Past Service
Date is on or after September 1, 1986, such benefit shall be equal to
the greater of (c) or (d) as set forth below in this Section 5.2.
(a) 0.75 percent of the Participant's base wage or salary on his
Initial Anniversary Date up to $7,800 and 1.20 percent of such
base wage or salary in excess of $7,800, multiplied by Credited
Service prior to his Initial Anniversary Date, plus
(b) For each Plan Year beginning with the Plan Year commencing on
the Participant's Initial Anniversary Date, and ending with the
Plan Year beginning September 1, 1988, 0.75 percent of base wage
or salary up to $7,800 and 1.75 percent of base wage or salary
in excess of $7,800, multiplied by the fraction of a year of
Credited Service completed by the Participant in the Plan Year
in question, plus 1.65 percent of base wage or salary earned in
each Plan Year beginning on or after September 1, 1989.
-16-
<PAGE>
Annual base wage or salary for Plan Years beginning before September 1,
1989 means the annual base wage or salary in effect on the September 1,
beginning the Plan Year in question, except that when necessary, a
Participant's annual base wage or salary on the September 1 following
his date of hire shall be used in determining the amount of Accrued
Benefit attributable to his first partial year of Credited Service. For
the period beginning September 1, 1989, Compensation, as defined in
Section 1.10 is used in lieu of annual base wage or salary.
(c) Credited Service multiplied by the rate in effect on the last
day that the Participant accrued Credited Service under the
Plan. Notwithstanding the above, effective February 27, 1995, if
the Participant transfers out of the Plan and into another of
the Company's defined benefit pension plans, the rate used to
calculate the monthly pension will be the rate in effect on the
last day that the Participant accrued credited service under any
of the Company's defined benefit pension plans.
The rates in effect are as follows:
Rate Effective Date
---- --------------
9.00 September 1, 1984 - June 14, 1987
12.00 June 15, 1987 - June 14, 1988
14.00 June 15, 1988 - June 14, 1989
16.00 June 15, 1989 - June 14, 1990
18.00 June 15, 1990 - June 30, 1994
20.00 July 1, 1994 - April 30, 1995
21.00 May 1, 1995 - September 30, 1996
22.00 October 1, 1996 and thereafter
(d) One percent of the Participant's Average Monthly Compensation
multiplied by Credited Service or, in the case of an individual
who is or becomes a Participant on or after September 1, 2000,
if greater, a monthly benefit of $62.50, payable commencing on
the Participant's Normal Retirement Date.
(e) For Participant's with Compensation for a Plan Year prior to
September 1, 1994 in excess of $150,000, in no event will such
Participant's benefit determined according to (a) and (b) and
(d) of this Section 5.2 be less than the sum of:
(i) the Participant's Accrued Benefit on August 31, 1994
frozen in accordance with Section 1.401(a)(4)-13 of the
Regulations and
(ii) the Participant's Accrued Benefit determined using the
benefit formula applicable on or after September 1, 1994
with respect to Credited Service earned on or after
September 1, 1994.
-17-
<PAGE>
5.3 Normal Retirement Benefit. A Participant who is eligible for normal
---------------------------
retirement benefits shall receive a monthly pension equal to his Accrued
Monthly Pension benefit on such retirement date.
5.4 Early Retirement Benefit. A Participant who is eligible for early
--------------------------
retirement benefits, upon retirement, shall receive either of the
following:
(a) A monthly pension equal to the product of (i) his Accrued
Monthly Pension as of his date of Separation from Service, and
(ii) his vesting percentage as of his date of Separation of
Service with such product, reduced by 5/9 percent for each of
the first 60 fall calendar months, and 5/18 percent for each of
the next 60 full calendar months by which the commencement of
his benefits precedes his Normal Retirement Date.
(b) A deferred monthly pension equal to the product of (a) his
Accrued Monthly Pension as of the date of his Separation from
Service, and (b) his vesting percentage as of the date of his
Separation from Service with payment commencing at his Normal
Retirement Date.
5.5 Deferred Vested Benefit. A Participant who is eligible for deferred
-------------------------
vested retirement benefits shall receive either of the following:
(a) A deferred monthly pension with payments commencing any time on
or after his Early Retirement Date equal to the product of (i)
his Accrued Monthly Pension as of the date of his Separation of
Service, and (ii) his vesting percentage as of the date of his
Separation of Service with such product, reduced by 5/9 percent
for each of the first 60 full calendar months, and 5/18 percent
for each of the next 60 full calendar months by which the
commencement of his benefits precedes his Normal Retirement
Date, and
(b) A deferred monthly pension equal to the product of (i) his
Accrued Monthly Pension as of the date of his Separation of
Service, and (ii) his vesting percentage as of the date of his
Separation of Service with payment commencing on his Normal
Retirement Date.
5.6 Late Retirement Benefit. A Participant who is eligible for late
-------------------------
retirement benefits shall receive a monthly pension equal to the greater
of (a) his Accrued Monthly Pension benefit on his Normal Retirement Date
or (b) the Actuarial Equivalent of his Normal Retirement Benefit except
that the benefit provided under Appendix B is not subject to any
actuarial increase that would otherwise result due to the benefit
commencing after his Normal Retirement Date, except to the extent
required by law.
-18-
<PAGE>
5.7 Suspension of Benefits
----------------------
(a) (i) In the event that a Participant is employed in qualified
reemployment or qualified employment, the benefits
otherwise payable to the Participant shall be suspended
for each calendar month in which he continues his
qualified reemployment or qualified employment. The
rules relating to such a suspension of benefits and
their subsequent resumption are described in this
Section.
(ii) The Committee shall notify the Participant by personal
delivery or first class mail of the suspension of his
benefits during the first month in which such suspension
of benefits occurs if required in accordance with the
notification requirements of Department of Labor
Regulations Section 2530.203-3(b)(4).
(iii) Each Participant receiving benefits under the Plan shall
be required to give notice to the Committee of any
employment relationship which such Participant has with
the Company. The Committee shall have the right to use
all reasonable efforts to determine whether such
employment constitutes qualified reemployment or
qualified employment. The Committee shall also have the
right to require the Participant to provide information
sufficient to prove that such employment does not
constitute qualified reemployment or qualified
employment.
(iv) A Participant may, by written request, ask the Committee
to make a determination as to whether specific
contemplated employment constitutes qualified
reemployment or qualified employment. The Committee
shall respond to such request in writing within 60 days
of the Committee's receipt of the request.
(v) Subject to Sections 8.3 and 8.8, benefit payments to the
Participant will resume (or commence) no later than the
first day of the third calendar month following the
month in which his qualified reemployment or qualified
employment ceases or, if later, the first day of the
calendar month following receipt by the Committee of the
Participant's notice that his qualified reemployment or
qualified employment has ceased. The initial resumption
payment shall include payment for the current month and
for all previous calendar months since the cessation of
the Participant's qualified employment or reemployment.
(vi) The Committee shall offset resumed benefits by an amount
equal to any benefits which were paid to the Participant
with respect to a calendar month in which the
Participant was engaged in qualified reemployment or
qualified employment. However, the offset to any monthly
benefit, other than the initial resumption payment,
shall not exceed twenty-five percent (25%) of such
monthly benefit. Any remaining offset shall be applied
to benefits payable in subsequent months.
-19-
<PAGE>
(b) In the event that a Participant is employed or reemployed by the
Company under any circumstances other than as described in
Subsection (a), the benefits otherwise payable to the
Participant shall be continued during such period of employment
or reemployment.
(c) Qualified reemployment shall mean the reemployment of a
Participant by the Company after his Normal Retirement Date in
such a capacity that (and provided that) the Participant
receives or is entitled to be paid for at least 40 Hours of
Service (not including Hours of Service credited as a result of
back pay) during a calendar month. Notwithstanding the above,
for Participants that attain age 70 1/2 in calendar years before
January 1, 2003, qualified reemployment shall not include
employment on or after the April 1st following the calendar year
in which the Participant attains age 70 1/2. In addition,
effective January 1, 2002, qualified reemployment shall not
include employment with respect to a Participant that makes an
election to commence benefits under Section 8.3(b).
(d) Qualified employment shall mean the continued employment of a
Participant after his Normal Retirement Date in such a capacity
that (and provided that) the Participant receives or is entitled
to be paid for at least 40 Hours of Service (not including Hours
of Service credited as a result of back pay) during a calendar
month. Notwithstanding the above, for Participants that attain
age 70 1/2 in calendar years before January 1, 2003, qualified
employment shall not include employment on or after the April
1st following the calendar year in which the Participant attains
age 70 1/2. In addition, effective January 1, 2002, qualified
employment shall not include employment with respect to a
Participant that makes an election to commence benefits under
Section 8.3(b).
-20-
<PAGE>
ARTICLE VI
VESTING
-------
If a Participant has been credited with three or more Years of Service, a
portion of the Participant's Accrued Benefit shall be nonforfeitable. The
nonforfeitable portion shall be an amount equal to a Participant's Accrued
Benefit multiplied by a percentage based upon the number of Years of Service, as
follows:
Number of Years of Service Vesting Percentage
-------------------------- ------------------
0 0
1 0
2 0
3 20
4 40
5 60
6 80
7 or more 100
Notwithstanding the above, the Vesting Percentage of a Participant who has
attained his Normal Retirement Age shall be 100 percent.
Also notwithstanding the above, each individual who was an employee of Strobic
Air Corporation on the date of acquisition by the Company and who continued his
employment with the Company and became a Participant in the Plan shall have his
Vesting Percentage equal to 100% if he had attained age 55 on or before the
September 12, 1996 date of acquisition.
-21-
<PAGE>
ARTICLE VII
PRE-RETIREMENT DEATH BENEFITS
-----------------------------
7.1 Pre-Retirement Survivor Death Benefit
---------------------------------------
In the event of a death of a Participant who (a) has a Vested Interest,
and (b) has not yet had an Annuity Starting Date, the Participant's
designated beneficiary shall receive a Pre-Retirement Survivor Death
Benefit. For purposes of this Article, a married Participant's
designated beneficiary shall be the Participant's Spouse. For Employees
who are hired by the Company or a Subsidiary on or after September 1,
2001, the provisions of this Section 7.1 will apply only if the
Participant is married on his or her date of death.
7.2 Amount and Form of Pre-Retirement Survivor Death Benefit
--------------------------------------------------------
Subject to the following, the Participant's Pre-Retirement Survivor
Death Benefit shall be paid to the Participant's Spouse or designated
beneficiary in the form of an annuity for the Spouse's or designated
beneficiary's life. The amount of the monthly annuity shall be such that
the present value of the Pre-Retirement Survivor Death Benefit shall be
equal to the present value of the deceased Participant's vested Accrued
Benefit on his date of death. Notwithstanding the above, if the
Participant is married, the present value of the monthly annuity shall
not be less than the present value of a Qualified Pre-Retirement
Survivor Annuity. If the Actuarial Equivalent present value of a
Participant's Pre-Retirement Survivor Death Benefit as of the Annuity
Starting Date does not exceed $5,000, the method of distribution to the
Participant's Spouse or designated beneficiary shall be as a single cash
distribution which is the Actuarial Equivalent of the Qualified
Pre-Retirement Survivor Annuity.
7.3 Timing of Distribution
----------------------
Distribution of a Participant's Pre-Retirement Survivor Death Benefit
shall commence as of the Annuity Starting Date of the Participant's
Spouse or designated beneficiary. The Annuity Starting Date of the
Participant's Spouse or designated beneficiary shall be the earliest
date which the Participant could have begun to receive benefits if he
had survived (the first day of the month following the Participant's
death if the Participant had been eligible at the time of his death to
begin receiving benefits). Notwithstanding the above, (1) if the
Participant's Pre-Retirement Survivor Death Benefit is not payable in
the form of a Qualified Pre-Retirement Death Benefit, then the Annuity
Starting Date of the Participant's designated beneficiary shall be the
first day of the month coincident with or next following the
Participant's date of death, and (2) if the Actuarial Equivalent present
value of his Pre-Retirement Survivor Death Benefit does not exceed
$5,000, the Annuity Starting Date of the Participant's designated
beneficiary shall be the first day of the month coincident with or next
following the Participant's death.
-22-
<PAGE>
7.4 Required Distribution
---------------------
If a Participant's Pre-Retirement Survivor Death Benefit is paid in the
form of a single cash payment, the Participant's entire Pre-Retirement
Survivor Death Benefit shall be distributed to his designated
beneficiary within five years of the Participant's death. If a
Participant's Pre-Retirement Survivor Death Benefit is distributed in
the form of an annuity, distribution shall commence by the December 31
of the year after the year of the Participant's death or, if later, in
the case of a married Participant, the December 31 of the year the
Participant would have attained age 70 1/2. Such Pre-Retirement Survivor
Death Benefit must be distributed over a period not extending beyond the
life expectancy of the Spouse or designated beneficiary.
-23-
<PAGE>
ARTICLE VIII
DISTRIBUTION
------------
8.1 Optional Forms of Benefits. The Participant may elect, subject to
----------------------------
Section 8.7, to receive distribution of his Retirement Benefit (if the
Actuarial Equivalent present value of such benefit as of the
Participant's Annuity Starting Date or at the time of any prior
distribution is in excess of $5,000) by one of the following methods:
(a) a Single Life Annuity - an annuity payable in equal monthly
installments to the retired Participant for his life; or
(b) a Qualified Joint and Survivor Annuity - an annuity payable in
monthly installments to the Participant for his life and with
fifty percent (50%) of the amount of such monthly installment
payable after his death of the Participant to the Spouse of such
Participant, if then living, for the life of such Spouse. The
benefit payable to the Participant and co-pensioner under this
form of payment shall be the Actuarial Equivalent of the Single
Life form of payment; or
(c) a Single Life Annuity with a 60, 120, or 180 month period
certain feature - an annuity payable in equal monthly
installments to the retired Participant for his life, with 60,
120, or 180 monthly payments guaranteed. The benefits payable
shall be the Actuarial Equivalent of the Single Life form of
payment; or
(d) a Joint and Survivor Annuity for the life of the Participant
with a survivor annuity for the life of the Participant's named
co-pensioner equal to 50 percent or 100 percent of the amount
payable to the Participant. The benefit payable to the
Participant and co-pensioner under this form of payment shall be
the Actuarial Equivalent of the Single Life form of payment.
8.2 Small Benefit Payments. If the Actuarial Equivalent present value of the
----------------------
Retirement Benefit is less than $5,000, such benefit shall be paid in a
single lump sum payment.
Notwithstanding the above, effective for distributions occurring on or
after March 22, 1999, if a Participant has begun to receive
distributions pursuant to an optional form of benefit under which at
least one scheduled periodic distribution has not yet been made, and if
the present value of the Participant's benefit at the time of the first
distribution exceeded the cash-out limit set forth above, then the
present value of the Participant's benefit is deemed to continue to
exceed such cash-out limit.
-24-
<PAGE>
8.3 Timing of Distribution; Annuity Starting Date.
----------------------------------------------
(a) Distribution of a Participant's Retirement Benefit shall
commence as of his Annuity Starting Date. A Participant's
Annuity Starting Date shall be the earliest of (1) the first day
of the month coincident with or next following the day of the
Participant's Retirement, (2) the first day of the month
coincident with or next following the day of the Participant's
Separation from Service if as of that date the Actuarial
Equivalent present value of his Vested Interest does not exceed
$5,000, (3) the first day of the month coincident with or next
following the Participant's Normal Retirement Date if the
Participant has a Separation from Service prior to that time,
unless the Participant elects under Section 8.4 to commence to
receive distribution prior to his Normal Retirement Date, and
(4) effective for all Participants (except Participants that
attained age 70 1/2after January 1, 1988 and before January 1,
2003, or Participants that are Five Percent Owners during the
Plan Year ending with or within the calendar year in which they
attain age 70 1/2or any subsequent Plan Year), the first day of
April immediately following the calendar year in which the
Participant retires or attains age 70 1/2, whichever occurs
later. For Participants that attained age 70 1/2after January 1,
1988 and prior to January 1, 2003, and for Five Percent Owners
as described above, the required beginning date of Plan benefits
is April 1 of the calendar year following the calendar year in
which the Participant attains age 70 1/2. In no event, unless
the Participant elects otherwise, shall distribution of a
Participant's Vested Interest commence later than 60 days after
the latest of the last day of the Plan Year in which occurs (i)
the Participant's Retirement, and (ii) the Participant's
attainment of age 65.
(b) Notwithstanding the above, effective January 1, 2002, a
Participant that has completed twenty years of Credited Service
and attained age 70 who is an active Employee may elect (subject
to the minimum distribution requirements of Sections 8.3(a) and
8.8) to commence benefits as of the first day of the month
following attainment of age 70 or as of the first day of any
month thereafter while an active Employee. The calculation of
the benefit payable to such a Participant that makes an election
under this subsection shall be made in accordance with Section
5.6. The first date for which benefits are payable due to an
election under this subsection shall be considered the
Participant's Annuity Starting Date.
8.4 Election to Receive Distribution Before Normal Retirement Date. A
--------------------------------------------------------------------
Participant who (a) has a Separation from Service before his Normal
Retirement Date and (b) has a Vested Interest, the Actuarial Equivalent
present value of which exceeds $5,000 as of the Participant's Annuity
Starting Date, may elect to have distribution of his Retirement Benefit
commence before his Normal Retirement Date. In that event, distribution
shall commence as of the first day of any month following the election,
but not prior to a Participant's Early Retirement Date.
-25-
<PAGE>
8.5 Qualified Joint and Survivor Annuity for Married Participants
-------------------------------------------------------------
(a) Subject to subsection (b), a Participant who is married on his
Annuity Starting Date shall receive distribution of his
Retirement Benefit in the form of a Qualified Joint and Survivor
Annuity, unless the Participant has previously waived his right
to receive benefits in this form. The waiver must be executed
and consented to by the Participant's Spouse in accordance with
Section 8.7. Both the Participant's waiver and the Spouse's
consent must state the particular optional form of benefit to be
distributed. Alternatively, the Spouse's consent may permit the
Participant to elect any optional form of benefit available
under the Plan. Such a general consent must acknowledge that the
Spouse has voluntarily relinquished rights to limit consent to a
specific form of benefit. A Participant's waiver of a Qualified
Joint and Survivor Annuity under this Section 8.5 may be revoked
at any time before the Participant's Annuity Starting Date and,
once revoked, may be made again before that date. A Spouse's
consent to the waiver once given may be revoked before the
Annuity Starting Date.
(b) In the case of a Participant (i) who is married for less than
one year on his Annuity Starting Date, (ii) receives
distribution of his Retirement Benefit in the form of a
Qualified Joint and Survivor Annuity and (iii) does not remain
married to his Spouse for at least one year, such Spouse shall
lose all survivor rights. In such event the Participant shall be
entitled to receive distribution of his Retirement Benefit in
any other form under Section 8.1.
8.6 Notification of Right to Waive Qualified Joint and Survivor Annuity.
-----------------------------------------------------------------------
Within the period beginning no earlier than 90 days, and no later than
30 days before the Participant's Annuity Starting Date the
Administrative Committee shall provide each Participant with a notice of
the Participant's right to elect to waive his right to receive
distribution of his Retirement Benefit in the form of a Qualified Joint
and Survivor Annuity. The notice shall contain an explanation, in
nontechnical language, of (a) the terms and conditions of the election
and its effect upon the Participant's Retirement Benefit (in terms of
dollars per annuity payment), (b) the requirement that the Participant's
Spouse must consent to the election in accordance with Section 8.7, (c)
the Participant's right to revoke the election in the manner prescribed
in regulations promulgated by the Secretary of the Treasury and (d) a
general description of the eligibility conditions and other features of
the optional forms of benefit under the Plan and sufficient information
to explain the relative values of these optional forms of benefits.
The Annuity Starting Date may not occur before the expiration of the 30
day period beginning on the date a written explanation describing the
terms of the Qualified Joint and Survivor Annuity is provided to the
Participant; provided however that the Annuity Starting Date may be less
than 30 days after receipt by the Participant of the written explanation
provided: (a) the Participant has been provided with information that
clearly indicates that the Participant has at least 30 days to consider
whether to waive the Qualified Joint and Survivor Annuity; (b) the
Participant is permitted to revoke any affirmative distribution election
at least until the Annuity Starting Date or , if later, at any time
-26-
<PAGE>
prior to the expiration of the 7-day period that begins the day after
the explanation of the Qualified Joint and Survivor Annuity is provided
to the Participant; and (c) the Annuity Starting Date is a date after
the date that the written explanation was provided to the Participant.
8.7 Spousal Consent. A Participant's waiver of a Qualified Joint and
----------------
Survivor Annuity described in Section 8.6 shall be valid only if the
Participant's Spouse executes a written consent to that election
acknowledging the effect of the election and the consent is witnessed by
a notary public or Plan Administrator. The Spouse's consent is not
required if (a) the Participant's Spouse cannot be located or for such
other circumstances as may be provided in regulations promulgated by the
Secretary of the Treasury, (b) the Participant is legally separated from
the Spouse or (c) the Participant has been abandoned by his or her
Spouse (within the meaning of local law) and the Participant has a court
order to that effect. A Participant's waiver of a Qualified Joint and
Survivor Annuity shall be effective only with respect to the Spouse who
consents to it as provided in this Section 8.7.
8.8 Minimum Distribution Requirements.
----------------------------------
(a) Notwithstanding any provision of this Plan to the contrary, all
distributions under the Plan shall be made in accordance with
Section 401(a)(9) of the Code and the regulations promulgated by
the Secretary of the Treasury thereunder.
(b) In the case of a Participant who is a Five Percent Owner, or a
Participant that attains age 70 1/2prior to January 1, 2003, or
a Participant that makes an election to commence benefits under
Section 8.3(b), if such a Participant remains an Employee after
attainment of age 70 1/2(or age 70 for a Participant electing
under Section 8.3(b)) and has commenced to receive Retirement
Benefits from the Plan, such Participant shall have such
benefits increased as of the first day of each calendar year to
reflect any additional Credited Service accrued during the Plan
Year ending immediately before the first day of that calendar
year. If a Participant who is not a Five Percent Owner attains
age 70 1/2after January 1, 2003, the Participant's accrued
benefit shall be actuarially increased in accordance with
Appendix A to take into account the period after age 70 1/2in
which the Participant is not receiving any benefits from the
Plan. The actuarial increase shall be provided for the period
starting on April 1 following the calendar year in which the
employee attains age 70 1/2. The actuarial increase described
above will be provided even during the period when a valid
benefit suspension is in place under ERISA Section 203(a)(3)(B).
(c) If a Participant dies after the date his Retirement Benefit has
commenced, the remaining portion, if any, of the Participant's
benefit shall be distributed to the Participant's beneficiary at
least as rapidly as it would have been distributed under the
method of distribution in effect on the day of the Participant's
death.
-27-
<PAGE>
(d) If a Participant's Retirement Benefit is distributed in the form
of an annuity other than an annuity for the life of the
Participant or an annuity for the joint lives of the Participant
and the Participant's Spouse or in installments and the
Participant's Beneficiary is other than the Participant's
Spouse, the distribution must satisfy the minimum distribution
incidental benefit requirements under Section 1.401(a)(9)-2 of
the Income Tax Regulations.
(e) With respect to distributions under the Plan made in calendar
years beginning on or after January 1, 2001, the Plan will apply
the minimum distribution requirements of section 401(a)(9) of
the Internal Revenue Code in accordance with the regulations
under section 401(a)(9) that were proposed in January 2001,
notwithstanding any provision of the Plan to the contrary. This
amendment shall continue in effect until the end of the last
calendar year beginning before the effective date of final
regulations under Code section 409(a)(9) or such other date
specified in guidance published by the Internal Revenue Service.
This also applies to required distributions made under Article
VII.
8.9 Direct Rollover
---------------
(a) This Section applies to distributions made on or after January
1, 1993. Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a distributee's election
under this Section, a distributee may elect, at the time and in
the manner prescribed by the Plan Administrator, to have any
portion of an eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee in a
direct rollover.
(b) For purposes of this Section the following definitions shall
apply:
(i) An eligible rollover distribution is any distribution of
all or any portion of the balance to the credit of the
distributee, except that an eligible rollover
distribution does not include: any distribution that is
one of a series of substantially equal periodic payments
(not less frequently than annually) made for the life
(or life expectancy) of the distributee or the joint
lives (or joint life expectancies) of the distributee
and the distributee's designated beneficiary, or for a
specified period of ten years or more; any distribution
to the extent such distribution is required under Code
Section 401(a)(9); and the portion of any distribution
that is not includible in gross income (determined
without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
(ii) An eligible retirement plan is an individual retirement
account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), an
annuity plan described in Code Section 403(a), or a
qualified trust described in Code Section 401(a), that
accepts the distributee's eligible rollover
distribution. However, in the case of an eligible
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<PAGE>
rollover distribution to the surviving Spouse, an
eligible retirement plan is an individual retirement
account or individual retirement annuity.
(iii) A distributee includes an Employee or former Employee.
In addition, the Employee's or former Employee's
surviving Spouse and the Employee's or former Employee's
Spouse or former Spouse who is the alternate payee under
a qualified domestic relations order, as defined in Code
Section 414(p), are distributees with regard to the
interest of the Spouse or former Spouse.
(iv) A direct rollover is a payment by the plan to the
eligible retirement plan specified by the distributee.
8.10 Payments To Incompetents
------------------------
If the Committee shall find that any person to whom a benefit is payable
from the Trust Fund is unable to care for his affairs because of illness
or accident, or is a minor, any payment due (unless a prior claim
therefore shall have been made by a duly appointed guardian, committee
or other legal representative) may be paid to the Spouse, a child, a
parent, or a brother or sister, or to any person deemed by the Committee
to have incurred expense for such person otherwise entitled to payment.
Any such payment shall be a complete discharge of any liability of the
Company, the Administrator, the Committee, the Trustee, and the Fund
therefore.
8.11 Lost Participant. Neither the Administrator nor the Trustee shall be
-----------------
obligated to search for or ascertain the whereabouts of any Participant
or Beneficiary (other than to write to the Participant at his last
mailing address shown in the Plan Administrator's records). If a
Participant or Beneficiary cannot be located, the Participant's
Retirement Benefit or Pre-Retirement Death Benefit shall be forfeited,
but shall be reinstated (without interest) upon the Participant's or
Beneficiary's claim for the benefit.
8.12 Deemed Cashouts
---------------
Notwithstanding any other provision contained herein, if a Participant
separates from service and the Actuarial Equivalent present value of his
vested Accrued Monthly Pension is zero, the Participant shall be deemed
to have received a distribution of his vested Accrued Monthly Pension.
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<PAGE>
ARTICLE IX
LIMITATION ON BENEFITS
----------------------
<TABLE>
<CAPTION>
<S> <S>
9.1 Definitions. The following definitions apply for purposes of Section 9.2:
-----------
</TABLE>
(a) Annual Benefit - shall mean a benefit which is payable annually
in the form of a straight life annuity with no ancillary
benefits.
(b) Compensation - shall mean annual compensation, as defined in
Regulation 1.415(2)(d)(l) of the Code, and effective for
limitation years beginning on or after January 1, 1998, shall
include (i) any elective deferral as defined in Code Section
402(g)(3) and (ii) any amount which is contributed or deferred
by the Company at the election of an Employee which is not
includible in gross income by reason of Code Section 125, or
effective January 1, 2001, Code Section 132(f).
(c) Defined Benefit Plan Fraction - for any limitation year ending
before the 2000 limitation year is a fraction:
(i) the numerator of which is the Projected Annual Benefit
of a Participant under the Defined Benefit Plan
(determined as of the close of the year), and
(ii) the denominator of which is the lesser of:
(1) 1.25 multiplied by $90,000 (or the applicable
dollar limitation under Section 415(d) of the
Code), or
(2) 1.4 multiplied by the average of the
Participant's total Compensation during the
three consecutive years in which he earned the
greatest amount of total Compensation from the
Company.
(d) Defined Contribution Plan Fraction - for any limitation year
ending on or before the 2000 limitation year is a fraction:
(i) the numerator of which is the sum of annual additions to
the Participant's accounts under the Defined
Contribution Plan as of the close of the year, and
(ii) the denominator of which is the sum of the lesser of the
following amounts for such year and for each prior year
of service with the Company;
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<PAGE>
(1) 1.4 multiplied by the amount determined under
Section 415(c)(l)(B) of the Code, or
(2) 1.25 multiplied by $30,000 (or the applicable
dollar limitation under Section 415(c)(1)(A) of
the Code).
For limitation years ending before the 2000 limitation year, in
the case of a Participant with respect to whom the sum of his
Defined Benefit Plan Fraction and Defined Contribution Plan
Fraction exceeds 1.0 as of either (or both) December 31, 1982 or
December 31, 1986 (computed as if the provisions of Section 415
of the Code, as amended by the Tax Equity and Fiscal
Responsibility Act of 1982 or the Tax Reform Act of 1986,
respectively, were in effect on the applicable of those dates)
the numerator of the Participant's Defined Contribution Plan
Fraction shall be reduced so that the sum of those fractions as
of the applicable date does not exceed 1.0.
(e) Projected Annual Benefit - shall mean the annual benefit to
which a Participant would be entitled under the terms of all
Defined Benefit Plans if he had continued employment until his
normal retirement date under such plans and if his compensation
for the purpose of such plans had continued at the same rate.
9.2 Maximum Retirement Benefit. Notwithstanding any other provisions of this
--------------------------
Plan the Maximum Retirement Benefit shall be:
(a) Subject to Sections 9.2(b), (c), and (d), the Retirement Benefit
of a Participant shall be reduced to the extent that it (plus,
if applicable, the aggregate retirement benefit to which the
Participant is entitled under all other Defined Benefit Plans in
which he or she was a participant) exceeds the lesser of (1)
$90,000 (or such higher amount as may be permitted under Section
415 (d) of the Code to reflect increases in the cost of living,
and (2) 100 percent of the Participant's average annual
compensation during the three consecutive Plan Years in which
the Participant received the greatest aggregate amount of annual
compensation. No reduction shall be required under this Section
9.2(a) in the case of a Participant who never participated in a
defined contribution plan if the Participant's Retirement
Benefit (plus, if applicable, the Participant's retirement
benefit under all other Defined Benefit Plans) does not exceed
$10,000.
(b) The following adjustments shall be made in applying the
limitations of Sections 9.2(a) and 9.4.
(i) If a Participant's Retirement Benefit (or a retirement
benefit to which the Participant is entitled under any
other Defined Benefit Plan) is payable in a form other
than an Annual Benefit, the Retirement Benefit shall be
adjusted so that it is the Actuarial Equivalent of an
Annual Benefit, except that the following shall not be
taken into account: (A) any ancillary benefit that is
-31-
<PAGE>
not related to retirement income benefits and (B) the
survivor annuity provided under the portion of any
annuity that constitutes a Qualified Joint and Survivor
Annuity (as defined in Section 417(b) of the Code).
Effective September 1, 1995, for purposes of adjusting
any benefit for any form of payment subject to Code
Section 417(e)(3), the interest rate assumption shall
not be less than the greater of the applicable interest
rate described in Appendix A(2)(b) or the rate described
in Appendix A(1)(a).
(ii) The dollar limitation set forth in Section 9.2(a)(i)
shall be adjusted as follows:
(1) If distribution of a Participant's Retirement
Benefit begins before the Participant's Social
Security retirement age as defined in Section
415(b)(8) of the Internal Revenue Code but on or
after the Participant's attainment of age 62
then the limitation shall be reduced by 5/9 of
one percent for each of the first 36 months and
5/12 of one percent for each of the additional
months (up to 24 months), if any, by which the
benefits commenced before the month in which the
Participant attains his or her Social Security
retirement age.
(2) If the distribution of a Participant's
Retirement Benefit begins before his or her
attainment of age 62 then the limitation shall
be reduced by (A) reducing the limitation to the
applicable limit for benefits payable at age 62
in accordance with paragraph (i); and (B) then
determining the Actuarial Equivalent of that
amount at the Participant's age at the time that
the benefit commences.
(3) If distribution of a Participant's Retirement
Benefit begins after the Participant's Social
Security retirement age, the limitation shall be
increased (in accordance with regulations
promulgated by the Secretary of the Treasury) so
that it equals the amount of an Annual Benefit
beginning at the time distribution of the
Participant's Retirement Benefit begins, which
is the Actuarial Equivalent of an Annual Benefit
equal to the dollar limitation set forth in
Section 9.2(a)(1) beginning at the Participant's
Social Security retirement age.
(iii) In the case of a Participant with less than ten years of
participation in the Plan or less than ten (10) years of
Credited Service:
(1) the dollar limitation set forth in Section
9.2(a)(i) shall be multiplied by a fraction the
numerator of which is the aggregate number of
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<PAGE>
the Participant's years of participation in the
Plan at the time the determination is made and
the denominator of which is ten, and
(2) the percentage limitation set forth in Section
9.2(a)(2) and the $10,000 minimum benefit
referred to in the last sentence of Section
9.2(a) shall be multiplied by a fraction the
numerator of which is the aggregate number of
the years of the Participant's Years of Service
at the time the determination is made and the
denominator of which is ten.
(iv) For purposes of adjusting the Participant's retirement
benefit under Section 9.2(b)(i) or the dollar limitation
under Section 9.2(b)(ii), the interest rate assumption
shall be that set forth in the Appendix to this Plan
subject to the limitations on interest rates of Section
415(b)(2)(E) of the Code, and the mortality decrement
shall be ignored to the extent that a forfeiture does
not occur at death.
(c) The Retirement Benefit of a Participant who was a Participant
before January 1, 1987 shall not be reduced under any other
provisions of this Section 9.2 to the extent that it does not
exceed the Participant's Retirement Benefit accrued as of that
date and determined in accordance with the requirements of
Section 415 of the Code in effect on that date and without
regard to amendments to the Plan after May 5, 1986. The
Retirement Benefit of a Participant who was a Participant before
January 1, 1983 shall be similarly protected.
(d) If a Participant is a participant in any Defined Contribution
Plan for limitation years ending before the 2000 limitation
year, the Participant's Retirement Benefit shall be reduced to
the extent that it causes the sum of the Participant's Defined
Benefit Plan Fraction and the Participant's Defined Contribution
Plan Fraction to exceed 1.0 for any Plan Year.
(e) If Section 415 of the Code is amended, or if new regulations are
promulgated by the Secretary of Treasury, the restrictions under
this Section 9.2 shall be correspondingly modified without
formal amendment to this Plan.
9.3 Incorporation by Reference
--------------------------
Notwithstanding anything contained in Section 9.1 and 9.2 to the
contrary, the limitations, adjustments and other requirements prescribed
in Section 9.1 and 9.2 shall at all times comply with the provisions of
Code Section 415 and the Regulations thereunder, the terms of which are
specifically incorporated herein by reference.
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<PAGE>
9.4 Restrictions on 25 Highest Paid Employees
-----------------------------------------
(a) Benefits distributed to any of the twenty-five (25) most highly
compensated active and highly compensated former employees with
the greatest compensation in the current or prior year are
restricted such that the monthly payments are no greater than an
amount equal to the monthly payment that would be made on behalf
of such individual under a straight life annuity that is the
Actuarial Equivalent of the sum of the individual's Accrued
Monthly Pension, the individual's other benefits under the Plan
(other than a social security supplement within the meaning of
Regulation 1.411(a)-7(c)(4)(ii)), and the amount the individual
is entitled to receive under a social security supplement.
However, the limitation of this Section 9.4 shall not apply if:
(i) after payment of the benefit to an individual described
above, the value of Plan assets equals or exceeds 110
percent of the value of current liabilities, as defined
in Code Section 412(1)(7);
(ii) the value of the benefits payable under the Plan to an
individual described above is not less than 1 percent of
the value of current liabilities before distribution; or
(iii) the value of the benefits payable under the Plan to an
individual described above does not exceed $5,000.
(b) For purposes of this Section, benefit includes any periodic
income, any withdrawal values payable to a living Participant,
and any death benefits not provided for by insurance on the
individual's life.
(c) An individual's otherwise restricted benefit may be distributed
in full to the affected individual if, prior to receipt of the
restricted amount, the individual enters into a written
agreement with the Administrator to secure repayment to the Plan
of the restricted amount. The restricted amount is the excess of
the amounts distributed to the individual (accumulated with
reasonable interest) over the amounts that could have been
distributed to the individual under the straight life annuity
described above (accumulated with reasonable interest). The
individual may secure repayment of the restricted amount upon
distribution by:
(i) entering into an agreement for promptly depositing into
escrow with an acceptable depositary, property having a
fair market value equal to at least 125 percent of the
restricted amount;
(ii) providing a bank letter of credit in an amount equal to
at least 100 percent of the restricted amount; or
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<PAGE>
(iii) posting a bond equal to at least 100 percent of the
restricted amount. The bond must be furnished by an
insurance company, bonding company or other surety for
federal bonds.
(d) The escrow agreement may permit an individual to withdraw from
escrow amounts in excess of 125 percent of the restricted
amount. If the market value of the property in an escrow account
falls below 110 percent of the remaining restricted amount, the
individual must deposit additional property to bring the value
of the property held by the depositary up to 125 percent of the
restricted amount. The escrow arrangement may provide that the
individual has the right to receive any income from the property
placed in escrow, subject to the individual's obligation to
deposit additional property, as set forth in the preceding
sentence.
(e) A surety or bank may release any liability on a bond or letter
of credit in excess of 100 percent of the restricted amount.
(f) If the Administrator certifies to the depositary, surety or bank
that the individual (or the individual's estate) is no longer
obligated to repay any restricted amount, a depositary may
deliver to the individual any property held under an escrow
arrangement, and a surety or bank may release any liability or
an individual's bond or letter of credit.
(g) Notwithstanding the foregoing, with respect to Plan Years
beginning prior to January 1, 1989, compliance with the Plan and
Regulations then in effect shall be deemed compliance with this
Section 9.4.
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<PAGE>
ARTICLE X
FUNDING
-------
10.1 Contributions to the Fund. The benefits provided under the Plan shall be
-------------------------
financed exclusively by contributions made from time to time to the
Trustees by the Company and by the Fund created thereby. Subject to the
provisions of applicable law, the liability of the Company under the
Plan shall be limited to the contributions determined by the Company
from time to time in accordance with the advice and counsel of the
Actuary. The Company's liability for Plan payments shall be limited to
making contributions into the Fund in order to maintain the funding
standard account set forth in Section 412 of the Internal Revenue Code.
The funding policy applicable to the Fund shall be established by the
Committee and reviewed from time to time.
10.2 Use of Contributions to the Fund. The contributions deposited under the
--------------------------------
terms of this Plan shall constitute the Fund held for the benefit of
Participants, former Employees, and their eligible survivors under and
in accordance with this Plan. No part of the corpus or income of the
Fund shall be used for or diverted to purposes other than exclusively
for the benefit of such Participants, former Employees, and their
eligible survivors and for necessary administrative costs; provided,
however, that, in the event of the termination of the Plan and after all
fixed and contingent liability, as defined under the Code and ERISA,
shall have been satisfied and, upon receipt of the necessary approvals
from the Pension Benefit Guaranty Corporation, any remaining funds
attributable to contributions by the Company shall revert to the
Company; and further provided that, in the case of a contribution (a)
made by the Company as a mistake of fact, or (b) for which a tax
deduction is disallowed, in whole or in part, by the Internal Revenue
Service, the Company shall be entitled to a refund of said contributions
(i) within one year after payment of a contribution is made as a mistake
of fact, or (ii) within one year after disallowance, to the extent of
such disallowance, as the case may be.
10.3 Forfeitures. Forfeitures and other actuarial gains shall not be applied
-----------
to increase the benefits of any Participant, but shall reduce the
contributions of the Participating Company hereunder.
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<PAGE>
ARTICLE XI
ADMINISTRATION
--------------
11.1 Committee. The Company is plan administrator with full discretionary
---------
authority to interpret the Plan, find facts relating to the Plan, and
apply the Plan as such to the facts. The Board of Directors of the
Company shall appoint a Committee consisting of not less than two
persons to act on behalf of the Company with full discretionary
authority to control and manage the operation of, and administer, the
Plan. The Committee members may, but need not be, employees of the
Company and shall serve at the pleasure of the Board of Directors of the
Company. They shall be entitled to reimbursement of expenses, but those
members of the Committee who are also employees of the Company shall be
entitled to no compensation for their service on the Committee. Any
reimbursement of expenses of the Committee members shall be paid
directly by the Company. Vacancies on the Committee shall be filled by
the Board of Directors of the Company. Such Committee shall be
responsible for the general administration of the Plan under the policy
guidance of the Company.
11.2 Duties and Powers of the Committee. In addition to the duties and powers
----------------------------------
described elsewhere hereunder, the Committee shall have the following
specific duties and powers:
(a) to retain such consultants, accountants, attorneys, and
Actuaries as deemed necessary or desirable to render statements,
reports, and advice with respect to the Plan and to assist the
Committee in complying with all applicable rules and regulations
affecting the Plan; any consultants, accountants, attorneys, and
Actuaries may be the same as those retained by the Company;
(b) to decide appeals under Article XIII;
(c) to establish a funding policy consistent with the objectives of
the Plan;
(d) to enact uniform and nondiscriminatory rules and regulations to
carry out the provisions of the Plan;
(e) to resolve questions or disputes relating to eligibility for
benefits or the amount of benefits under the Plan;
(f) to interpret the provisions of the Plan;
(g) to determine whether any domestic relations order received by
the Plan is a qualified domestic relations order, as provided in
Section 414(p) of the Code;
(h) to evaluate administrative procedures; and
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<PAGE>
(i) to delegate such duties and powers as the Committee shall
determine from time to time to any person or persons, including
the Administrator.
11.3 Functioning of Committee. The Committee and those persons or entities to
------------------------
whom the Committee has delegated responsibilities shall keep accurate
records and minutes of meetings, interpretations and decisions. Any
Employee may examine records pertaining directly to him. The Committee
shall elect a chairman and a secretary from its membership. The
Committee shall act by majority vote of the members, and such action
shall be evidenced by a written document.
11.4 Indemnification. Each member of the Committee, and any other person who
---------------
is an employee or director of the Company, shall be indemnified by the
Company against expenses (other than amounts paid in settlement to which
the Company does not consent) reasonably incurred by him in connection
with any action to which he may be a party by reason of his performance
of administrative functions and duties under the Plan, except in
relation to matters as to which he shall be adjudged in such action to
be personally guilty of negligence or willful misconduct in the
performance of his duties. The foregoing right to indemnification shall
be in addition to such other rights as the Committee member, or other
person may enjoy as a matter of law or by reason of insurance coverage
of any kind. Rights granted hereunder shall be in addition to and not in
lieu of any rights to indemnification to which the Committee member, or
other person may be entitled pursuant to the by-laws of the Company.
11.5 The Trustee. The Trustee shall be the named fiduciary with respect to
-----------
the management and control of Plan assets held by it, and shall have
exclusive authority to hold, manage and administer the Trust Fund in
accordance with the terms of the Trust Agreement entered into between
the Company and the Trustee except to the extent that authority to
manage certain assets held by the Trust is delegated by the
Administrative Committee to an Investment Manager pursuant to the terms
of the Trust Agreement. The Trustee may designate agents or others to
carry out certain of the administrative responsibilities in connection
with the management of the Trust.
11.6 The Trust Fund. The Trust Fund shall be used to pay benefits as provided
--------------
in the Plan and for the payment of expenses relating to the Plan except
to the extent that such expenses are paid by the Employers. For all
other purposes, including investment management and custodial functions,
the Trust Fund held under this Plan may be commingled with the Trust
Fund or Funds held under any other pensions plan or plans of the
Company. Prior to the satisfaction of all rights of Participants and
Beneficiaries under the Plan, no part of the principal or income of the
Trust Fund shall be used or diverted to purposes other than those
provided in the Plan, and no part thereof shall revert to the Employers
except after satisfaction of all liabilities of the Plan.
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<PAGE>
ARTICLE XII
MANAGEMENT OF TRUST FUND
------------------------
12.1 The Trust Fund. The Trust Fund shall be held in trust by the Trustee
---------------
appointed from time to time (before or after termination of the Plan) by
the Administrative Committee and shall he evidenced by a Trust Agreement
between the Company and the Trustee, a copy of which shall be filed with
the Administrative Committee.
12.2 Exclusive Benefit. The Trust Agreement must contain a provision that it
-----------------
shall be impossible at any time prior to the satisfaction of all
liabilities with respect to Participants or Beneficiaries thereof under
the Trust, for any part of the corpus or income to be used for purposes
other than for the exclusive benefit of Participants or Beneficiaries
and paying the reasonable expenses of the Plan and of the Trust,
provided that nothing herein shall be deemed to prevent the return of
any employer contribution (1) resulting from a mistake of fact, or (2)
conditioned upon deductibility under Section 404 of the Code, within one
year after the date of (i) payment of the contribution, or (ii) the
disallowance of the contribution, respectively.
12.3 Trustee's Reports. As soon as practicable after each Plan Year, the
------------------
Trustee shall submit to the Administrative Committee an appropriate
report stating the net value of the Trust Fund as of the end of the Plan
Year and containing such other information relating to the Trust Fund as
the Administrative Committee from time to time may request.
12.4 Trust Agreement. The Trust Agreement shall be a part of this Plan and
----------------
any rights or benefits under this Plan shall be subject to all the terms
and provisions of the Trust Agreement.
12.5 Expenses. All expenses incurred in the administration of the Plan shall
--------
be paid for by the Trust Fund to the extent not paid by the Company.
Such expenses include any expenses incident to the administration of the
Plan including, but not limited to, fees of accountants, counsel and
other specialist.
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<PAGE>
ARTICLE XIII
BENEFIT CLAIMS PROCEDURE
------------------------
13.1 Claim for Benefits. Any claim for benefits under this Plan shall be made
------------------
in writing to the Administrative Committee. If a claim for benefits is
wholly or partially denied, the Administrative Committee shall so notify
the Participant or Beneficiary within 90 days after receipt of the
claim, unless special circumstances require an extension to 180 days, in
which case the Participant will be notified of the need for the
extension within the initial 90-day period. The notice of denial shall
be written in a manner calculated to be understood by the Participant or
Beneficiary and shall contain (a) the specific reason or reasons for
denial of the claim, (b) a specific reference to the pertinent Plan
provisions upon which the denial is based, (c) a description of any
additional material or information necessary to perfect the claim
together with an explanation of why such material or information is
necessary and (d) an explanation of the claims review procedure. If a
written notice of denial is not provided to the Participant or
Beneficiary within such time period, the claim may be considered denied.
13.2 Review of Claim. Within 60 days after the receipt by the Participant or
---------------
Beneficiary of notice of denial of a claim (or at such later time as may
be reasonable in view of the nature of the benefit subject to claim and
other circumstances), the Participant or Beneficiary may (a) file a
request with the Committee that it conduct a full and fair review of the
denial of the claim, (b) review pertinent documents and (c) submit
questions and comments to the Committee in writing.
13.3 Decision After Review. Within 60 days after the receipt of a request for
---------------------
review under Section 13.2, the Administrative Committee shall deliver to
the Participant or Beneficiary a written decision with respect to the
claim, except that if there are special circumstances (such as the need
to hold a hearing) which require more time for processing, the 60-day
period shall be extended to 120 days upon notice within the initial
60-day period to the Participant or Beneficiary to that effect. The
decision shall be written in a manner calculated to be understood by the
Participant or Beneficiary and shall (a) include the specific reason or
reasons for the decision and (b) contain a specific reference to the
pertinent Plan provisions upon which the decision is based. If a written
notice of denial is not provided to the Participant or Beneficiary
within such time period, the appeal may be considered denied.
13.4 Committee Determination Binding. The Committee shall have the right to
---------------------------------
decide, in their sole and exclusive discretion, all questions respecting
the interpretation, application, or administration of the rules of
eligibility for the benefits or services furnished by the Plan and such
decisions shall be conclusive and binding upon all Participants,
dependents and beneficiaries.
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<PAGE>
ARTICLE XIV
NON-ALIENATION OF BENEFITS
--------------------------
14.1 Non-Alienation. Subject to Section 14.2, any benefits under or interests
--------------
in this Plan shall not be assignable or subject to alienation,
hypothecation, garnishment, attachment, execution or levy of any kind.
Any action in violation of this provision shall be void.
14.2 Qualified Domestic Relations Orders. Section 13.1 shall not apply to the
-----------------------------------
creation, assignment or recognition of a right to the Retirement Benefit
of a Participant pursuant to a Qualified Domestic Relations Order. The
Administrative Committee shall establish reasonable procedures for
determining whether a domestic relations order is a Qualified Domestic
Relations Order and for administering distributions under such order.
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<PAGE>
ARTICLE XV
DESIGNATION OF BENEFICIARY
--------------------------
15.1 Beneficiary Designation.
-----------------------
(a) The designation of a beneficiary under a joint and survivor
annuity shall be fixed and may not be changed on or after
benefit payments commence.
(b) The designation of a beneficiary to receive any remainder of a
guaranteed number of payments may be made or changed until the
date on which the guaranteed period has expired.
(c) Subject to Subsections (a) and (b) and to the provisions set
forth above relating to the rights of Spouses to survivor
benefit payments, each Participant shall have the right at any
time to designate or to change the previous designation of the
beneficiary or beneficiaries who shall receive benefits, if any,
after his death by executing and filing with the Committee a
form prescribed by the Committee. No designation, revocation, or
change of beneficiaries shall be valid and effective unless and
until filed with the Committee. If no designation is made, or if
all of the beneficiaries named in such designation predeceases
the Participant or cannot be located by the Committee, the
interest, if any, of the deceased Participant shall be paid to
the surviving relatives of the Participant in the first
surviving class in the schedule set forth as follows: (i)
Spouse, (ii) lineal descendants (including stepchildren and
adopted persons), (iii) parents equally, and (iv) the
Participant's estate.
15.2 Effective Date of Designation. Any designation or revocation of a
-------------------------------
designation of a Beneficiary shall become effective when actually
received by the Administrative Committee but shall not affect any
distribution previously made pursuant to a prior designation.
-42-
<PAGE>
ARTICLE XVI
AMENDMENT AND TERMINATION
-------------------------
16.1 Power of Amendment and Termination. It is the intention of the Company
-----------------------------------
that this Plan will be permanent. However, the Company reserves the
right to terminate its participation in this Plan at any time by action
of its board of directors or other governing body. Furthermore, the
Company reserves the power to amend or terminate the Plan at any time by
action of the Board of Directors. Each amendment to the Plan will be
binding on the Company.
16.2 Limitation on Amendment.
------------------------
(a) Except as expressly provided elsewhere in the Plan, prior to the
satisfaction of all liabilities with respect to the benefits
provided under this Plan, no such amendment or termination shall
cause any part of the monies contributed hereunder to revert to
the Company or to be diverted to any purpose other than for the
exclusive benefit of Participants and their beneficiaries. No
amendment shall have the effect of retroactively depriving
Participants of benefits already accrued under the Plan. Any
amendment shall become effective as of the date designated by
the Board of Directors.
(b) Except as permitted by Regulations, no Plan amendment or
transaction having the effect of a Plan amendment (such as a
merger, plan transfer or similar transaction) shall be effective
to the extent it eliminates or reduces any "Section 411(d) (6)
protected benefit" or adds or modifies conditions relating to
"Section 411(d) (6) protected benefits" the result of which is a
further restriction on such benefit unless such protected
benefits are preserved with respect to benefits accrued as of
the later of the adoption date or effective date of the
amendment. "Section 411(d) (6) protected benefits" are benefits
described in Code Section 411(d)(6)(A), early retirement
benefits and retirement-type subsidies, and optional forms of
benefits.
(c) If this Plan is amended and an effect of such amendment is to
increase current liability (as defined in Code Section 401(a)
(29) (E)) under the Plan for a Plan Year, and the funded current
liability percentage of the Plan for the plan Year in which the
amendment takes effect is less than sixty percent (60%),
including the amount of the unfunded current liability under the
Plan attributable to the amendment, the amendment shall not take
effect until the Employer (or any member of a controlled group
which includes the Employer) provides security to the Plan. The
form and amount of such security shall satisfy the requirements
of Code Section 401(a) (29) (B) and (C). Such security may be
released provided the requirements of Code Section 401(a) (29)
(D) are satisfied.
-43-
<PAGE>
16.3 Amendment to Vesting Provision. If the vesting provisions set forth in
-------------------------------
Article VI are amended, any Participant who, as of the effective day of
the amendment had been credited with three or more years of Vesting
Service may irrevocably elect to have his nonforfeitable interest
computed without regard to the amendment. Notice of the amendment and
the availability of the election shall be given to each such
Participant, and the election may be exercised by the Participant by
notice to the Administrative Committee within 60 days after the later of
(a) the Participant's receipt of the notice, (b) the day the amendment
is adopted or (c) the effective date of the amendment.
16.4 Amendment to Maintain Qualified Status. Notwithstanding anything to the
--------------------------------------
contrary in Section 16.1, the Board, in its discretion, may make any
modifications or amendments to the Plan, retroactively or prospectively,
which it deems appropriate to establish or maintain the Plan and the
Trust Agreement as a qualified employees' plan and trust under Section
401 and 501 of the Code.
16.5 Disposition on Termination. In the event of the termination or partial
---------------------------
termination of the Plan, as defined in the Code, the interest of each
affected Participant who would not have a non-forfeitable right to one
hundred percent (100%) of his Accrued Benefit if his employment
terminated on the date of the termination or partial termination of the
Plan shall become non-forfeitable; however, in the event of such a
termination, each Participant and beneficiary shall have recourse toward
satisfaction of his non-forfeitable rights to his pension only from Plan
assets or from the Pension Benefit Guaranty Corporation to the extent
that it guarantees benefits.
The amount of the Fund shall be determined and, after providing for
expenses incident to termination and liquidation, the remaining assets
of such Fund shall be allocated in accordance with Section 4044 of ERISA
for the purpose of paying benefits proportionately among each of the
priority groups described below in the following order of precedence:
(a) to provide benefits to retired Participants and beneficiaries
who began receiving benefits at least three years before the
Plan termination (including those benefits which would have been
received for at least three years if the Participant had retired
that long ago), based on Plan provisions in effect five years
prior to termination during which period such benefit would be
the least; provided that the lowest benefit in pay status during
a three-year period shall be considered the benefit in pay
status for such period;
(b) to provide all other Accrued Benefits guaranteed by Federal law;
(c) to provide all other vested Accrued Benefits;
(d) to provide all remaining non-vested Accrued Benefits.
-44-
<PAGE>
If the assets available for allocation under any priority group (other
than as provided in priority groups (c) and (d)) are insufficient to
satisfy in full the Accrued Benefits of all Participants and
beneficiaries, the assets shall be allocated pro rata among such
Participants and beneficiaries on the basis of the present value of
their respective benefits (as of the termination date). The foregoing
payments and payments in the event assets are insufficient to pay the
Accrued Benefits provided in priority groups (c) and (d) will be paid in
accordance with regulations prescribed by the Pension Benefit Guaranty
Corporation. The procedure for allocation of assets upon termination of
the Plan will be carried out in an appropriate manner as to prevent the
Plan from being deemed disqualified by the Internal Revenue Service.
In the event all Accrued Benefits described above have been fully
funded, any remaining funds will revert to the Company.
Notwithstanding any other provision in this Section, if any of the
provisions of this Section conflicts with ERISA and regulations
thereunder, then ERISA and its regulations shall control.
16.6 Merger, Consolidation, or Transfer. In case of any merger or
-------------------------------------
consolidation with, or transfer of assets or liabilities to any other
plan, as provided in the Code, the benefit of any Participant or
beneficiary immediately after such merger, consolidation, or transfer
(if the Plan had then terminated) shall be at least equal to the benefit
such Participant or beneficiary would have received immediately before
such merger, consolidation, or transfer (if the Plan had then
terminated).
Plant Shutdown. Effective December 31, 1996 the Systems Division was
---------------
shut down. Certain employees were covered by the Met-Pro Corporation
Negotiated Pension Plan. The Met-Pro Corporation Negotiated Pension Plan
is merged into this Plan effective June 1, 1997. In the event of a
termination or partial termination or spin-off of this Plan occurring on
or prior to May 31, 2002, the allocation of assets of the Plan pursuant
to this Article XVI shall be made in such a manner as to give effect to
any special schedule of benefits which is required, pursuant to
regulations issued under Section 414(l) of the Internal Revenue Code, to
be created as a result of the merger of the Met-Pro Corporation
Negotiated Pension Plan into this Plan which merger was effective as of
June 1, 1997.
-45-
<PAGE>
ARTICLE XVII
TOP-HEAVY PROVISIONS
--------------------
17.1 The following definitions apply for purposes of this Article XVII:
(a) Average Compensation - a Participant's average annual
compensation (as defined in Regulation 1.415-2(d)(1) of the
Code) during the five consecutive Plan Years in which the
Participant received the greatest compensation, taking into
account only Plan Years (1) during which he was a Participant,
(2) with respect to which the Participant was credited with a
year of Vesting Service and (3) ending no later than the last
day of the last Plan Year in which the Plan was a Top Heavy
Plan.
(b) Determination Date - with respect to any plan year of the Plan,
a Defined Benefit Plan or a Defined Contribution Plan, the last
day of the preceding plan year (or in the case of the first plan
year of a plan the last day of that plan year).
(c) Key Employee - an Employee who at any time during a Plan Year or
any of the preceding four Plan Years is (a) an officer of the
Employer with Compensation greater than 50 percent of the amount
in effect under Section 415(b)(l)(A) of the Code on the last day
of the Plan Year, (b) one of the ten Employees with Compensation
greater than the amount in effect under Section 415(c)(l)(A) of
the Code on the last day of the Plan Year and owning the largest
percentage (in excess of one half of one percent) interest in
value of the Company (c) a Five Percent Owner and (d) an owner
of more than One Percent Owner with Compensation in excess of
$150,000. The determination of whether an Employee is a Key
Employee shall be made in accordance with Section 416(i) of the
Code. The Beneficiary of a Key Employee shall be treated as a
Key Employee.
(d) Permissive Aggregation Group of Plans - a group of employee
benefit plans including a Required Aggregation Group of Plans
and any other Defined Benefit Plans or Defined Contribution
Plans which when considered as a group meets the requirements of
Sections 401(a)(4) and 410 of the Code.
(e) Required Aggregation Group of Plans - a group of employee
benefit plans including each Defined Benefit Plan and Defined
Contribution Plan (a) in which any Key Employee is or was a
Participant or (b) which enables a plan described in clause (a)
to meet the requirements of Section 401(a)(4) or Section 410 of
the Code.
(f) Super Top Heavy Plan - the Plan for any Plan Year if it
satisfies the definition of Top Heavy Plan with 90 percent
substituted for 60 percent.
-46-
<PAGE>
(g) Top Heavy Fraction means (a) with respect to the Plan, a
fraction for a Plan Year the numerator of which is the aggregate
of the present values of the accrued benefits as of a
Determination Date of all Participants who are Key Employees and
the denominator of which is the aggregate of the present values
of the accrued benefits as of a Determination Date of all
Participants or (b) with respect to a Required Aggregation Group
of Plans or a Permissive Aggregation Group of Plans a fraction
(A) the numerator of which is the sum of (i) the aggregate of
the present values of the accrued benefits as of the applicable
Determination Date of all Participants who are Key Employees
under all defined benefit plans included in that group and (ii)
the aggregate credit balances as of the applicable Determination
Date in the accounts of all Participants who are Key Employees
under all defined contribution plans included in the group and
(B) the denominator of which is the sum of (i) the aggregate of
the present values of the accrued benefits as of the applicable
Determination Date of all Participants under all defined benefit
plans included in the Group and (ii) the aggregate credit
balances as of the applicable Determination Date in the accounts
of all Participants under all defined contribution plans
included in the group.
In computing a Top Heavy Fraction for a Plan Year, the following
rules shall apply: (a) the present value of accrued benefits as
of a Determination Date under each defined benefit plan and the
aggregate account balances as of a Determination Date under each
defined contribution plan shall be increased by the aggregate
distributions made from that plan to Participants during the
five year period ending on the Determination Date, (b) the
accrued benefit under any defined benefit plan and the account
balance under any defined contribution plan of a Participant who
has not performed services for an Employer at any time during
the five-year period ending on the Determination Date shall be
disregarded, (c) the present value of accrued benefits under a
defined benefit plan as of a Determination Date and the credit
balance under a defined contribution plan shall be determined as
of that plan's valuation date which occurs during the 12-month
period ending on the Determination Date, (d) in the case of a
Required Aggregation Group or a Permissive Aggregation Group,
the Determination Date of each Plan included in the group shall
be the Determination Date that occurs in the same calendar year
as the Determination Date of the Plan, (e) in the case of a
Required Aggregation Group or a Permissive Aggregation Group, in
determining the present value of accrued benefits the actuarial
assumptions set forth for this Plan shall be used for all
defined benefit plans, and (f) in the case of a Required
Aggregation Group or Permissive Aggregation Group the present
value of the accrued benefits under all defined benefit plans of
Participants other than Key Employees shall he determined based
upon the method used uniformly for accrual purposes for all
defined benefit plans but if there is no uniform method, based
upon the benefit accrual rate which does not exceed the slowest
accrual rate permitted under the fractional accrual rule of
Section 411(b)(l)(C) of the Internal Revenue Code.
-47-
<PAGE>
(h) Top Heavy Plan - the Plan for any Plan Year if the Top Heavy
Fraction for that Plan Year exceeds 60 percent (a) for the Plan,
if the Plan is not part of a Required Aggregation Group of
Plans, (b) for the Required Aggregation Group of Plans, if the
Plan is part of a Required Aggregation Group of Plans, or (c)
for the Permissive Aggregation Group of Plans, if the Plan is
part of a Permissive Aggregation Group of Plans and a Required
Aggregation Group of Plans.
17.2 When Top Heavy Provisions Apply. Notwithstanding any other provision of
-------------------------------
this Plan, the provisions of this Article XVII shall apply with respect
to any Plan Year for which the Plan is a Top Heavy Plan.
17.3 Minimum Benefit. Subject to Article IX, upon the retirement or
----------------
termination of employment of a Participant who is not a Key Employee,
the Participant's retirement benefit shall be equal to the greater of
(a) the Retirement Benefit that otherwise would be determined for the
Participant under Article V if no effect were given to this Article XVII
and (b) the product of 2 percent of the Participant's Average
Compensation and the number of years of his or her Years of Service (not
in excess of 10) credited with respect to Plan Years in which the Plan
is a Top Heavy Plan and he or she is a Participant. For purposes of
determining a Participant's Retirement Benefit under this Section 17.3,
it shall be assumed that payment of the Retirement Benefit shall be in
the form of a straight life annuity without ancillary benefits,
commencing on the Participant's Normal Retirement Date. If a Participant
who is not a Key Employee participates in both a defined benefit and
defined contribution Plan, the Company is not required to provide such
Participant both the minimum benefit and the minimum contribution. In
such event, the Participant shall receive the benefit described in this
Section.
The retirement benefit determined under this Section 17.3 shall apply
even though as a result of other Plan provisions a Participant who is
not a Key Employee would not otherwise have been entitled to have
received a benefit or would have received a lesser benefit because (i)
he or she failed to make mandatory employee contributions under the
Plan; (ii) his or her Compensation is less than the stated amount; (iii)
he or she is not employed on the last day of the accrual computation
period or (iv) the Plan is integrated with Social Security.
17.4 Vesting. For any Plan Year the Plan is a Top Heavy Plan, the non-
-------
forfeitable portion of the Retirement Benefit of a Participant who is
credited with at least one Hour of Service during that Plan Year under
Section 1.24 shall be the greater of the percentage determined under
Article VI and a percentage based on the Participant's Years of Service
as follows:
Number of Years of Service Vesting Percentage
0 0
1 0
2 20
3 40
4 60
5 80
6 or more 100
-48-
<PAGE>
17.5 Change From Top Heavy Vesting. If the Plan is a Top Heavy Plan for a
-------------------------------
Plan Year and ceases to be a Top Heavy Plan for the subsequent Plan
Year, the change in the vesting provision under this Section 17.5 to the
vesting provision under Article VI shall for purposes of Section 16.3 be
treated as an amendment of the vesting provisions of the Plan.
17.6 Combined Limitation. For any Plan Year in which the Plan is a Super Top
-------------------
Heavy Plan, 1.0 shall be substituted for 1.25 in clause (1) of the
definition of Defined Benefit Plan Fraction (Section 9.1(b)) and clause
(2) of the definition of Defined Contribution Plan Fraction (Section
9.1(c)). The foregoing shall not apply for Plan Years beginning on or
after the first day of the 2000 limitation year.
-49-
<PAGE>
ARTICLE XVIII
GENERAL PROVISIONS
------------------
18.1 No Employment Rights. Neither the action of the Company in establishing
--------------------
the Plan, nor any provisions of the Plan, nor any action taken by it or
by the Committee shall be construed as giving to any employee of the
Company the right to be retained in its employ, or any right to payment
except to the extent of the benefits provided in the Plan to be paid
from the Fund.
18.2 Governing Law. Except to the extent superseded by ERISA, all questions
-------------
pertaining to the validity, construction, and operation of the Plan
shall be determined in accordance with the laws of the state in which
the principal place of business of the Company is located.
18.3 Severability of Provisions. If any provision of this plan is determined
--------------------------
to be void by any court of competent jurisdiction, the Plan shall
continue to operate and, for the purposes of the jurisdiction of that
court only, shall be deemed not to include the provisions determined to
be void.
18.4 No Interest in Fund. No persons shall have any interest in, or right to,
-------------------
any part of the principal or income of the Fund, except as and to the
extent expressly provided in this Plan and in the Trust Agreement.
18.5 Discretion. Any discretionary acts under this Plan by the Company or by
----------
the Administrative Committee shall be uniform and applicable to all
persons similarly situated. No discretionary act shall be taken which
constitutes prohibited discrimination under the provisions of Section
401(a) of the Code.
18.6 Gender. Wherever applicable, any word used in the masculine should
------
include the feminine, and any word used in the singular shall include
the plural.
18.7 Participant Information. Each Participant shall notify the
--------------------------
Administrative Committee of (a) his mailing address and each change of
mailing address, (b) the Participant's, the Participant's Beneficiary's
and, if applicable the Participant's Spouse's date of birth, (c) the
Participant's marital status and any change of his marital status, and
(d) any other information required by the Administrative Committee. The
information provided by the Participant under this Section 18.7 shall be
binding upon the Participant and the Participant's Beneficiary for all
purposes of the Plan.
-50-
<PAGE>
18.8 Statement of Retirement Benefits. Upon a Participant's written request
--------------------------------
to the Administrative Committee, but no more frequently than once in a
twelve-month period, the Administrative Committee shall furnish him with
a statement of his Retirement Benefits.
18.9 Notices. Any notice, request, election, designation, revocation or other
-------
communication under this Plan shall be in writing and shall be
considered given when delivered personally or mailed by first class mail
to the last address furnished to the Committee.
18.10 Headings. The headings in this Plan are for convenience of reference and
--------
shall not be given substantive effect.
18.11 Withholding. The Committee and the Trustees shall have the right to
-----------
withhold any and all state, local, and Federal taxes which may be
withheld in accordance with applicable law.
Executed this 26th of February, 2002.
[SEAL] (NAME)
By: /s/ William L. Kacin
----------------------
President and CEO
-51-
<PAGE>
APPENDIX A
ACTUARIAL ASSUMPTIONS USED TO DETERMINE ACTUARIAL EQUIVALENCE
-------------------------------------------------------------
1. "Actuarial Equivalent". Subject to Section 2, the Actuarial Equivalent
-----------------------
of a given benefit shall be determined using the following assumptions:
(a) Interest - 8 percent per annum compounded annually.
(b) Mortality - The 1971 Male Group Annuity Table with ages set back
three years.
2. Minimum Actuarial Equivalent Present Value.
------------------------------------------
(a) Subject to paragraph (b) below, if a Participant's benefits are
to be paid in a single sum, then in no event shall the Actuarial
Present Value of a Participant's Vested Interest be less than
the greater of:
(i) such present value determined based on the assumptions
set forth in Section 1 above, or
(ii) such present value determined based on the interest
rates which would be used as of the first day of the
Plan Year in which distribution occurs by the Pension
Benefit Guaranty Corporation for a trusteed single
employer Plan and the mortality table specified in
paragraph (b) of Section 1.
(b) Effective September 1, 1995, if a Participant's benefits are to
be paid in a single sum, then in no event shall the Actuarial
Equivalent present value of a Participant's Vested Interest be
less than:
(i) such present value determined based on the assumptions
set forth in Section 1 above, or
(ii) such present value determined using the following
assumptions:
(A) Interest - the annual rate of interest on
30-Year Treasury securities as published by the
IRS for the month prior to the first month of
the Plan Year in which the distribution occurs.
(B) Mortality - determined under the applicable
mortality table under Code Section 417(e).
-52-
<PAGE>
(c) Solely for the purpose of determining an actuarial increase in
benefits due as a result of the commencement of such benefits
after the Participant's attainment of age 70 1/2, the following
assumptions will be used:
(i) Interest - 5 percent per annum compounded annually,
(ii) Mortality - 1994 Group Annuity Table.
-53-
<PAGE>
APPENDIX B
Effective as of December 31, 2000, the Accrued Monthly Pension of William L.
Kacin is increased by $6,666.67.
-54-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>ex10s.txt
<DESCRIPTION>EXHIBIT 10.S
<TEXT>
Exhibit (10.s)
FIRST AMENDMENT TO THE
MET-PRO CORPORATION SALARIED PENSION PLAN
This First Amendment to the Met-Pro Corporation Salaried Pension Plan
(the "Plan") is made by Met Pro Corporation (the "Company").
W I T N E S S E T H:
WHEREAS,the Company established the Plan for its eligible employees
effective as of September 1, 1968, and amended and restated as of September 1,
2000; and
WHEREAS, the Company reserved the right in Section 16.1 of the Plan to
amend the Plan at any time; and
WHEREAS, the Company now desires to amend the Plan to make certain
changes as required or permitted by the Economic Growth and Tax Relief
Reconciliation Act of 2001; to make certain required changes to the Plan's
claims procedures; to add Pristine Hydrochemical, Inc. as a participating
employer; and to revise the use of mortality tables for certain purposes under
the Plan.
NOW, THEREFORE, the Plan is hereby amended as set forth below.
Preamble
- --------
1. Adoption and effective date of amendment. This amendment of the Met-Pro
----------------------------------------
Corporation Salaried Pension Plan (the "Plan") is adopted to reflect
certain provisions of the Economic Growth and Tax Relief Reconciliation
Act of 2001 ("EGTRRA"), and to make certain other changes to the Plan.
This amendment is intended as good faith compliance with the
requirements of EGTRRA and is to be construed in accordance with EGTRRA
and guidance issued thereunder. Except as otherwise provided, this
amendment shall be effective as of the first day of the first plan year
beginning after December 31, 2001.
-1-
<PAGE>
2. Supersession of inconsistent provisions. This amendment shall supersede
---------------------------------------
the provisions of the plan to the extent those provisions are
inconsistent with the provisions of this amendment.
Section 1. Limitations on Benefits
-----------------------
1. Effective date. This section shall be effective for limitation years
ending after December 31, 2001.
2. Definitions.
-----------
2.1 Defined benefit dollar limitation. The "defined benefit dollar
----------------------------------
limitation" is $160,000, as adjusted, effective January 1 of
each year, under section 415(d) of the Code in such manner as
the Secretary shall prescribe, and payable in the form of a
straight life annuity. A limitation as adjusted under section
415(d) will apply to limitation years ending with or within the
calendar year for which the adjustment applies.
2.2 Maximum permissible benefit. The "maximum permissible benefit"
----------------------------
is the lesser of the defined benefit dollar limitation or the
defined benefit compensation limitation (both adjusted where
required, as provided in (a) and, if applicable, in (b) or (c)
below).
(a) If the Participant has fewer than 10 years of
participation in the Plan, the defined benefit dollar
limitation shall be multiplied by a fraction, (i) the
numerator of which is the number of years (or part
thereof) of participation in the Plan and (ii) the
denominator of which is 10. In the case of a Participant
who has fewer than 10 years of service with the
employer, the defined benefit compensation limitation
shall be multiplied by a fraction, (i) the numerator of
which is the number of years (or part thereof) of
service with the employer and (ii) the denominator of
which is 10.
(b) If the benefit of a Participant begins prior to age 62,
the defined benefit dollar limitation applicable to the
Participant at such earlier age is an annual benefit
payable in the form of a straight life annuity beginning
at the earlier age that is the actuarial equivalent of
the defined benefit dollar limitation applicable to the
Participant at age 62 (adjusted under (a) above, if
required). The defined benefit dollar limitation
applicable at an age prior to age 62 is determined as
the lesser of (i) the actuarial equivalent (at such age)
of the defined benefit dollar limitation computed using
the interest rate and mortality table specified in the
Plan for early retirement and (ii) the actuarial
equivalent (at such age) of the defined benefit dollar
limitation computed using a 5 percent interest rate and
-2-
<PAGE>
the applicable mortality table as defined in Appendix A
of the Plan. Any decrease in the defined benefit dollar
limitation determined in accordance with this paragraph
(b) shall not reflect a mortality decrement if benefits
are not forfeited upon the death of the Participant. If
any benefits are forfeited upon death, the full
mortality decrement is taken into account.
(c) If the benefit of a Participant begins after the
Participant attains age 65, the defined benefit dollar
limitation applicable to the Participant at the later
age is the annual benefit payable in the form of a
straight life annuity beginning at the later age that is
actuarially equivalent to the defined benefit dollar
limitation applicable to the Participant at age 65
(adjusted under (a) above, if required). The actuarial
equivalent of the defined benefit dollar limitation
applicable at an age after age 65 is determined as (i)
the lesser of the actuarial equivalent (at such age) of
the defined benefit dollar limitation computed the
interest rate and mortality table specified in the Plan
for late retirement and (ii) the actuarial equivalent
(at such age) of the defined benefit dollar limitation
computed using a 5 percent interest rate assumption and
the applicable mortality table as defined in Appendix A
of the Plan. For these purposes, mortality between age
65 and the age at which benefits commence shall be
ignored.
Section 2. Increase in Compensation Limit
------------------------------
1. Increase in limit. The annual compensation of each Participant taken
-----------------
into account in determining benefit accruals in any Plan Year beginning
after December 31, 2001, shall not exceed $200,000. Annual compensation
means compensation during the Plan Year or such other consecutive
12-month period over which compensation is otherwise determined under
the Plan (the determination period). For purposes of determining benefit
accruals in a Plan Year beginning after December 31, 2001, the $200,000
limitation on compensation shall also apply for any prior determination
period.
2. Cost-of-living adjustment. The $200,000 limit on annual compensation in
--------------------------
paragraph 1 shall be adjusted for cost-of-living increases in accordance
with section 401(a)(17)(B) of the Code. The cost-of-living adjustment in
effect for a calendar year applies to annual compensation for the
determination period that begins with or within such calendar year.
-3-
<PAGE>
Section 3. Modification of Top-Heavy Rules
-------------------------------
1. Effective date. This section shall apply for purposes of determining
---------------
whether the Plan is a top-heavy Plan under section 416(g) of the Code
for Plan Years beginning after December 31, 2001, and whether the Plan
satisfies the minimum benefits requirements of section 416(c) of the
Code for such years. This section amends Article 17 of the Plan.
2. Determination of top-heavy status.
----------------------------------
2.1 Key employee. Key employee means any employee or former employee
------------
(including any deceased employee) who at any time during the
Plan Year that includes the determination date was an officer of
the employer having annual compensation greater than $130,000
(as adjusted under section 416(i)(1) of the Code for Plan Years
beginning after December 31, 2002), a 5-percent owner of the
employer, or a 1-percent owner of the employer having annual
compensation of more than $150,000. For this purpose, annual
compensation means compensation within the meaning of section
415(c)(3) of the Code. The determination of who is a key
employee will be made in accordance with section 416(i)(1) of
the Code and the applicable regulations and other guidance of
general applicability issued thereunder.
2.2 Determination of present values and amounts. This section 2.2
---------------------------------------------
shall apply for purposes of determining the present values of
accrued benefits and the amounts of account balances of
employees as of the determination date.
2.2.1 Distributions during year ending on the determination
--------------------------------------------------------
date. The present values of accrued benefits and the
----
amounts of account balances of an employee as of the
determination date shall be increased by the
distributions made with respect to the employee under
the Plan and any plan aggregated with the Plan under
section 416(g)(2) of the Code during the 1-year period
ending on the determination date. The preceding sentence
shall also apply to distributions under a terminated
plan which, had it not been terminated, would have been
aggregated with the Plan under section 416(g)(2)(A)(i)
of the Code. In the case of a distribution made for a
reason other than separation from service, death, or
disability, this provision shall be applied by
substituting "5-year period" for "1-year period."
2.2.2 Employees not performing services during year ending on
--------------------------------------------------------
the determination date. The accrued benefits and
--------------------------
accounts of any individual who has not performed
services for the employer during the 1-year period
-4-
<PAGE>
ending on the determination date shall not be taken into
account.
3. Minimum benefits. For purposes of satisfying the minimum benefit
-----------------
requirements of section 416(c)(1) of the Code and the Plan, in
determining years of service with the employer, any service with the
employer shall be disregarded to the extent that such service occurs
during a Plan Year when the Plan benefits (within the meaning of section
410(b) of the Code) no key employee or former key employee.
Section 4. Direct Rollovers of Plan Distributions
--------------------------------------
1. Effective date. This section shall apply to distributions made after
---------------
December 31, 2001.
2. Modification of definition of eligible retirement plan. For purposes of
-------------------------------------------------------
the direct rollover provisions in section 8.9 of the Plan, an eligible
retirement plan shall also mean an annuity contract described in section
403(b) of the Code and an eligible plan under section 457(b) of the Code
which is maintained by a state, political subdivision of a state, or any
agency or instrumentality of a state or political subdivision of a state
and which agrees to separately account for amounts transferred into such
plan from this Plan. The definition of eligible retirement plan shall
also apply in the case of a distribution to a surviving spouse, or to a
spouse or former spouse who is the alternate payee under a qualified
domestic relation order, as defined in section 414(p) of the Code.
Section 5. Definition of Pristine Hydrochemical, Inc.
------------------------------------------
1. The following definition is inserted as section 1.40 of Article I
(definitions) of the Plan and the remainder of the Article is renumbered
accordingly:
"Pristine Hydrochemical" shall mean Pristine Hydrochemical, Inc. a
subsidiary of Met-Pro Corporation.
2. Section 1.53, definition of Subsidiary, is amended by adding "and
effective June 1, 2002, Pristine Hydrochemical" at the end of the
section.
Section 6. Credited Service
----------------
1. Section 1.35 of the Plan is amended by adding the following sentence to
the end:
"Past Service Date" shall mean June 1, 2002 for Employees of Pristine
Hydrochemical."
-5-
<PAGE>
2. Section 3.5 of the Plan is amended effective June 1, 2002 by inserting
the following at the end thereof as subsection (j):
(j) Pristine Hydrochemical - All Past Service accumulated before
June 1, 2002 shall not be taken into account in determining the
amount of Credited Service.
Section 7. Claims Procedures
-----------------
Sections 13.1 through 13.3 of the Plan are deleted effective January 1, 2002 and
the following is inserted in Section 13.1. Section 13.4 shall be renumbered as
Section 13.2.
Timing of Notification of Benefit Determination
A claim for benefits shall be made in writing to the Administrator or Committee,
as applicable.
The Administrator (or Committee, if appointed) shall notify the claimant of an
adverse benefit determination within a reasonable period of time, but not later
than 90 days after receipt of the claim by the Plan, unless it determines that
special circumstances require an extension of time for processing the claim. If
the Administrator (or Committee, if applicable) determines that an extension of
time for processing is required, written notice of the extension shall be
furnished to the claimant within the initial 90-day period. In no event shall
such extension exceed a period of 90 days from the end of such initial period.
The extension notice shall indicate the special circumstances requiring an
extension of time and the date by which the Plan expects to render the benefit
determination.
Manner and Content of Benefit Determinations
The Administrator (or Committee, if applicable) shall provide a claimant with
written or electronic notification of any adverse benefit determination. Any
electronic notification shall comply with the standards imposed by 29 CFR
2520-104b-1(c)(1)(i), (iii) and (iv). The notification shall set forth, in a
manner calculated to be understood by the claimant:
(i) The specific reason or reasons for the adverse determination.
(ii) Reference to the specific Plan provisions on which the determination is
based.
(iii) A description of any additional material or information necessary for
the claimant to perfect the claim and an explanation of why such
material or information is necessary.
-6-
<PAGE>
(iv) A description of the Plan's review procedures and the time limits
applicable to such procedures, including a statement of the claimant's
right to bring a civil action under section 502(a) of the Act following
an adverse benefit determination on review.
Appeal of Adverse Benefit Determination
In order to provide a claimant with the opportunity for a full and fair review
of a claim and adverse benefit determination:
(i) A claimant has at least 60 days following receipt of a notification of
an adverse benefit determination within which to appeal the
determination.
(ii) A claimant may submit written comments, documents, records and other
information relating to the claim for benefits
(iii) A claimant shall be provided, upon request and free of charge,
reasonable access to, and copies of, all documents, records and other
information relevant to the claimant's claim for benefits. A document,
record or other information shall be considered "relevant" to a
claimant's claim if such document, record or other information:
(A) was relied upon in making the benefit determination;
(B) was submitted, considered or generated in the course of making
the benefit determination, without regard to whether such
document or record was relied upon in making the benefit
determination; or
(C) demonstrates compliance with the administrative processes and
safeguards required by the Department of Labor's regulations in
making the benefit determination.
(iv) The review will take into account all comments, documents, records and
other information submitted by the claimant relating to the claim,
without regard to whether such information was submitted or considered
in the initial benefit determination.
Timing of Notification of Benefit Determination on Review
The Administrator (or Committee, as applicable) shall notify a claimant of the
Plan's benefit determination on review within a reasonable period of time, but
not later than 60 days after receipt of the claimant's request for review by the
Plan, unless it determines that special circumstances (such as the need to hold
a hearing) require an extension of time for processing the claim. If an
extension of time for processing is required, written notice of the extension
shall be furnished to the claimant prior to the termination of the initial
-7-
<PAGE>
60-day period. In no event shall such extension exceed a period of 60 days from
the end of the initial period. The extension notice shall indicate the special
circumstances requiring an extension of time and the date by which the Plan
expects to render the determination on review.
When the Committee is making the determination on review, if it holds regularly
scheduled meetings at least quarterly, the paragraph above shall not apply, and
the Committee shall instead make a benefit determination no later than the date
of the meeting of the Committee that immediately follows the Plan's receipt of a
request for review, unless the request for review is filed within 30 days
preceding the date of such meeting. In such case, a benefit determination may be
made by no later than the date of the second meeting following the Plan's
receipt of the request for review. If special circumstances require a further
extension of time for processing, a benefit determination shall be rendered not
later than the third meeting of the Committee following the Plan's receipt of
the request for review. If such an extension of time for review is required
because of special circumstances, the Committee shall provide the claimant with
written notice of the extension, describing the special circumstances and the
date as of which the benefit determination will be made, prior to the
commencement of the extension. The Committee shall notify the claimant of the
benefit determination as soon as possible, but not later than 5 days after the
benefit determination is made.
The period of time within which a benefit determination on review is required to
be made shall begin at the time an appeal is filed in accordance with the Plan
procedures, without regard to whether all the information necessary to make a
benefit determination on review accompanies the filing. In the event that a
period of time is extended due to a claimant's failure to submit information
necessary to decide a claim, the period for making the benefit determination on
review shall be tolled from the date on which the notification of the extension
is sent to the claimant until the date on which the claimant responds to the
request for additional information.
Manner and Content of Notification of Benefit Determination on Review
The Administrator (or Committee as applicable) shall provide a claimant with
written or electronic notification of a plan's benefit determination on review.
Any electronic notification shall comply with the standards imposed by 29 CFR
2520.104b-1(c)(1)(i) , (iii), and (iv). In the case of an adverse benefit
determination, the notification shall set forth, in a manner calculated to be
understood by the claimant:
(i) The specific reason or reasons for the adverse determination.
(ii) Reference to the specific Plan provisions on which the benefit
determination is based.
-8-
<PAGE>
(iii) A statement that the claimant is entitled to receive, upon request and
free of charge, reasonable access to, and copies of, all documents,
records, and other information relevant to the claimant's claim for
benefits.
(iv) A statement describing any voluntary appeal procedures offered by the
Plan and the claimant's right to obtain the information about such
procedures described in paragraph (c)(3)(iv) of this section, and a
statement of the claimant's right to bring an action under section
502(a) of ERISA.
In the case of an adverse benefit determination on review, the Administrator (or
Committee, as applicable) shall provide such access to, and copies of,
documents, records, and other information described above, as appropriate.
Failure to Follow Claims Procedures
In the case of the failure of the Plan to follow the claims procedures, the
claimant shall be deemed to have exhausted the administrative remedies under the
Plan and shall be entitled to pursue any available remedies under section 502(a)
of ERISA.
Section 8. Required Minimum Distributions
------------------------------
Section 8.8(f) is added to the Plan as follows:
(f) Minimum Distribution Rules Effective January 1, 2003.
(i) Effective Date. The provisions of this Section 8.8(f)
will apply for purposes of determining required minimum
distributions for calendar years beginning with the 2003
calendar year.
(1) Precedence. The requirements of this article
will take precedence over any inconsistent
provisions of the plan.
(2) Requirements of Treasury Regulations
Incorporated. All distributions required under
this article will be determined and made in
accordance with the Treasury regulations under
section 401(a)(9) of the Internal Revenue Code.
(3) TEFRA Section 242(b)(2) Elections.
Notwithstanding the other provisions of this
article, other than section (f)(i)(2) above,
distributions may be made under a designation
made before January 1, 1984, in accordance with
section 242(b)(2) of the Tax Equity and Fiscal
Responsibility Act (TEFRA) and the provisions of
the plan that relate to section 242(b)(2) of
TEFRA.
-9-
<PAGE>
(ii) Timing and Manner of Distribution
(1) Required Beginning Date. The participant's
entire interest will be distributed, or begin to
be distributed, to the participant no later than
the participant's required beginning date.
(2) Death of Participant Before Distributions Begin.
If the participant dies before distributions
begin, the participant's entire interest will be
distributed, or begin to be distributed, no
later than as follows:
(A) If the participant's surviving spouse is
the participant's sole designated
beneficiary, then, except as provided in
the adoption agreement, distributions to
the surviving spouse will begin by
December 31 of the calendar year
immediately following the calendar year
in which the participant died, or by
December 31 of the calendar year in
which the participant would have
attained age 70 1/2, if later.
(B) If the participant's surviving spouse is
not the participant's sole designated
beneficiary, then, except as provided in
the adoption agreement, distributions to
the designated beneficiary will begin by
December 31 of the calendar year
immediately following the calendar year
in which the participant died.
(C) If there is no designated beneficiary as
of September 30 of the year following
the year of the participant's death, the
participant's entire interest will be
distributed by December 31 of the
calendar year containing the fifth
anniversary of the participant's death.
(D) If the participant's surviving spouse is
the participant's sole designated
beneficiary and the surviving spouse
dies after the participant but before
distributions to the surviving spouse
begin, this section (f)(ii)(2), other
than section (f)(ii)(2)(A), will apply
as if the surviving spouse were the
participant.
For purposes of this section (f)(ii)(2) and section (f)(v), distributions are
considered to begin on the participant's required beginning date (or, if section
(f)(ii)(2)(D) applies, the date distributions are required to begin to the
-10-
<PAGE>
surviving spouse under section (f)(ii)(2)(A)). If annuity payments irrevocably
commence to the participant before the participant's required beginning date (or
to the participant's surviving spouse before the date distributions are required
to begin to the surviving spouse under section (f)(ii)(2)(A), the date
distributions are considered to begin is the date distributions actually
commence.
(3) Form of Distribution. Unless the participant's interest
is distributed in the form of an annuity purchased from
an insurance company or in a single sum on or before the
required beginning date, as of the first distribution
calendar year distributions will be made in accordance
with subsections f(iii), (iv) and (v). If the
participant's interest is distributed in the form of an
annuity purchased from an insurance company,
distributions thereunder will be made in accordance with
the requirements of section 401(a)(9) of the Code and
the Treasury regulations. Any part of the participant's
interest which is in the form of an individual account
described in section 414(k) of the Code will be
distributed in a manner satisfying the requirements of
section 401(a)(9) of the Code and the Treasury
regulations that apply to individual accounts.
(iii) Determination of Amount to be Distributed Each Year.
(1) General Annuity Requirements. If the participant's
interest is paid in the form of annuity distributions
under the plan, payments under the annuity will satisfy
the following requirements:
(A) the annuity distributions will be paid in
periodic payments made at intervals not longer
than one year;
(B) the distribution period will be over a life (or
lives) or over a period certain not longer than
the period described in section (f)(iv) or
(f)(v);
(C) once payments have begun over a period certain,
the period certain will not be changed even if
the period certain is shorter than the maximum
permitted;
(D) payments will either be nonincreasing or
increase only as follows:
(i) by an annual percentage increase that
does not exceed the annual percentage
-11-
<PAGE>
increase in a cost-of-living index that
is based on prices of all items and
issued by the Bureau of Labor
Statistics;
(ii) to the extent of the reduction in the
amount of the participant's payments to
provide for a survivor benefit upon
death, but only if the beneficiary whose
life was being used to determine the
distribution period described in
subsection (f)(iv) dies or is no longer
the participant's beneficiary pursuant
to a qualified domestic relations order
within the meaning of section 414(p);
(iii) to provide cash refunds of employee
contributions upon the participant's
death; or
(iv) to pay increased benefits that result
from a plan amendment.
(2) Amount Required to be Distributed by Required Beginning
Date. The amount that must be distributed on or before
the participant's required beginning date (or, if the
participant dies before distributions begin, the date
distributions are required to begin under section
(f)(ii)(2)(A) or (B)) is the payment that is required
for one payment interval. The second payment need not be
made until the end of the next payment interval even if
that payment interval ends in the next calendar year.
Payment intervals are the periods for which payments are
received, e.g., bi-monthly, monthly, semi-annually, or
annually. All of the participant's benefit accruals as
of the last day of the first distribution calendar year
will be included in the calculation of the amount of the
annuity payments for payment intervals ending on or
after the participant's required beginning date.
(3) Additional Accruals After First Distribution Calendar
Year. Any additional benefits accruing to the
participant in a calendar year after the first
distribution calendar year will be distributed beginning
with the first payment interval ending in the calendar
year immediately following the calendar year in which
such amount accrues.
(iv) Requirements For Annuity Distributions That Commence During
Participant's Lifetime.
-12-
<PAGE>
(1) Joint Life Annuities Where the Beneficiary Is Not the
Participant's Spouse. If the participant's interest is
being distributed in the form of a joint and survivor
annuity for the joint lives of the participant and a
nonspouse beneficiary, annuity payments to be made on or
after the participant's required beginning date to the
designated beneficiary after the participant's death
must not at any time exceed the applicable percentage of
the annuity payment for such period that would have been
payable to the participant using the table set forth in
Q&A-2 of section 1.401(a)(9)-6T of the Treasury
regulations. If the form of distribution combines a
joint and survivor annuity for the joint lives of the
participant and a nonspouse beneficiary and a period
certain annuity, the requirement in the preceding
sentence will apply to annuity payments to be made to
the designated beneficiary after the expiration of the
period certain.
(2) Period Certain Annuities. Unless the participant's
spouse is the sole designated beneficiary and the form
of distribution is a period certain and no life annuity,
the period certain for an annuity distribution
commencing during the participant's lifetime may not
exceed the applicable distribution period for the
participant under the Uniform Lifetime Table set forth
in section 1.401(a)(9)-9 of the Treasury regulations for
the calendar year that contains the annuity starting
date. If the annuity starting date precedes the year in
which the participant reaches age 70, the applicable
distribution period for the participant is the
distribution period for age 70 under the Uniform
Lifetime Table set forth in section 1.401(a)(9)-9 of the
Treasury regulations plus the excess of 70 over the age
of the participant as of the participant's birthday in
the year that contains the annuity starting date. If the
participant's spouse is the participant's sole
designated beneficiary and the form of distribution is a
period certain and no life annuity, the period certain
may not exceed the longer of the participant's
applicable distribution period, as determined under this
section (f)(iv)(2), or the joint life and last survivor
expectancy of the participant and the participant's
spouse as determined under the Joint and Last Survivor
Table set forth in section 1.401(a)(9)-9 of the Treasury
regulations, using the participant's and spouse's
attained ages as of the participant's and spouse's
birthdays in the calendar year that contains the annuity
starting date.
-13-
<PAGE>
(v) Requirements For Minimum Distributions Where Participant Dies
Before Date Distributions Begin.
(1) Participant Survived by Designated Beneficiary. Except
as provided in the adoption agreement, if the
participant dies before the date distribution of his or
her interest begins and there is a designated
beneficiary, the participant's entire interest will be
distributed, beginning no later than the time described
in section (f)(ii)(2)(A) or (B), over the life of the
designated beneficiary or over a period certain not
exceeding:
(A) unless the annuity starting date is before the
first distribution calendar year, the life
expectancy of the designated beneficiary
determined using the beneficiary's age as of the
beneficiary's birthday in the calendar year
immediately following the calendar year of the
participant's death; or
(B) if the annuity starting date is before the first
distribution calendar year, the life expectancy
of the designated beneficiary determined using
the beneficiary's age as of the beneficiary's
birthday in the calendar year that contains the
annuity starting date.
(2) No Designated Beneficiary. If the participant dies
before the date distributions begin and there is no
designated beneficiary as of September 30 of the year
following the year of the participant's death,
distribution of the participant's entire interest will
be completed by December 31 of the calendar year
containing the fifth anniversary of the participant's
death.
(3) Death of Surviving Spouse Before Distributions to
Surviving Spouse Begin. If the participant dies before
the date distribution of his or her interest begins, the
participant's surviving spouse is the participant's sole
designated beneficiary, and the surviving spouse dies
before distributions to the surviving spouse begin, this
section (f)(v) will apply as if the surviving spouse
were the participant, except that the time by which
distributions must begin will be determined without
regard to section (f)(ii)(2)(A).
-14-
<PAGE>
(vi) Definitions.
(1) Designated beneficiary. The individual who is designated
as the beneficiary under section 15.1 of the plan and is
the designated beneficiary under section 401(a)(9) of
the Internal Revenue Code and section 1.401(a)(9)-1,
Q&A-4, of the Treasury regulations.
(2) Distribution calendar year. A calendar year for which a
minimum distribution is required. For distributions
beginning before the participant's death, the first
distribution calendar year is the calendar year
immediately preceding the calendar year which contains
the participant's required beginning date. For
distributions beginning after the participant's death,
the first distribution calendar year is the calendar
year in which distributions are required to begin
pursuant to section (f)(ii)(2).
(3) Life expectancy. Life expectancy as computed by use of
the Single Life Table in section 1.401(a)(9)-9 of the
Treasury regulations.
(4) Required beginning date. The date specified in section
8.3 of the plan.
Section 9. Mortality Tables
----------------
1. Effective date. This section shall apply to distributions with annuity
starting dates on or after December 31, 2002.
2. Notwithstanding any other plan provisions to the contrary, the
applicable mortality table used for purposes of adjusting any benefit or
limitation under 415(b)(2)(B), (C), or (D) of the Internal Revenue Code
as set forth in Appendix A of the plan and the applicable mortality
table used for purposes of satisfying the requirements of 417(e) of the
Internal Revenue Code as set forth in Appendix A of the plan is the
table prescribed in Rev. Rul. 2001-62.
-15-
<PAGE>
IN ALL OTHER RESPECTS, this Plan is continued in full force and effect.
In order to maintain the terms of the Plan in a single document, this Amendment
may be incorporated into the most recent restatement of the Plan.
IN WITNESS WHEREOF, the Company has caused this First Amendment to be
executed by its duly authorized officer this 15th day of August, 2002.
ATTEST: Met Pro Corporation
By /s/ Gary J. Morgan By /s/ William L. Kacin
----------------------------- -------------------------------
Title: V/P Finance Title: Pesident and CEO
------------------------- ----------------------------
-16-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>5
<FILENAME>ex10t.txt
<DESCRIPTION>EXHIBIT 10.T
<TEXT>
Exhibit (10.t)
SECOND (QUALIFICATION) AMENDMENT TO THE
MET-PRO CORPORATION SALARIED PENSION PLAN
This Second (Qualification) Amendment to the Met-Pro Corporation
Salaried Pension Plan (the "Plan") is made by Met-Pro Corporation (the
"Company") and is effective as of September 1, 2000 (or other specified
effective dates).
W I T N E S S E T H:
WHEREAS, the Company maintains the Plan, amended and restated as of
September 1, 2000 (and other effective dates) for its eligible employees;
WHEREAS, Section 16.1 of the Plan permits the Company to amend the Plan;
and
WHEREAS, the Company desires to amend the Plan to make certain technical
changes to comply with law as required by the Internal Revenue Service and to
make other clarifying changes.
NOW THEREFORE, the Plan is hereby amended, effective September 1, 2000
(or other specified effective dates) as follows:
1. The following sentence is added to the end of the first
paragraph of
Section 1.21 of the Plan, effective January 1, 1997:
(ii) As used herein, "Leased Employee" means any person who
is not an employee and who provides services to the
Company: (a) under an agreement between the Company and
the leasing organization, (b) such services have been
performed by the person for the recipient (or for the
recipient and related persons as defined in Code Section
414(n)) on a substantially full-time basis for at least
one year, and (c) such services are performed under the
primary direction and control of the Company.
Notwithstanding, a "leased employee" shall be treated as
an Employee of the Company
<PAGE>
solely to the extent required under Code Section 414(n)
(but shall in no event be eligible to participate in the
Plan). However, "leased employees" shall not be treated
as Employees of the Company to the extent permitted
under Code Section 414(n) if the leased employees
constitute no more than 20% of the Company's "non-highly
compensated" work force, and the leasing organization
maintains a qualified nonintegrated money purchase
pension plan in which: (a) at least 10% of compensation
(within the meaning of Code Section 414(n)) contributed
for each participant, (b) participants are immediately
fully vested in all contributions, and (c) each leasing
organization employee immediately participates.
2. Section 8.1(a) of the Plan is amended to read as follows:
(a) a Single Life Annuity - an annuity payable in equal
monthly installments to the retired Participant for his
life; the Single Life Annuity shall be the normal form
of payment for a single (unmarried) Participant; or
3. Section 9.3 of the Plan is amended by deleting at the end
thereof "the terms of which are specifically incorporated herein
by reference."
4. The following sentence is added to the end of Section 17.1(e) of
the Plan:
Plans that have terminated within the last five (5)
years of the determination date shall be included in the
definition of Required Aggregation Group of Plans.
IN WITNESS WHEREOF, the Company has caused this Second (Qualification)
Amendment to be executed by its duly authorized officers this 23rd day of
October, 2002.
[signature page follows]
-2-
<PAGE>
ATTEST: MET-PRO CORPORATION AND
PLAN ADMINISTRATOR
By: /s/ Gary J. Morgan By: /s/ William L. Kacin
----------------------------- ----------------------------
Title: Vice President - Finance Title: President and CEO
-------------------------- ---------------------------
-3-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>6
<FILENAME>ex10u.txt
<DESCRIPTION>EXHIBIT 10.U
<TEXT>
Exhibit (10.u)
AMENDMENT NO. 3
TO THE
MET-PRO CORPORATION DIRECTORS'
RETIREMENT PLAN
This Amendment to the Met-Pro Corporation Directors' Retirement Plan
(the "Plan") is made and is effective this 24th day of February, 2003.
WHEREAS, Met-Pro Corporation (the "Company") previously adopted the Plan
and now wishes to further amend the Plan in certain respects.
NOW, THEREFORE, the Plan is hereby amended as follows:
1. Section 5(e) is restated as follows:
(e) If a Change in Control (as defined in Section 6
hereof) occurs, or if the Company fails to cure any breach of
its obligations under this Plan in less than 30 days after
receiving written notice of the same from a Director or a
Director's surviving spouse or estate (a "Default"), then the
Company (i) shall immediately prior to the Change in Control, or
in the case of a Default, on the 31st day following the date of
such written notice, make an irrevocable contribution to the
Trust (as hereafter defined) in the amount provided for in
Subsection 1(b) of the Trust Agreement (as hereafter defined)
and (ii) shall be liable to pay the reasonable attorneys' fees
and expenses incurred by any such beneficiary in filing suit to
enforce any provision of this Subsection and prosecuting such
claims should such beneficiary be the prevailing party in such
litigation. Each Director shall be entitled to an immediate lump
sum payment of the Retirement Payments then applicable to such
person's status pursuant to Subsection 4(a) and, if applicable,
Subsection 4(b) of this Plan, in both cases without regard and
not subject to the lump sum limitations of Section 4(d) of this
Plan. A former Director who has retired prior to a Change in
Control (or such Director's spouse, if such Director has died)
shall be entitled to an immediate lump sum payment of all
Retirement Payments to which such Director was entitled under
Section 4 hereof and which have not yet been paid, without
regard and not subject to the lump sum limitations of Section
4(d) of this Plan.
2. Section 7 is restated as follows:
7. NO OBLIGATION TO MAINTAIN RESERVES.
The Company has executed an agreement, as amended, with
a Trustee (the "Trust Agreement") to hold, invest and disburse
funds set aside for payments required under the Plan. However,
except as provided in Subsection 5(e) of this Plan,
-1-
<PAGE>
contributions to the trust created by the Trust Agreement (the
"Trust") by the Company shall be in the discretion of the Board
of Directors. Except as provided in Subsection 5(e), nothing in
this Plan shall create an obligation on the Company's part to
set aside or earmark any monies or other assets specifically for
the purposes of this Plan or to pay any specified amount to the
Trust. To the extent that assets of the Trust are insufficient
to meet the Company's obligations under the Plan, such
obligations will be paid out of the general funds of the
Company.
3. This Amendment has been approved and authorized by the Company's
Board of Directors by action taken as of the date hereof.
IN WITNESS WHEREOF, the Company has caused its authorized officers to
execute this Amendment on behalf of the Company.
WITNESS MET-PRO CORPORATION
/s/ Raymond J. De Hont BY: /s/ Gary J. Morgan
- ----------------------------- ---------------------------------------
Gary J. Morgan, Vice President--Finance
-2-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>7
<FILENAME>ex10v.txt
<DESCRIPTION>EXHIBIT 10.V
<TEXT>
Exhibit (10.v)
Amendment No. 1 Effective as of February 24, 2003 (this "Amendment") to Met-Pro
Corporation Supplemental Executive Retirement Plan Established Effective
February 1, 2000
Met-Pro Corporation (the "Company") established effective February 1, 2000 a
Supplemental Executive Retirement Plan (the "Supplemental Plan") to provide for
the payment of supplementary retirement benefits to William L. Kacin (hereafter,
"Eligible Executive").
Section 8 of the Supplemental Plan provides that the Board may amend the
Supplemental Plan at any time and from time to time, provided that no such
amendment may adversely affect the accrued benefit of the Eligible Executive,
his surviving spouse or other beneficiaries, as more fully provided for therein.
All terms used but not defined in this Amendment shall have such meaning as is
ascribed to them in the Supplemental Plan.
By action taken on February 24, 2003, the Board hereby amends the Supplemental
Plan as follows: the date "February 24, 2003" shall be deemed to replace the
date "January 31, 2004" on page 3 of the Supplemental Plan in the column
entitled "Continued Employment until", with the effect that the Vested
Percentage of the Eligible Executive shall be deemed to be 100% as of February
24, 2003.
Except to the extent set forth herein, the Supplemental Plan is unmodified, and
remains in full force and effect.
Executed this 21st day of March, 2003, effective as of February 24, 2003.
MET-PRO CORPORATION
BY:/s/ Gary J. Morgan
------------------
Gary J. Morgan, Vice President--Finance
Witness:/s/ Marion Berkey
-----------------
Marion Berkey
-------------
print name
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>8
<FILENAME>ex10w.txt
<DESCRIPTION>EXHIBIT 10.W
<TEXT>
Exhibit (10.w)
Met-Pro Corporation Directors Retirement Plan Trust Agreement
-------------------------------------------------------------
This Met-Pro Corporation Directors Retirement Plan Trust Agreement (the
"Trust Agreement") is made this 11th day of February, 2000, by and between
Met-Pro Corporation a Delaware corporation (the "Company"), and Mellon Bank,
N.A. (the "Trustee").
WITNESSETH:
WHEREAS, the Company adopted the Met-Pro Corporation Directors
Retirement Plan as amended, (the "Plan"), a copy of which is attached hereto;
and
WHEREAS, the Company wishes to establish this trust (the "Trust") to
fund its obligations under the Plan, with the assets held in the Trust to be
subject to the claims of the Company's creditors in the event the Company
becomes Insolvent (as defined in Section 3(a)) until paid to Plan participants
or their beneficiaries in such manner and at such times as specified in the
Plan.
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 management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act of 1974;
and
WHEREAS, it is the intention of the Company to make contributions to the
Trust to provide the Trust with a source of funds to assist it in the meeting of
the Company's liabilities under the Plan;
NOW, THEREFORE, the parties do hereby establish the Trust and agree that
the Trust shall be comprised, held and disposed of as follows:
Section 1. Establishment of Trust.
(a) The initial principal of the Trust, together with any future
contributions to the Trust and any other assets held in the Trust, and earnings
thereon, are collectively referred to herein as the "Trust Assets". The Company
shall make contributions to the Trust in cash or other property acceptable to
the Trustee. The Trustee shall hold, administer and distribute Trust Assets as
provided in this Trust Agreement. The Company shall have the sole duty and
responsibility for the determination of the accuracy or sufficiency of the
contributions to be made under the Plan.
(b) Upon a Change of Control (as defined in Section 14 of the Trust),
the Trustee shall, immediately upon the Change of Control, pay each Plan
participant or beneficiary thereof the benefits to which Plan participants or
their beneficiaries would be entitled pursuant to the terms of the Plan as of
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the date on which the Change of Control occurred to the extent then funded under
the Trust.
In the event a Change of Control of the Company (as defined in Section
14 of the Trust) shall be deemed to occur (whenever such shall occur, and
whether or not the Eligible Executive is then employed by the Company or shall
be alive), all payments due to the Eligible Executive, his surviving spouse or
other beneficiary under the Plan shall be accelerated and immediately paid in a
lump sum payment in an amount determined in accordance with the provisions of
the Plan.
(c) The Trust hereby established shall be irrevocable except as
explicitly provided to the contrary in Section 3 or 4.
(d) The Trust is intended to be a "grantor trust", of which the 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 (the "Code"), and
shall be construed accordingly.
(e) The Trust Assets shall be used exclusively to discharge the
Company's obligations under the Plan, except as provided to the contrary in
Section 3 or 4 hereof. Neither any Plan participant nor beneficiary thereof
shall have a preferred claim on, or any beneficial ownership interest in, any of
the Trust Assets. Each Plan participants' rights to benefits under the Plan and
this Trust Agreement shall be mere unsecured contractual rights against the
Company. Trust Assets are subject to the claims of the Company's general
creditors to the extent provided under federal and state law if the Company
becomes Insolvent
(f) The Company represents and warrants to the Trustee that the Plan is
not covered under Title I of ERISA.
(g) The Company's Chief Financial Officer or such Officer's designee
shall have authority to act for the Company under this Trust Agreement.
Section 2. Payments to Plan Participants.
(a) Pending the Company's funding of the Trust, the Company shall pay
all benefits to Plan participants as they become due under the Plan. After the
Trust is funded, the Company may continue to make payment directly. In such
case, the Company shall notify the Trustee of its decision to make payment
directly prior to the time payment is due. In addition, if at any time the Trust
Assets are not sufficient to make payment in accordance with the terms of the
Plan, the Company shall make the balance of each such payment as it falls due.
The Trustee shall notify the Company and affected participants in the Plan if
Trust Assets are not sufficient to make a scheduled payment.
(b) After the Company funds the Trust, in advance of the time that any
amounts are payable under the Plan, the Company shall deliver to the Trustee a
schedule (the "Payment Schedule") that indicates with respect to each
Participant (i) the amounts payable or provides a formula or other instructions
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acceptable to the Trustee for determining the amounts so payable, (ii) the form
in which such amount is to be paid, and (iii) the time of commencement and
duration for payment of such amounts. Except as otherwise provided herein, upon
direction of the Company, the Trustee shall make payments in accordance with
such Payment Schedule.
It is the intent of the Company and the Trustee that the Company shall
be responsible for determining and effecting all federal, state and local tax
aspects of the Plan and the Trust, including without limitation income taxes
payable on the Trust's income, if any, any required withholding of income or
other payroll taxes in connection with the payment of benefits from the Trust
pursuant to the Plan, and all reporting required in connection with any such
taxes. To the extent that the Company is required by applicable law to pay or
withhold such taxes or to file such reports, such obligation shall be a
responsibility allocated to the Company, as the case may be, hereunder. To the
extent the Trustee is required by applicable law to pay or withhold such taxes
or to file such reports, the Company shall inform the Trustee of such
obligation, shall direct the Trustee with respect to the performance of such
obligations and shall provide the Trustee with all information required by the
Trustee to meet such obligations.
(c) The entitlement of a Plan participant or beneficiary thereof to
benefits under the Plan shall be determined by the Company or such party as it
shall designate under the Plan, and any claim for such benefits shall be
considered and reviewed under the procedures set out in the Plan.
Section 3. The Trustee's Responsibility Regarding Payments to Trust
Beneficiaries when the Company is Insolvent.
(a) The Trustee shall cease payment to Plan participants or their
beneficiaries if the Company becomes Insolvent. The Company shall be considered
"Insolvent" for purposes of this Trust Agreement if (i) if the Company is unable
to pay its debts as they become due or (ii) the 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, the Trust Assets
shall be subject to claims of general creditors of the Company.
(1) The Company shall have the duty to inform the
Trustee and affected participants in the Plan in writing if the
Company becomes Insolvent. If a person claiming to be a creditor
of the Company alleges in writing to the Trustee that the
Company has become Insolvent, the Trustee shall determine
whether the Company is Insolvent and, pending such
determination, the Trustee shall discontinue payment to Plan
participants and beneficiaries. In all cases, the Trustee shall
be entitled to conclusively rely upon the written certification
of the Board of Directors or the Chief Executive Officer of the
Company when determining whether the Company is Insolvent.
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<PAGE>
(2) Unless the Trustee has actual knowledge that the
Company is Insolvent or has received notice from the Company or
a person claiming to be a creditor alleging the Company is
Insolvent, the Trustee shall have no duty to inquire whether the
Company is Insolvent. The Trustee may in all events rely on such
evidence concerning the Company's solvency as may be furnished
to the Trustee that provides the Trustee with a reasonable basis
for making a determination concerning the Company's solvency.
(3) If at any time the Trustee has determined that the
Company is Insolvent, the Trustee shall discontinue payments to
Plan participants and their beneficiaries and shall hold the
Trust Assets for the benefit of the Company's general creditors.
Nothing in this Trust Agreement shall in any way diminish any
rights of Plan participants and their beneficiaries to pursue
rights as a general creditor of the Company with respect to
payments due under the Plan.
(4) The Trustee shall resume payments in accordance with
Section 2 of this Trust Agreement only after the Trustee has
determined that the Company is not Insolvent (or no longer
Insolvent).
(c) Provided that there are sufficient assets, the Trustee discontinues
the payment of benefits from the Trust pursuant to Section 3 (a) 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 them
by the Company in lieu of the payments provided for hereunder during any such
period of discontinuance, plus interest at the prime rate of interest announced
from time to time by the Trustee.
Section 4. Payments to the Company.
Except as provided in Section 3 hereof, the Company shall have no right
or power to direct the Trustee to return to the Company or to divert to others
any of the Trust Assets before all payments required under the Plan have been
made to Plan participants and their beneficiaries.
Section 5. Investment and Other Authority.
The Company and the Trustee may formulate investment policies and
standards for the investment of the Trust, which shall be broad guidelines and
shall not restrict the Trustee's investment discretion with respect to the
selection of Trust assets. Subject to the preceding sentence, the Trustee shall
have the powers described below:
(a) The Trustee may invest and reinvest the principal and income of the
Trust and keep it invested, without distinction between principal and income, in
any security or property as it, in its sole discretion, deems advisable;
provided, however, that in no event may the Trustee invest in (i) securities
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<PAGE>
(including stock or rights to acquire stock) or obligations issued by the
Company, other than a de minimis amount held in common investment vehicles in
which the Trustee invests, (ii) any asset settled or held in safekeeping outside
of the United States, or (iii) real estate. For this purpose, "real estate"
includes, but is not limited to, real property, leaseholds, mineral interests,
and any form of asset which is secured by any of the foregoing. All rights
associated with assets of the Trust shall be exercised by the Trustee or the
person designated by the Trustee, and shall in no event be exercisable by or
rest with the Participants.
(b) The Trustee may invest in securities (including stock or rights to
acquire stock) or obligations issued by the Trustee. 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.
The Company shall have the right at anytime, and acceptable to the Trustee 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.
(c) In carrying out its responsibilities under Section 5, the Trustee is
authorized:
(1) To invest and reinvest the funds received hereunder, and any
accretions thereto, without distinction between principal and income, in such
securities or in such other property, wherever situate, whether or not income
producing, including but not limited to stock, common or preferred, interests in
registered investment companies, including registered investment companies for
which the Trustee or an affiliate of the Trustee receives compensation for
providing custodial, transfer agency, investment advisory or other services (The
Company acknowledges that interest in such registered investment companies are
not bank deposits and are not insured by, guaranteed by, obligations of, or
otherwise supported by the United States of America, the Federal Deposit
Insurance Corporation, Mellon Bank, N.A. or any bank or government entity),
bonds and mortgages, and other evidences of indebtedness (including debt
securities underwritten by the Trustee or any of its affiliates, whether
individually or as a member of a divided or undivided syndicate), and deposits
in a bank or other financial institution under state or Federal supervision,
including the Trustee's banking department, which bear a reasonable rate of
interest. In making such investment, the Trustee shall not be a restricted by
any state law or statute designating investments eligible for trust funds.
(2) To hold uninvested, from time to time, without liability for
interest thereon, such amounts as are necessary for the cash requirements of the
Plan; and to hold assets of the Trust in cash or equivalents, government
securities, or straight debt securities in varying proportions when and for so
long as, in the opinion of the Trustee, prevailing market and economic
considerations indicate that it is in the best interest of the Trust to do so.
(3) To vote upon any stocks, bonds or other securities; to give
general or special proxies or powers of attorney with or without power of
substitution, to exercise any conversion privileges, subscription rights, or
other options, and to make any payments incidental thereto,
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to oppose or to consent to, or otherwise participate in, corporate
reorganizations or other changes affecting corporate securities, to delegate
discretionary powers, and to pay any assessments or charges in connection
therewith; and generally to exercise any of the powers of an owner with respect
to stocks, bonds, securities, or other properties held as part of the Trust.
(4) To settle, compromise, or submit to arbitration any claims,
debts, or damage due or owing to or from the Trust, to commence or defend suits
or legal or administrative proceedings, and to represent the Trust in all legal
and administrative proceedings, provided, however, that the Trustee shall not be
obligated to take any action or to appear and participate in any action which
would subject it to expense or liability unless it is first indemnified in an
amount and manner satisfactory to it, or its furnished with funds sufficient, in
its sole judgement, to cover the same.
(5) To purchase, enter, sell hold, and generally deal in any
manner in and with contracts for the immediate or future delivery of financial
instruments of any issuer or of any other property; the Trustee may also grant,
purchase, sell, exercise, permit to expire, permit to be held in escrow, or
otherwise acquire, dispose of, hold and generally deal in any manner with and in
all forms of options or any combination thereof.
(6) To take all action necessary to pay for authorized
transactions, including borrowing or raising monies from any lender, including
the Trustee, in its corporate capacity in conjunction with its duties under this
Agreement and upon such terms and conditions as the Trustee may deem advisable
to settle security purchases and securing the repayments thereof by pledging all
or any part of the Account.
(7) To appoint custodians, subcustodians or subtrustees
(including affiliates of the Trustee), as to part or all of the Trust. The
Trustee shall not be responsible or liable for any losses or damages suffered by
the Company arising as a result of the insolvency of any custodian, subcustodian
or subtrustee, except to the extent the Trustee was negligent in its selection
or continued retention of such agent.
(8) To hold property in nominee name, in bearer form, or in book
entry form, in a clearinghouse corporation or in a depository (including an
affiliate of the Trustee), so long as the Trustee's records clearly indicate
that the assets held are a part of the Trust. The Trustee shall not be
responsible for any losses resulting from the deposit or maintenance of
securities or other property (in accordance with market practice, custom, or
regulation) with any recognized clearing facility, book-entry system,
centralized custodial depository, or similar organization.
(9) Generally to do all acts, whether or not expressly
authorized, which the Trustee may reasonably deem necessary or desirable for the
protection of the Trust.
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<PAGE>
(d) Notwithstanding anything to the contrary, the Company may reserve to
itself the exclusive authority to direct the Trustee as to the acquisition,
retention or disposition of all or any portion of the assets of the Trust and,
to the extent the Company reserves such authority, the Trustee shall not be
responsible for the management and control of such assets other than to serve as
custodian of them. Upon receipt by the Trustee of a written notice from the
Company advising the Trustee that the Company has reserved such authority, the
Trustee shall, pursuant to such notice, invest all or any portion of the Trust
designated in such notice only in accordance with the instructions of the
Company. The Trustee shall be under no duty to question any instruction of the
Company. Any such instruction may be of continuing nature or otherwise and may
be changed or revoked in writing by the Company at any time. In the absence of
such a written direction, the Trustee shall have full authority as to the
acquisition, retention or disposition of the assets of the Trust. The Company
may revoke or amend the investment powers that it reserves to itself provided
such revocation or amendment is in writing and is consented to in advance by the
Trustee.
Section 6. Contractual Settlement and Income; Market Practice Settlements.
(a) In accordance with the Trustee's standard operating procedure, the
Trustee shall credit the Trust with income and maturity proceeds on securities
on contractual payment date net of any taxes or upon actual receipt. To the
extent the Trustee credits income on contractual payment date, the Trustee may
reverse such accounting entries to the contractual payment date if the Trustee
reasonably believes that such amount will not be received.
(b) In accordance with the Trustee's standard operating procedure, the
Trustee will attend to the settlement of securities transactions on the basis of
either contractual settlement date accounting or actual settlement date
accounting. To the extent the Trustee settles certain securities transactions on
the basis of contractual settlement date accounting, the Trustee may reverse to
the contractual settlement date any entry relating to such contractual
settlement if the Trustee reasonably believes that such amount will not be
received.
(c) Settlements of transactions may be effected in trading and
processing practices customary in the jurisdiction or market where the
transaction occurs. The Company acknowledges that this may, in certain
circumstances, require the delivery of cash or securities (or other property)
without the concurrent receipt of securities (or other property) or cash. In
such circumstances, the Trustee shall have no responsibility for nonreceipt of
payment (or late payment) or nondelivery of securities or other property (or
late delivery) by the counterparty.
Section 7. 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.
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Section 8. Accounting by the Trustee.
The 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 between the Company and
the Trustee. Within ninety (90) days following the close of each calendar year
and within ninety (90) days after the removal or resignation of the Trustee, the
Trustee shall deliver to the Company and the affected participants in the Plan a
written account of its administration of the Trust during such year or during
the period from the close of the last preceding year to the date of such removal
or resignation, setting forth all investments, receipts, disbursements and other
transactions effected by it, including a description of all securities and
investments purchased and sold with the cost or net proceeds of such purchases
or sales (accrued and showing all cash, securities and other property held in
the Trust at the end of such year or as of the date of such removal or
resignation, as the case may be. If, within ninety (90) days after the Trustee
mails to the Company a statement with respect to the Trust, the Company has not
given the Trustee written notice of any exception or objection thereto, the
statement shall be deemed to have been approved, and in such case, the Trustee
shall not be liable for any matters reasonably apparent from the face of such
statements.
Section 9. Responsibility of the Trustee.
(a) The 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 an
enterprise of a like character and with like aims, provided, however, that the
Trustee shall incur no liability to any person for any action taken pursuant to
the written direction, request or approval of the Company.
In the event of a dispute between the Company and a third party, the
Trustee may apply to a court of competent jurisdiction to resolve the dispute.
(b) The Trustee is not a party to, and has no duties or responsibilities
under, the Plan other than those that may be expressly contained in this
Agreement. In any case in which a provision of this Agreement conflicts with any
provision in the Plan, this Agreement shall control.
(c) The Trustee shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Agreement and shall be held harmless in acting
upon any notice, request, direction, instruction, consent, certification or
other instrument believed by it to be genuine and delivered by the proper party
or parties.
(d) The Company agrees to indemnify and hold harmless the Trustee, its
parent, subsidiaries and affiliates and each of their respective officers,
directors, employees and agents from and against all liability, loss and
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expense, including reasonable attorneys' fees and expenses incurred by the
Trustee or any of the foregoing indemnities arising out of or in connection with
this Agreement, except as a result of the Trustee's own negligence or willful
misconduct. This indemnification shall survive the termination of this
Agreement.
(e) If the Trustee undertakes or defends any litigation or other claim
or action or participates in a negotiation resulting in a settlement prior to
the commencement of litigation arising in connection with this Trust, the
Company agrees to indemnify the Trustee against the Trustee's reasonable costs,
expenses and liabilities (including, without limitation, attorneys' fees and
expenses) relating thereto and to be primarily liable for such payments. This
provision shall not apply, however, to any litigation claim or action where the
Trustee's actions are determined to involve fraud, self-dealing or breach of the
Trustee's duties hereunder. If the Company does not pay such costs, expenses and
liabilities in a reasonably timely manner, the Trustee may obtain payment from
the Trust.
(f) The Trustee may consult with legal counsel (who may also be counsel
for the Company generally) with respect to any of its duties or obligations
hereunder and shall have no liability for any action or failure to act
exclusively in reliance upon the reasonable written advice of such counsel.
(g) The Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants and other professionals to assist it in
performing any of its duties or obligations hereunder.
(h) The 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.
(i) Notwithstanding anything in this Agreement to the contrary contained
herein, the Trustee shall not be responsible or liable for any losses to the
Trust resulting from any event beyond the reasonable control of the Trustee, its
agents or custodians, including but not limited to nationalization, strikes,
expropriation, devaluation, seizure, or similar action by any governmental
authority, de facto or de jure; or enactment, promulgation, imposition or
enforcement by any such governmental authority of currency restrictions,
exchange controls, levies or other charges affecting the Trust's property; or
the breakdown, failure or malfunction or any utilities or telecommunications
systems; or any order or regulation of any banking or securities industry
including changes in market rules and market conditions affecting the execution
or settlement of transactions; or acts of war, terrorism, insurrection or
revolution; or acts of God; or any other similar event. This Section shall
survive the termination of this Agreement.
(j) The Trustee shall not be liable for any act of omission of any other
person in carrying out any responsibility imposed upon such person and under no
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circumstances shall the Trustee be liable for any indirect, consequential, or
special damages with respect to its role as Trustee.
(k) Notwithstanding any powers granted to the Trustee pursuant to this
Trust Agreement or applicable law, the 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 Code.
Section 10. Compensation and Expenses of the Trustee.
The Company shall pay all agreed upon administrative and Trustee's fees
and reasonable expenses. If not so paid, the fees and expenses shall be paid
from the Trust. The Trustee shall be entitled to fees for services as mutually
agreed. The Company acknowledges that as part of the Trustee's compensation, the
Trustee may earn interest on balances including disbursement balances and
balances arising from purchase and sale transactions. If the Trustee advances
cash or securities to the Trust for any purpose, or in the event that the
Trustee shall incur or be assessed taxes, interest, charges, expenses,
assessments, or other liabilities in connection with the performance of this
Agreement, except such as may arise from its own negligent action, negligent
failure to act or willful misconduct, any property at any time held in the Trust
Fund shall be security therefor and the Trustee shall be entitled to collect
from the Trust sufficient cash for reimbursement, and if such cash is
insufficient, dispose of the assets of the Trust Fund to the extent necessary to
obtain reimbursement. To the extent the Trustee advances funds to the Trust for
disbursements or to the effect the settlement of purchase transactions, the
Trustee shall be entitled to collect from the Trust an amount equal to what
would have been earned on the sums advanced (an amount approximating "federal
funds" interest rate).
Section 11. Resignation and Removal of the Trustee.
(a) The Trustee may resign at any time by written notice to the Company
and affected participants in the Plan, which shall be effective thirty (30)
calendar days after receipt of such notice unless the Company and the Trustee
agree otherwise.
(b) The Trustee may be removed by the Company without cause or reason on
sixty (60) calendar days' notice or upon shorter notice accepted by the Trustee.
(c) Upon resignation or removal of the Trustee and appointment of a
successor, all Trust Assets shall subsequently be transferred to the successor.
The transfer shall be completed within ninety (90) calendar days after receipt
of notice of resignation, removal or transfer, unless the Company extends the
time limit.
(d) If the Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 12 hereof, prior to the effective date of
resignation or removal under Section 11 (a) or (b) above. If no such appointment
has been made, the Trustee may apply to a court of competent jurisdiction for
10
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appointment of a successor or for instructions. All reasonable expenses of the
Trustee in connection with the legal proceeding for appointment of a successor
shall be allowed as administrative expenses of the Trust.
Section 12. Appointment of Successor.
(a) If the Trustee resigns or is removed in accordance with Section 11
(a) or (b) hereof, the Company shall appoint a successor, which successor must
be a corporate fiduciary independent of the Company. 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 the Company or the successor Trustee to evidence the transfer.
(b) The successor Trustee need not examine the records and acts of any
prior Trustee and may retain or dispose of existing Trust Assets, subject to
Section 5 hereof. The successor Trustee shall not be responsible for, and the
Company shall indemnify and defend the successor Trustee from, 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 13. Amendment or Termination.
(a) This Trust Agreement may be amended only by a written instrument
executed by the Trustee and the Company.
(b) The Trust shall not terminate until the date on which no Plan
participant or beneficiary is entitled to payments under the Plan. Upon
termination of the Trust, any assets remaining in the Trust shall be returned to
the Company.
Section 14. 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) Notwithstanding anything to the contrary contained elsewhere in this
Trust Agreement, any reference to the Plan or Plan provisions which require
knowledge or interpretation of the Plan shall impose a duty upon the Company to
communicate such knowledge or interpretation to the Trustee. The Trustee shall
11
<PAGE>
have no obligation to know or interpret any portion of the Plan and shall in no
way be liable for any proper action taken contrary to the Plan.
(d) This Trust Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania. Met-Pro
Corporation and Mellon Bank, N.A. hereby expressly waive, to the full extent
permitted by applicable law, any right to trial by jury with respect to any
judicial proceeding arising from or related to this Agreement.
(e) For purpose of the Trust, Change of Control shall be deemed to
occur;
(1) If any "person" or "group of persons", which person or group
of persons are not part of present management and are acting in concert (as the
term "person" is used in Section 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended (the "Act")) becomes the "beneficial owner" (as defined in
Rule 13 d-3 promulgated under the Act) directly or indirectly of securities of
the Corporation representing thirty (30%) percent or more of the combined voting
power of the Corporation's then outstanding securities; or
(2) If at any time there shall be a change in the composition of
the Corporation's Board of Directors resulting in a majority of such Directors
as of the date hereof no longer constituting such a majority; provided, however,
that in making any such determination as to change in composition, there shall
be excluded any change where the new Director was elected by or upon
recommendation of such present majority; or
(3) If the approval by the stockholders of the Corporation of a
reorganization, merger or consolidation, in each case, with respect to which
persons who were stockholders of the Corporation immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter, own more
than fifty (50%) percent of the combined voting power of the reorganized, merged
or consolidated Corporation's then outstanding securities entitled to vote
generally in the election of Directors or with respect to a liquidation or
dissolution of the Corporation or the sale of all or substantially all of the
Corporation's assets; or
(4) At any time that the Board of Directors, in its sole
discretion, determines that a change of control has occurred, regardless of
whether such determination relates to any of the aforementioned events.
The Company shall have the duty to inform the Trustee in writing
upon the occurrence of a Change of Control. The Trustee shall be entitled to
conclusively rely upon such written certification of the Company.
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Section 15. Reliance of Representations.
(a) The Company and the Trustee each acknowledge that the other will be
relying, and shall be entitled to rely, on the representations, undertakings and
acknowledgments of the other as set forth in this Agreement. The Company and the
Trustee each agree to notify the other and affected participants in the Plan
promptly if its representations, undertakings, or acknowledgments set forth in
this Agreement ceases to be true.
(b) The Company and the Trustee hereby each represent and warrant to the
other that it has full authority to enter into this Agreement upon the terms and
conditions hereof and that the individual executing this Agreement on their
behalf has the requisite to bind the Company and the Trustee to this Agreement.
Attest: Met-Pro Corporation
/s/ Gary J. Morgan By: /s/ William L. Kacin
-------------------------- --------------------------------
Secretary William L. Kacin
Chairman, Chief Executive
Officer and President
(Corporate Seal)
Attest: Mellon Bank, N.A.
/s/ Raph C. Phellep By: /s/ Christine A. Bloom
-------------------------- --------------------------------
Secretary Vice President
(Corporate Seal)
13
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>9
<FILENAME>ex10x.txt
<DESCRIPTION>EXHIBIT 10.X
<TEXT>
Exhibit (10.x)
AMENDMENT NO. 1
TO
DIRECTOR'S RETIREMENT PLAN TRUST AGREEMENT
by and between
MET-PRO CORPORATION
and
MELLON BANK, N.A.
THIS AMENDMENT TO THE DIRECTOR'S RETIREMENT PLAN TRUST AGREEMENT is made
and entered into this 24th day of February, 2003 ("Amendment"), by and between
MET-PRO CORPORATION ("Company") and MELLON BANK, N.A. ("Trustee").
WITNESSETH:
WHEREAS, Company and Trustee entered into the Director's Retirement Plan
Trust Agreement ("Agreement") on February 11, 2000; and
WHEREAS, Company wishes to amend the Agreement to revise the provisions
of Section 1(b) of the Agreement to correspond to Section (b) of the Met-Pro
Pension Restoration and Supplemental Executive Retirement Plan Trust Agreement;
and
WHEREAS, Company and Mellon now wish to amend the Agreement to make such
change;
NOW, THEREFORE, the parties hereto, intending to be legally bound, do
hereby amend the Agreement as follows:
1. The definitions set forth above are incorporated herein by this
reference thereto.
2. Section 1(b) is amended and restated to read as follows:
"(b) Upon a Change of Control (as defined in Section 14 of
the Trust), the Trustee shall, immediately upon the Change
of Control, pay each Plans participant or beneficiaries thereof
the benefits to which Plan participants or their beneficiaries
would be entitled pursuant to the terms of the Plans as of the
date on which the Change of Control occurred to the extent
then funded under the Trust.
In the event a Change of Control of the Company (as
defined in Section 14 of the Trust) shall be deemed to occur
(whenever such shall occur, and whether or not the Eligible
Executive is then employed by the Company or shall be alive),
<PAGE>
all payments due to the Eligible Executive, his surviving spouse
of other beneficiary under the Plans shall be accelerated and
immediately paid in a lump sum payment in an amount determined
in accordance with the provisions of the Plans."
3. Except as set forth herein, the Agreement is hereby ratified and
confirmed and remains in full force and effect.
IN WITNESS WHEREOF, the parties hereto, each intending to be legally
bound hereby, have executed this Amendment as of the day and year first above
written. The parties hereby each represent and warrant to the other that is has
full authority to approve and adopt this Amendment and that the individual
executing this Amendment on its behalf has the requisite authority to bind
Company or Trustee to this Amendment.
MELLON BANK, N.A. MET-PRO CORPORATION
By: By: /s/ Raymond J. De Hont
------------------------ -----------------------
Name: Name: Raymond J. De Hont
----------------------- ----------------------
Title: Title: President
--------------------- --------------------
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>10
<FILENAME>ex10y.txt
<DESCRIPTION>EXHIBIT 10.Y
<TEXT>
Exhibit (10.y)
AMENDMENT NO. 2 made effective the 24th day of February, 2003 (this "Amendment")
to DIRECTORS' RETIREMENT PLAN TRUST AGREEMENT made the 11th day of February,
2000, by and between Met-Pro Corporation, a Delaware corporation (the
"Company"), and Mellon Bank, N.A. ("Trustee").
WITNESSETH:
WHEREAS, the Company and Trustee are party to an agreement entitled "Directors'
Retirement Plan Trust Agreement" (the "Trust Agreement") made the 11th day of
February, 2000 that established a Trust (as defined therein) with respect to the
Company's Directors' Retirement Plan (the "Plan").
WHEREAS, the Company and Trustee reserved the power to amend the Trust by
written instrument under Section 13(a) of the Trust Agreement.
WHEREAS, the Company and Trustee now desires to amend the Trust Agreement to the
extent and upon the terms set forth in this Amendment.
NOW, THEREFORE, the parties hereto do hereby agree as follows:
1. All terms used but not defined in this Amendment shall have such
meaning as is ascribed to them in the Trust Agreement.
2. Section 1(b) of the Trust Agreement is hereby restated as
follows:
"(b) Immediately prior to a Change of Control (as defined in
Section 14 of the Trust Agreement), the Company shall
contribute to the Trust that amount necessary to fully
fund all benefits under the Plan without regard to the
lump sum limitations provided for by Section 4(d) of the
Plan, and the Trustee shall, immediately upon receipt of
such contribution, pay each Plan participant or
beneficiary thereof the benefits to which Plan
participants or their beneficiaries are entitled
pursuant to the terms of the Plan as of the date on
which the Change of Control occurred."
3. Section 13(a) of the Trust Agreement is hereby restated as
follows:
"(a) This Trust Agreement may be amended only by a written
instrument executed by the Trustee and the Company;
provided, however, that no such amendment may adversely
affect any right or interest of any Plan participant or
beneficiary."
4. The Company agrees that should it fail to cure any breach of its
obligations under this Trust Agreement in less than 30 days
<PAGE>
after receiving written notice of same from any beneficiary of
the Trust, the Company (i) shall, on the 31st day following the
date of such written notice, make an irrevocable contribution to
the Trust in the amount provided for in Section 1(b) of this
Trust Agreement, exactly as if a Change of Control had then
occurred, and (ii) shall be liable to pay the reasonable
attorneys' fees and expenses incurred by any such beneficiary in
filing suit and prosecuting such claims should such beneficiary
be the prevailing party in such litigation.
5. Except to the extent expressly set forth herein in this
Amendment, the Trust Agreement is unmodified and in full force
and effect.
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute this Amendment as of the day and year first above written.
MET-PRO CORPORATION
BY:/s/ Raymond J. De Hont ATTEST: /s/ Gary J. Morgan
-------------------------------- ----------------------------
Secretary
MELLON BANK, N.A.
BY: ATTEST:
-------------------------------- ----------------------------
Secretary
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>11
<FILENAME>ex10z.txt
<DESCRIPTION>EXHIBIT 10.Z
<TEXT>
Exhibit (10.z)
Met-Pro Corporation Pension Restoration and Supplemental Executive Retirement
-----------------------------------------------------------------------------
Plan Trust Agreement
--------------------
This Met-Pro Corporation Pension Restoration and Supplemental Executive
Retirement Plan Trust Agreement (the "Trust Agreement") is made this 11th day of
February, 2000, by and between Met-Pro Corporation, a Delaware corporation (the
"Company"), and Mellon Bank, N.A. (the "Trustee").
WITNESSETH:
WHEREAS, the Company adopted the Met-Pro Corporation Supplemental
Executive Retirement Plan and the Met-Pro Corporation Pension Restoration Plan,
(individually, a "Plan" and collectively, the "Plans"), a copy of which is
attached hereto; and
WHEREAS, the Company wishes to establish this trust (the "Trust") to
fund its obligations under the Plans, with the assets held in the Trust to be
subject to the claims of the Company's creditors in the event the Company
becomes Insolvent (as defined in Section 3(a)) until paid to the Plans
participants or their beneficiaries in such manner and at such times as
specified in the Plans.
WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the Plans
as unfunded plans maintained for the purpose of providing deferred compensation
for a select group of management or highly compensated employees for purposes of
Title I of the Employee Retirement Income Security Act of 1974; and
WHEREAS, it is the intention of the Company to make contributions to the
Trust to provide the Trust with a source of funds to assist it in the meeting of
the Company's liabilities under the Plans;
NOW, THEREFORE, the parties do hereby establish the Trust and agree
that the Trust shall be comprised, held and disposed of as follows:
Section 1. Establishment of Trust.
(a) The initial principal of the Trust, together with any future
contributions to the Trust and any other assets held in the Trust, and earnings
thereon, are collectively referred to herein as the "Trust Assets". The Company
shall make contributions to the Trust in cash or other property acceptable to
the Trustee. The Trustee shall hold, administer and distribute Trust Assets as
provided in this Trust Agreement. The Company shall have the sole duty and
responsibility for the determination of the accuracy or sufficiency of the
contributions to be made under the Plans.
1
<PAGE>
(b) Upon a Change of Control (as defined in Section 14 of the Trust),
the Trustee shall, immediately upon the Change of Control, pay each Plans
participants or beneficiaries thereof the benefits to which Plan participants or
their beneficiaries would be entitled pursuant to the terms of the Plans as of
the date on which the Change of Control occurred to the extent then funded under
the Trust.
In the event a Change of Control of the Company (as defined in Section
14 of the Trust) shall be deemed to occur (whenever such shall occur, and
whether or not the Eligible Executive is then employed by the Company or shall
be alive), all payments due to the Eligible Executive, his surviving spouse or
other beneficiary under the Plans shall be accelerated and immediately paid in a
lump sum payment in an amount determined in accordance with the provisions of
the Plans.
(c) The Trust hereby established shall be irrevocable except as
explicitly provided to the contrary in Section 3 or 4.
(d) The Trust is intended to be a "grantor trust", of which the 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 (the "Code"), and
shall be construed accordingly.
(e) The Trust Assets shall be used exclusively to discharge the
Company's obligations under the Plans, except as provided to the contrary in
Section 3 or 4 hereof. Neither any Plan participant nor beneficiary thereof
shall have a preferred claim on, or any beneficial ownership interest in, any of
the Trust Assets. Each Plans participants' rights to benefits under the Plans
and this Trust Agreement shall be mere unsecured contractual rights against the
Company. Trust Assets are subject to the claims of the Company's general
creditors to the extent provided under federal and state law if the Company
becomes Insolvent.
(f) The Company represents and warrants to Trustee that the Plan is not
covered under Title I of ERISA.
(g) The Company's Chief Financial Officer or such Officer's designee
shall have authority to act for the Company under this Trust Agreement.
Section 2. Payments to Plan Participants.
(a) Pending the Company's funding of the Trust, the Company shall pay
all benefits to the Plans participants as they become due under the Plans. After
the Trust is funded, the Company may continue to make payment directly. In such
case, the Company shall notify the Trustee of its decision to make payment
directly prior to the time payment is due. In addition, if at any time the Trust
Assets are not sufficient to make payment in accordance with the terms of the
Plans, the Company shall make the balance of each such payment as it falls due.
The Trustee shall notify the Company and affected participants in the Plan if
Trust Assets are not sufficient to make a scheduled payment.
2
<PAGE>
(b) After the Company funds the Trust, in advance of the time that any
amounts are payable under the Plans, the Company shall deliver to the Trustee a
schedule (the "Payment Schedule") that indicates with respect to each
Participant (i) the amounts payable or provides a formula or other instructions
acceptable to the Trustee for determining the amounts so payable, (ii) the form
in which such amount is to be paid, and (iii) the time of commencement and
duration for payment of such amounts. Except as otherwise provided herein, upon
direction of the Company, the Trustee shall make payments in accordance with
such Payment Schedule.
It is the intent of the Company and the Trustee that the Company shall
be responsible for determining and effecting all federal, state and local tax
aspects of the Plans and the Trust, including without limitation income taxes
payable on the Trust's income, if any, any required withholding of income or
other payroll taxes in connection with the payment of benefits from the Trust
pursuant to the Plans, and all reporting required in connection with any such
taxes. To the extent that the Company is required by applicable law to pay or
withhold such taxes or to file such reports, such obligation shall be a
responsibility allocated to the Company, as the case may be, hereunder. To the
extent the Trustee is required by applicable law to pay or withhold such taxes
or to file such reports, the Company shall inform the Trustee of such
obligation, shall direct the Trustee with respect to the performance of such
obligations and shall provide the Trustee with all information required by the
Trustee to meet such obligations.
(c) The entitlement of a Plan participant or beneficiary thereof to
benefits under the Plans shall be determined by the Company or such party as it
shall designate under the Plans, and any claim for such benefits shall be
considered and reviewed under the procedures set out in the Plans.
Section 3. The Trustee's Responsibility Regarding Payments to Trust
Beneficiaries when the Company is Insolvent.
(a) The Trustee shall cease payment to the Plans participants or their
beneficiaries if the Company becomes Insolvent. The Company shall be considered
"Insolvent" for purposes of this Trust Agreement if (i) if the Company is unable
to pay its debts as they become due or (ii) the 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, the Trust Assets
shall be subject to claims of general creditors of the Company.
(1) The Company shall have the duty to inform the Trustee and
affected participants in the Plan in writing if the Company becomes Insolvent.
If a person claiming to be a creditor of the Company alleges in writing to the
Trustee that the Company has become Insolvent, the Trustee shall determine
whether the Company is Insolvent and, pending such determination, the Trustee
shall discontinue payment to the Plans participants and beneficiaries. In all
3
<PAGE>
cases, the Trustee shall be entitled to conclusively rely upon the written
certification of the Board of Directors or the Chief Executive Officer of the
Company when determining whether the Company is Insolvent.
(2) Unless the Trustee has actual knowledge that the Company is
Insolvent or has received notice from the Company or a person claiming to be a
creditor alleging the Company is Insolvent, the Trustee shall have no duty to
inquire whether the Company is Insolvent. The Trustee may in all events rely on
such evidence concerning the Company's solvency as may be furnished to the
Trustee that provides the Trustee with a reasonable basis for making a
determination concerning the Company's solvency.
(3) If at any time the Trustee has determined that the Company
is Insolvent, the Trustee shall discontinue payments to the Plans participants
and their beneficiaries and shall hold the Trust Assets for the benefit of the
Company's general creditors. Nothing in this Trust Agreement shall in any way
diminish any rights of the Plans participants and their beneficiaries to pursue
rights as a general creditor of the Company with respect to payments due under
the Plans.
(4) The Trustee shall resume payments in accordance with Section
2 of this Trust Agreement only after the Trustee has determined that the Company
is not Insolvent (or no longer Insolvent).
(c) Provided that there are sufficient assets, if the Trustee
discontinues the payment of benefits from the Trust pursuant to Section 3 (a)
hereof and subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to the
Plans participants or their beneficiaries under the terms of the Plans for the
period of such discontinuance, less the aggregate amount of any payments made to
them by the Company in lieu of the payments provided for hereunder during any
such period of discontinuance, plus interest at the prime rate of interest
announced from time to time by the Trustee.
Section 4. Payments to the Company.
Except as provided in Section 3 hereof, the Company shall have no right
or power to direct the Trustee to return to the Company or to divert to others
any of the Trust Assets before all payments required under the Plans have been
made to the Plans participants and their beneficiaries.
Section 5. Investment and Other Authority.
The Company and the Trustee may formulate investment policies and
standards for the investment of the Trust, which shall be broad guidelines and
shall not restrict the Trustee's investment discretion with respect to the
selection of Trust assets. Subject to the preceding sentence, the Trustee shall
have the powers described below:
(a) The Trustee may invest and reinvest the principal and income of the
Trust and keep it invested, without distinction between principal and income, in
4
<PAGE>
any security or property as it, in its sole discretion, deems advisable;
provided, however, that in no event may the Trustee invest in (i) securities
(including stock or rights to acquire stock) or obligations issued by the
Company, other than a de minimis amount held in common investment vehicles in
which the Trustee invests, (ii) any asset settled or held in safekeeping outside
of the United States, or (iii) real estate. For this purpose, "real estate"
includes, but is not limited to, real property, leaseholds, mineral interests,
and any form of asset which is secured by any of the foregoing. All rights
associated with assets of the Trust shall be exercised by the Trustee or the
person designated by the Trustee, and shall in no event be exercisable by or
rest with the Participants.
(b) The Trustee may invest in securities (including stock or rights to
acquire stock) or obligations issued by the Trustee. 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 the Plans
participants. The Company shall have the right at anytime, and acceptable to the
Trustee 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.
(c) In carrying out its responsibilities under Section 5, the Trustee is
authorized:
(1) To invest and reinvest the funds received hereunder, and any
accretions thereto, without distinction between principal and income, in such
securities or in such other property, wherever situate, whether or not income
producing, including but not limited to stock, common or preferred, interests in
registered investment companies, including registered investment companies for
which the Trustee or an affiliate of the Trustee receives compensation for
providing custodial, transfer agency, investment advisory or other services (The
Company acknowledges that interest in such registered investment companies are
not bank deposits and are not insured by, guaranteed by, obligations of, or
otherwise supported by the United States of America, the Federal Deposit
Insurance Corporation, Mellon Bank, N.A. or any bank or government entity),
bonds and mortgages, and other evidences of indebtedness (including debt
securities underwritten by the Trustee or any of its affiliates, whether
individually or as a member of a divided or undivided syndicate), and deposits
in a bank or other financial institution under state or Federal supervision,
including the Trustee's banking department, which bear a reasonable rate of
interest. In making such investment, the Trustee shall not be a restricted by
any state law or statute designating investments eligible for trust funds.
(2) To hold uninvested, from time to time, without liability for
interest thereon, such amounts as are necessary for the cash requirements of the
Plans; and to hold assets of the Trust in cash or equivalents, government
securities, or straight debt securities in varying proportions when and for so
long as, in the opinion of the Trustee, prevailing market and economic
considerations indicate that it is in the best interest of the Trust to do so.
5
<PAGE>
(3) To vote upon any stocks, bonds or other securities; to give
general or special proxies or powers of attorney with or without power of
substitution, to exercise any conversion privileges, subscription rights, or
other options, and to make any payments incidental thereto, to oppose or to
consent to, or otherwise participate in, corporate reorganizations or other
changes affecting corporate securities, to delegate discretionary powers, and to
pay any assessments or charges in connection therewith; and generally to
exercise any of the powers of an owner with respect to stocks, bonds,
securities, or other properties held as part of the Trust.
(4) To settle, compromise, or submit to arbitration any claims,
debts, or damage due or owing to or from the Trust, to commence or defend suits
or legal or administrative proceedings, and to represent the Trust in all legal
and administrative proceedings, provided, however, that the Trustee shall not be
obligated to take any action or to appear and participate in any action which
would subject it to expense or liability unless it is first indemnified in an
amount and manner satisfactory to it, or its furnished with funds sufficient, in
its sole judgement, to cover the same.
(5) To purchase, enter, sell hold, and generally deal in any
manner in and with contracts for the immediate or future delivery of financial
instruments of any issuer or of any other property; the Trustee may also grant,
purchase, sell, exercise, permit to expire, permit to be held in escrow, or
otherwise acquire, dispose of, hold and generally deal in any manner with and in
all forms of options or any combination thereof.
(6) To take all action necessary to pay for authorized
transactions, including borrowing or raising monies from any lender, including
the Trustee, in its corporate capacity in conjunction with its duties under this
Agreement and upon such terms and conditions as the Trustee may deem advisable
to settle security purchases and securing the repayments thereof by pledging all
or any part of the Account.
(7) To appoint custodians, subcustodians or subtrustees
(including affiliates of the Trustee), as to part or all of the Trust. The
Trustee shall not be responsible or liable for any losses or damages suffered by
the Company arising as a result of the insolvency of any custodian, subcustodian
or subtrustee, except to the extent the Trustee was negligent in its selection
or continued retention of such agent.
(8) To hold property in nominee name, in bearer form, or in book
entry form, in a clearinghouse corporation or in a depository (including an
affiliate of the Trustee), so long as the Trustee's records clearly indicate
that the assets held are a part of the Trust. The Trustee shall not be
responsible for any losses resulting from the deposit or maintenance of
securities or other property (in accordance with market practice, custom, or
regulation) with any recognized clearing facility, book-entry system,
centralized custodial depository, or similar organization.
6
<PAGE>
(9) Generally to do all acts, whether or not expressly
authorized, which the Trustee may reasonably deem necessary or desirable for the
protection of the Trust.
(d) Notwithstanding anything to the contrary, the Company may reserve to
itself the exclusive authority to direct the Trustee as to the acquisition,
retention or disposition of all or any portion of the assets of the Trust and,
to the extent the Company reserves such authority, the Trustee shall not be
responsible for the management and control of such assets other than to serve as
custodian of them. Upon receipt by the Trustee of a written notice from the
Company advising the Trustee that the Company has reserved such authority, the
Trustee shall, pursuant to such notice, invest all or any portion of the Trust
designated in such notice only in accordance with the instructions of the
Company. The Trustee shall be under no duty to question any instruction of the
Company. Any such instruction may be of continuing nature or otherwise and may
be changed or revoked in writing by the Company at any time. In the absence of
such a written direction, the Trustee shall have full authority as to the
acquisition, retention or disposition of the assets of the Trust. The Company
may revoke or amend the investment powers that it reserves to itself provided
such revocation or amendment is in writing and is consented to in advance by the
Trustee.
Section 6. Contractual Settlement and Income; Market Practice Settlements.
(a) In accordance with the Trustee's standard operating procedure, the
Trustee shall credit the Trust with income and maturity proceeds on securities
on contractual payment date net of any taxes or upon actual receipt. To the
extent the Trustee credits income on contractual payment date, the Trustee may
reverse such accounting entries to the contractual payment date if the Trustee
reasonably believes that such amount will not be received.
(b) In accordance with the Trustee's standard operating procedure, the
Trustee will attend to the settlement of securities transactions on the basis of
either contractual settlement date accounting or actual settlement date
accounting. To the extent the Trustee settles certain securities transactions on
the basis of contractual settlement date accounting, the Trustee may reverse to
the contractual settlement date any entry relating to such contractual
settlement if the Trustee reasonably believes that such amount will not be
received.
(c) Settlements of transactions may be effected in trading and
processing practices customary in the jurisdiction or market where the
transaction occurs. The Company acknowledges that this may, in certain
circumstances, require the delivery of cash or securities (or other property)
without the concurrent receipt of securities (or other property) or cash. In
such circumstances, the Trustee shall have no responsibility for nonreceipt of
payment (or late payment) or nondelivery of securities or other property (or
late delivery) by the counterparty.
7
<PAGE>
Section 7. 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 8. Accounting by the Trustee.
The 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 between the Company and
the Trustee. Within ninety (90) days following the close of each calendar year
and within ninety (90) days after the removal or resignation of the Trustee, the
Trustee shall deliver to the Company and the affected participants in the Plan a
written account of its administration of the Trust during such year or during
the period from the close of the last preceding year to the date of such removal
or resignation, setting forth all investments, receipts, disbursements and other
transactions effected by it, including a description of all securities and
investments purchased and sold with the cost or net proceeds of such purchases
or sales (accrued and showing all cash, securities and other property held in
the Trust at the end of such year or as of the date of such removal or
resignation, as the case may be. If, within ninety (90) days after the Trustee
mails to the Company a statement with respect to the Trust, the Company has not
given the Trustee written notice of any exception or objection thereto, the
statement shall be deemed to have been approved, and in such case, the Trustee
shall not be liable for any matters reasonably apparent from the face of such
statements.
Section 9. Responsibility of the Trustee.
(a) The 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 an
enterprise of a like character and with like aims, provided, however, that the
Trustee shall incur no liability to any person for any action taken pursuant to
the written direction, request or approval of the Company.
In the event of a dispute between the Company and a third party,
the Trustee may apply to a court of competent jurisdiction to resolve the
dispute.
(b) The Trustee is not a party to, and has no duties or responsibilities
under, the Plans other than those that may be expressly contained in this
Agreement. In any case in which a provision of this Agreement conflicts with any
provision in the Plans, this Agreement shall control.
(c) The Trustee shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Agreement and shall be held harmless in acting
upon any notice, request, direction, instruction, consent, certification or
other instrument believed by it to be genuine and delivered by the proper party
or parties.
8
<PAGE>
(d) The Company agrees to indemnify and hold harmless the Trustee, its
parent, subsidiaries and affiliates and each of their respective officers,
directors, employees and agents from and against all liability, loss and
expense, including reasonable attorneys' fees and expenses incurred by the
Trustee or any of the foregoing indemnities arising out of or in connection with
this Agreement, except as a result of the Trustee's own negligence or willful
misconduct. This indemnification shall survive the termination of this
Agreement.
(e) If the Trustee undertakes or defends any litigation or other claim
or action or participates in a negotiation resulting in a settlement prior to
the commencement of litigation arising in connection with this Trust, the
Company agrees to indemnify the Trustee against the Trustee's reasonable costs,
expenses and liabilities (including, without limitation, attorneys' fees and
expenses) relating thereto and to be primarily liable for such payments. This
provision shall not apply, however, to any litigation claim or action where the
Trustee's actions are determined to involve fraud, self-dealing or breach of the
Trustee's duties hereunder. If the Company does not pay such costs, expenses and
liabilities in a reasonably timely manner, the Trustee may obtain payment from
the Trust.
(f) The Trustee may consult with legal counsel (who may also be counsel
for the Company generally) with respect to any of its duties or obligations
hereunder and shall have no liability for any action or failure to act
exclusively in reliance upon the reasonable written advice of such counsel.
(g) The Trustee may hire agents, accountants, actuaries, investment
advisors, financial consultants and other professionals to assist it in
performing any of its duties or obligations hereunder.
(h) The 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.
(i) Notwithstanding anything in this Agreement to the contrary contained
herein, the Trustee shall not be responsible or liable for any losses to the
Trust resulting from any event beyond the reasonable control of the Trustee, its
agents or custodians, including but not limited to nationalization, strikes,
expropriation, devaluation, seizure, or similar action by any governmental
authority, de facto or de jure; or enactment, promulgation, imposition or
enforcement by any such governmental authority of currency restrictions,
exchange controls, levies or other charges affecting the Trust's property; or
the breakdown, failure or malfunction or any utilities or telecommunications
systems; or any order or regulation of any banking or securities industry
including changes in market rules and market conditions affecting the execution
or settlement of transactions; or acts of war, terrorism, insurrection or
9
<PAGE>
revolution; or acts of God; or any other similar event. This Section shall
survive the termination of this Agreement.
(j) The Trustee shall not be liable for any act of omission of any other
person in carrying out any responsibility imposed upon such person and under no
circumstances shall the Trustee be liable for any indirect, consequential, or
special damages with respect to its role as Trustee.
(k) Notwithstanding any powers granted to the Trustee pursuant to this
Trust Agreement or applicable law, the 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 Code.
Section 10. Compensation and Expenses of the Trustee.
The Company shall pay all agreed upon administrative and Trustee's fees
and reasonable expenses. If not so paid, the fees and expenses shall be paid
from the Trust. The Trustee shall be entitled to fees for services as mutually
agreed. The Company acknowledges that as part of the Trustee's compensation, the
Trustee may earn interest on balances including disbursement balances and
balances arising from purchase and sale transactions. If the Trustee advances
cash or securities to the Trust for any purpose, or in the event that the
Trustee shall incur or be assessed taxes, interest, charges, expenses,
assessments, or other liabilities in connection with the performance of this
Agreement, except such as may arise from its own negligent action, negligent
failure to act or willful misconduct, any property at any time held in the Trust
Fund shall be security therefor and the Trustee shall be entitled to collect
from the Trust sufficient cash for reimbursement, and if such cash is
insufficient, dispose of the assets of the Trust Fund to the extent necessary to
obtain reimbursement. To the extent the Trustee advances funds to the Trust for
disbursements or to the effect the settlement of purchase transactions, the
Trustee shall be entitled to collect from the Trust an amount equal to what
would have been earned on the sums advanced (an amount approximating "federal
funds" interest rate).
Section 11. Resignation and Removal of the Trustee.
(a) The Trustee may resign at any time by written notice to the Company
and affected participants in the Plan, which shall be effective thirty (30)
calendar days after receipt of such notice unless the Company and the Trustee
agree otherwise.
(b) The Trustee may be removed by the Company without cause or reason on
sixty (60) calendar days' notice or upon shorter notice accepted by the Trustee.
(c) Upon resignation or removal of the Trustee and appointment of a
successor, all Trust Assets shall subsequently be transferred to the successor.
The transfer shall be completed within ninety (90) calendar days after receipt
of notice of resignation, removal or transfer, unless the Company extends the
time limit.
10
<PAGE>
(d) If the Trustee resigns or is removed, a successor shall be
appointed, in accordance with Section 12 hereof, prior to the effective date of
resignation or removal under Section 11 (a) or (b) above. If no such appointment
has been made, the Trustee may apply to a court of competent jurisdiction for
appointment of a successor or for instructions. All reasonable expenses of the
Trustee in connection with the legal proceeding for appointment of a successor
shall be allowed as administrative expenses of the Trust.
Section 12. Appointment of Successor.
(a) If the Trustee resigns or is removed in accordance with Section 11
(a) or (b) hereof, the Company shall appoint a successor, which successor must
be a corporate fiduciary independent of the Company. 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 the Company or the successor Trustee to evidence the transfer.
(b) The successor Trustee need not examine the records and acts of any
prior Trustee and may retain or dispose of existing Trust Assets, subject to
Section 5 hereof. The successor Trustee shall not be responsible for, and the
Company shall indemnify and defend the successor Trustee from, 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 13. Amendment or Termination.
(a) This Trust Agreement may be amended only by a written instrument
executed by the Trustee and the Company.
(b) The Trust shall not terminate until the date on which no Plan
participant or beneficiary is entitled to payments under the Plans. Upon
termination of the Trust, any assets remaining in the Trust shall be returned to
the Company.
Section 14. 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 the Plans 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.
11
<PAGE>
(c) Notwithstanding anything to the contrary contained elsewhere in this
Trust Agreement, any reference to the Plans or Plan provisions which require
knowledge or interpretation of the Plans shall impose a duty upon the Company to
communicate such knowledge or interpretation to the Trustee. The Trustee shall
have no obligation to know or interpret any portion of the Plans and shall in no
way be liable for any proper action taken contrary to the Plans.
(d) This Trust Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania. Met-Pro
Corporation and Mellon Bank, N.A. hereby expressly waive, to the full extent
permitted by applicable law, any right to trial by jury with respect to any
judicial proceeding arising from or related to this Agreement.
(e) For purpose of the Trust, Change of Control shall be deemed to
occur;
(1) If any "person" or "group of persons", which person or group
of persons are not part of present management and are acting in concert (as the
term "person" is used in Section 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended (the "Act")) becomes the "beneficial owner" (as defined in
Rule 13 d-3 promulgated under the Act) directly or indirectly of securities of
the Corporation representing thirty (30%) percent or more of the combined voting
power of the Corporation's then outstanding securities; or
(2) If at any time there shall be a change in the composition of
the Corporation's Board of Directors resulting in a majority of such Directors
as of the date hereof no longer constituting such a majority; provided, however,
that in making any such determination as to change in composition, there shall
be excluded any change where the new Director was elected by or upon
recommendation of such present majority; or
(3) If the approval by the stockholders of the Corporation of a
reorganization, merger or consolidation, in each case, with respect to which
persons who were stockholders of the Corporation immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter, own more
than fifty (50%) percent of the combined voting power of the reorganized, merged
or consolidated Corporation's then outstanding securities entitled to vote
generally in the election of Directors or with respect to a liquidation or
dissolution of the Corporation or the sale of all or substantially all of the
Corporation's assets; or
(4) At any time that the Board of Directors, in its sole
discretion, determines that a change of control has occurred, regardless of
whether such determination relates to any of the aforementioned events.
The Company shall have the duty to inform the Trustee in writing upon
the occurrence of a Change of Control. The Trustee shall be entitled to
conclusively rely upon such written certification of the Company.
12
<PAGE>
Section 15. Reliance of Representations.
(a) The Company and the Trustee each acknowledge that the other will be
relying, and shall be entitled to rely, on the representations, undertakings and
acknowledgments of the other as set forth in this Agreement. The Company and the
Trustee each agree to notify the other and affected participants in the Plan
promptly if its representations, undertakings, or acknowledgments set forth in
this Agreement ceases to be true.
(b) The Company and the Trustee hereby each represent and warrant to the
other that it has full authority to enter into this Agreement upon the terms and
conditions hereof and that the individual executing this Agreement on their
behalf has the requisite to bind the Company and the Trustee to this Agreement.
13
<PAGE>
Attest: Met-Pro Corporation
/s/ Gary J. Morgan By: /s/ William L. Kacin
- ------------------------- ----------------------------------
Secretary William L. Kacin
Chairman, Chief Executive
Officer and President
(Corporate Seal)
Attest: Mellon Bank, N.A.
/s/ Ralph C. Phellep By: /s/ Christine A. Bloom
- ------------------------- -------------------------------
Secretary Vice President
(Corporate Seal)
14
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>12
<FILENAME>ex10aa.txt
<DESCRIPTION>EXHIBIT 10.AA
<TEXT>
Exhibit (10.aa)
AMENDMENT NO. 1 made effective the 24th day of February, 2003 (this "Amendment")
to PENSION RESTORATION AND SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN TRUST
AGREEMENT made the 11th day of February, 2000, by and between Met-Pro
Corporation, a Delaware corporation (the "Company"), and Mellon Bank, N.A.
("Trustee").
WITNESSETH:
WHEREAS, the Company and Trustee are party to an agreement entitled "Pension
Restoration and Supplemental Executive Retirement Plan Trust Agreement" (the
"SERP Trust Agreement") made the 11th day of February, 2000 that established a
Trust (as defined therein) with respect to the Company's Pension Restoration
Plan and Supplemental Executive Retirement Plan (collectively the "Plans" and
each a "Plan").
WHEREAS, the Company and Trustee reserved the power to amend the SERP Trust
Agreement by written instrument under Section 13(a) of the SERP Trust Agreement.
WHEREAS, the Company and Trustee now desires to amend the SERP Trust Agreement
to the extent and upon the terms set forth in this Amendment.
NOW, THEREFORE, the parties hereto do hereby agree as follows:
1. All terms used but not defined in this Amendment shall have such meaning
as is ascribed to them in the SERP Trust Agreement.
2. Section 1(b) of the SERP Trust Agreement is hereby restated as follows:
"(b) Immediately prior to a Change of Control (as defined in Section 14
of the Trust Agreement), the Company shall contribute to the Trust
that amount necessary to fully fund all benefits under the Plan and
the Trustee shall, immediately upon receipt of such contribution,
pay each Plan participant or beneficiary thereof the benefits to
which Plan participants or their beneficiaries are entitled
pursuant to the terms of the Plan as of the date on which the
Change of Control occurred."
3. Section 13(a) of the Trust Agreement is hereby restated as follows:
"(a) This Trust Agreement may be amended only by a written instrument
executed by the Trustee and the Company; provided, however, that no
such amendment may adversely affect any right or interest of any
Plan participant or beneficiary."
<PAGE>
4. The Company agrees that should it fail to cure any breach of its
obligations under the SERP Trust Agreement in less than 30 days after
receiving written notice of same from any beneficiary of the Trust, the
Company will be liable to pay the reasonable attorneys' fees and
expenses incurred by any such beneficiary in filing suit and prosecuting
such claims should such beneficiary be the prevailing party in such
litigation.
5. Except to the extent expressly set forth herein in this Amendment, the
SERP Trust Agreement is unmodified and in full force and effect.
IN WITNESS WHEREOF, the parties hereto, hereunder bound, do hereby execute this
Amendment as of the day and year first above written.
MET-PRO CORPORATION
BY: Raymond J. De Hont ATTEST: Gary J. Morgan
------------------------ -------------------------
Secretary
MELLON BANK, N.A.
BY: ATTEST:
------------------------ -------------------------
Secretary
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>13
<FILENAME>ex23.txt
<DESCRIPTION>EXHIBIT 23
<TEXT>
Exhibit (23)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated February 21, 2003 included or incorporated by reference in this
annual report on Form 10-K, into the Company's previously filed: Form S-8
Registration Statement, File Number 333-44471; Form S-3 Registration Statement,
File Number 333-13929; and Form S-3 Registration Statement, File Number
333-74481.
/s/ Margolis & Company P.C.
----------------------------
Margolis & Company P.C.
Certified Public Accountants
Bala Cynwyd, Pennsylvania
April 11, 2003
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>14
<FILENAME>ex99_1.txt
<DESCRIPTION>EXHIBIT 99.1
<TEXT>
Exhibit (99.1)
MET-PRO CORPORATION
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K for the fiscal year ended
January 31, 2003 of Met-Pro Corporation (the "Company") as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Raymond
J. De Hont, Chief Executive Officer of the Company, certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
/s/ Raymond J. De Hont
- --------------------------------
Raymond J. De Hont
Chief Executive Officer
April 28, 2003
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>15
<FILENAME>ex99_2.txt
<DESCRIPTION>EXHIBIT 99.2
<TEXT>
Exhibit (99.2)
MET-PRO CORPORATION
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K for the fiscal year ended
January 31, 2003 of Met-Pro Corporation (the "Company") as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Gary J.
Morgan, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
/s/ Gary J. Morgan
- --------------------------------
Gary J. Morgan
Chief Financial Officer
April 28, 2003
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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