-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N0pj1LJyinWmQ/4qV20ELXq526j4zlKYzFIgDU/8iH+yetyPpLt6fsD5IzwGT0k2 CKYh/1gOyXcxIwJKU9oPUA== 0000950123-95-003411.txt : 19951120 0000950123-95-003411.hdr.sgml : 19951120 ACCESSION NUMBER: 0000950123-95-003411 CONFORMED SUBMISSION TYPE: SC 14D9 PUBLIC DOCUMENT COUNT: 30 FILED AS OF DATE: 19951116 SROS: NYSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CBI INDUSTRIES INC /DE/ CENTRAL INDEX KEY: 0000310431 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INORGANIC CHEMICALS [2810] IRS NUMBER: 363009343 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9 SEC ACT: 1934 Act SEC FILE NUMBER: 005-30135 FILM NUMBER: 95594179 BUSINESS ADDRESS: STREET 1: 800 JORIE BLVD CITY: OAK BROOK STATE: IL ZIP: 60522 BUSINESS PHONE: 7085727000 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CBI INDUSTRIES INC /DE/ CENTRAL INDEX KEY: 0000310431 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INORGANIC CHEMICALS [2810] IRS NUMBER: 363009343 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D9 BUSINESS ADDRESS: STREET 1: 800 JORIE BLVD CITY: OAK BROOK STATE: IL ZIP: 60522 BUSINESS PHONE: 7085727000 SC 14D9 1 SCHEDULE 14D-9 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ SCHEDULE 14D-9 SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------------ CBI INDUSTRIES, INC. (NAME OF SUBJECT COMPANY) CBI INDUSTRIES, INC. (NAME OF PERSON(S) FILING STATEMENT) COMMON STOCK, PAR VALUE $2.50 PER SHARE (AND ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) (TITLE OF CLASS OF SECURITIES) ------------------------ 124800 10 3 (CUSIP NUMBER OF CLASS OF SECURITIES) ------------------------ CHARLES O. ZIEMER, ESQ. SENIOR VICE PRESIDENT AND GENERAL COUNSEL CBI INDUSTRIES, INC. 800 JORIE BOULEVARD OAK BROOK, ILLINOIS 60521-2268 (708) 572-7000 (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT) ------------------------ WITH A COPY TO: RICHARD D. KATCHER, ESQ. WACHTELL, LIPTON, ROSEN & KATZ 51 WEST 52ND STREET NEW YORK, NEW YORK 10019-6150 (212) 403-1000 ================================================================================ 2 ITEM 1. SECURITY AND SUBJECT COMPANY. The name of the subject company is CBI Industries, Inc., a Delaware corporation (the "Company"). The address of the principal executive offices of the Company is 800 Jorie Boulevard, Oak Brook, Illinois 60521-2268. The title of the class of equity securities to which this Statement relates is the Company's Common Stock, par value $2.50 per share (the "Common Stock"), and the associated Preferred Stock Purchase Rights (the "Rights" and, together with such shares of Common Stock, except where the context otherwise requires, the "Shares"). ITEM 2. TENDER OFFER OF THE BIDDER. This Statement relates to the tender offer made by PX Acquisition Corp. ("P Sub"), a Delaware corporation and a wholly owned subsidiary of Praxair, Inc., a Delaware corporation ("Praxair"), to purchase all outstanding shares of Common Stock, including the associated Rights issued pursuant to the Amendment and Restatement dated August 8, 1989 of a Rights Agreement dated as of March 4, 1986, between the Company and First Chicago Trust Company of New York, as Rights Agent (as amended to date, the "Rights Agreement"), at a price of $32.00 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated November 3, 1995 (the "Praxair Offer to Purchase") and the related Letter of Transmittal (which together constitute the "Praxair Offer"), as disclosed in a Tender Offer Statement on Schedule 14D-1 filed by P Sub and Praxair with the Securities and Exchange Commission (the "Commission") on November 3, 1995, as amended by Amendment No. 1, dated November 7, 1995 and Amendment No. 2, dated November 8, 1995 (as so amended, the "Praxair Schedule 14D-1"). The address of the principal executive offices of P Sub and Praxair, according to the Praxair Schedule 14D-1, is 39 Old Ridgebury Road, Danbury, Connecticut 06810-5113. ITEM 3. IDENTITY AND BACKGROUND. (a) The name and business address of the Company, which is the person filing this Statement, are set forth in Item 1 above. (b) Except as described herein or in Annex A hereto, to the knowledge of the Company, as of the date hereof there are no material contracts, agreements, arrangements or understandings (other than in the ordinary course of business), or any actual or potential conflicts of interest between the Company or its affiliates and (i) the Company, its executive officers, directors, or affiliates, or (ii) Praxair, P Sub or their executive officers, directors or affiliates. Certain contracts, agreements, arrangements and understandings between the Company or its affiliates and certain of its executive officers, directors and affiliates and between the Company and Praxair are described in Annex A hereto, which description is incorporated herein by reference. ITEM 4. THE SOLICITATION OR RECOMMENDATION. (a) Recommendation. The Company's Board of Directors (the "Board") met on November 6, November 8 and November 14, 1995 to consider the Praxair Offer and related matters. During those meetings, the Board considered the Company's business, financial condition, current business strategy and future prospects, recent and historical market prices for the Common Stock, the terms and conditions of, and potential alternatives to, the Praxair Offer and other matters, including presentations by management and by the Company's financial and legal advisors. After taking into account these matters, the Board determined by unanimous vote that the Praxair Offer is inadequate and not in the best interests of the Company's stockholders, and that such interests would be best served if the Company were to actively explore alternatives to maximize stockholder value. ACCORDINGLY, THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS REJECT THE PRAXAIR OFFER AND NOT TENDER ANY OF THEIR SHARES PURSUANT THERETO. The Board has directed management and the Company's advisors to explore strategic alternatives and to report back to the Board promptly with respect thereto. 3 At the November 14, 1995 meeting, the Board declined the requests of Praxair with respect to the Rights and unanimously determined not to redeem the Rights or amend the Rights Agreement to make the Rights inapplicable to the Praxair Offer and the merger (the "Second Step Cash Merger") proposed by Praxair to be consummated after the consummation of the Praxair Offer pursuant to which all Shares not tendered and purchased pursuant to the Praxair Offer or otherwise (other than Shares owned by P Sub or Praxair or any of their subsidiaries, Shares held in the treasury of the Company and Shares owned by stockholders who perfect dissenters' rights under the Delaware General Corporation Law (the "DGCL")) would be converted into the right to receive an amount in cash equal to the price per Share paid pursuant to the Praxair Offer. The Board also unanimously declined a request by P Sub and Praxair that the Board adopt a resolution approving and recommending the Praxair Offer and the Second Step Cash Merger for purposes of Section 203 of the DGCL. The Board also unanimously declined a request by P Sub and Praxair that the Board adopt a resolution approving and recommending the Second Step Cash Merger pursuant to the Article Tenth and Article Fifteenth of the Company's Restated Certificate of Incorporation (the "Certificate"). Pursuant to such Articles, supermajority votes would be required to approve the Second Step Cash Merger, in the case of Article Tenth, unless the Board has recommended the transaction, and, in the case of Article Fifteenth, unless the transaction is either approved by a majority of the Continuing Directors (as defined therein) or certain price and procedural requirements are met. A copy of the letter to the Company's stockholders communicating the Board's recommendation and the press release relating thereto are filed as Exhibits 21 and 22, respectively, to this Schedule 14D-9 and are incorporated herein by reference. (b) Reasons for the Recommendation. In addition to the factors set forth above and considered by the Board in reaching its conclusions with respect to the Praxair Offer described in Item 4(a) above, the Board considered a number of factors, including, but not limited to, the following: (i) the Company's business, financial condition, results of operations, current business strategy and future prospects, including the nature of the markets in which the Company operates, the Company's position in such markets and the historical and current market prices for the Common Stock; (ii) presentations by the Company's management relating to the Company's financial performance and future prospects and the opinion of the Company's management that the proposed consideration in the Praxair Offer is inadequate; (iii) the fact that the Company has had preliminary discussions with other parties who have indicated their potential interest in an extraordinary transaction with the Company; (iv) presentations by Lehman Brothers Inc. ("Lehman Brothers") and Merrill Lynch & Co. ("Merrill Lynch"), financial advisors to the Company (the "Financial Advisors"), concerning the financial aspects of the Praxair Offer; (v) the written opinions of Lehman Brothers and Merrill Lynch that, as of the date of such opinions, the consideration of $32.00 per Share offered to the stockholders of the Company (other than Praxair) pursuant to the Praxair Offer is inadequate from a financial point of view; the full texts of such opinions, dated November 14, 1995, which set forth the assumptions made and matters considered and limitations set forth by Lehman Brothers and Merrill Lynch, are included as Annexes B-1 and B-2 hereto and should be read in their entirety; (vi) the Board's perception that Praxair is primarily interested in the Company's gas business and may be significantly undervaluing the Company's non-gas businesses; (vii) the Board's belief, based in part on the factors referred to above, that the $32.00 per Share price pursuant to the Praxair Offer does not reflect the current value inherent in the Company and that the stockholders' interests would be best served if the Company were to actively explore alternatives to maximize stockholder value; (viii) the conditional nature of the Praxair Offer; the Praxair Offer is conditioned upon, among other things, the matters referred to in paragraph (ix) and upon there not being any threat of a change in 2 4 the results of operations or prospects of the Company or any of its subsidiaries that, in the sole judgment of P Sub, may be materially adverse to the Company or any of its subsidiaries, or P Sub having become aware of any fact that, in the sole judgment of P Sub, has or may have material adverse significance with respect to the value of the Shares to P Sub; and (ix) the Board's belief, based on advice received from outside counsel, that there are antitrust issues relating to a combination of the Company and Praxair, both domestically and internationally, which issues create significant uncertainty as to whether the conditions of the Praxair Offer will be met; in that regard, the Board noted that the Praxair Offer is conditioned on there not being threatened or instituted any action by any domestic or foreign governmental entity or by any other person seeking to impose any limitations upon the ownership or operation by Praxair of any portion of the business or assets of the Company. The foregoing discussion of the information and factors considered and given weight by the Board is not intended to be exhaustive. In view of the variety of factors considered in connection with its evaluation of the Praxair Offer, the Board did not find it practicable to and did not quantify or otherwise assign relative weights to the specific factors considered in reaching its determinations and recommendation. In addition, individual members of the Board may have given different weight to different factors. Background. During the course of 1994, a series of conversations were held between officers of the Company and officers of Praxair regarding a possible joint venture involving the combination of certain hydrogen and carbon monoxide assets in a particular geographic location. On December 10, 1994, Mr. John E. Jones, the Chairman, President and Chief Executive Officer of the Company, contacted Mr. H. William Lichtenberger, the Chairman and Chief Executive Officer of Praxair, to advise him that the Company was not interested in pursuing discussions about the project at that time. Later in December, the Company disclosed that it had received an unsolicited proposal from a third party interested in acquiring the Company's industrial gas business. Thereafter, Mr. Jones was contacted by Mr. Lichtenberger, among others, asking whether the Company was interested in pursuing a transaction involving the Company's industrial gas business. Mr. Jones said he would let Mr. Lichtenberger know if the Company developed an interest. Several months later Mr. Lichtenberger contacted Mr. Jones to arrange a meeting. On May 19, 1995, Mr. Jones and Mr. Lichtenberger met in Chicago. At that meeting, Mr. Lichtenberger said he wanted to explore whether the Company had any interest in pursuing any of several possible business transactions, including the previously discussed joint venture project involving certain hydrogen and carbon monoxide assets and also including a combination of the two companies. Mr. Jones said that, notwithstanding that it was the Company's desire to pursue its business plan as an independent company, the Board would of course consider any proposal that was made to it in light of the best interests of the Company's stockholders. Mr. Jones said that he would be back in touch with Mr. Lichtenberger regarding the joint venture project after the Company had a chance to study it further. Mr. Lichtenberger called Mr. Jones on August 28, 1995. During that conversation, Mr. Jones informed Mr. Lichtenberger that he was not interested in pursuing the joint venture project or any of the other transactions Mr. Lichtenberger had raised at the May meeting. Mr. Lichtenberger requested a meeting and Mr. Jones agreed. On August 31, 1995, Mr. Lichtenberger and Mr. John A. Clerico, Vice President and Chief Financial Officer of Praxair, met with Mr. Jones and Mr. A.J. Schneider, Chief Financial Officer of the Company. Mr. Lichtenberger and Mr. Clerico presented certain financial data and background data, discussed the general business strategies of Praxair and presented their conception of the bases upon which a business combination of the Company and Praxair might proceed. At the end of September 1995, Mr. Lichtenberger called Mr. Jones and told him that the Praxair Board of Directors had authorized him to enter into discussions with the Company regarding a possible business combination involving an exchange of shares on a pooling basis. Mr. Jones said he would discuss the matter with the Board. 3 5 At a meeting of the Board on October 11, the Board considered Mr. Lichtenberger's invitation to enter into negotiations and directed Mr. Jones to tell Mr. Lichtenberger that the Company was not for sale and was not interested in negotiating with Praxair. Mr. Jones so advised Mr. Lichtenberger on October 20, 1995. On October 27, 1995, Mr. Lichtenberger submitted to Mr. Jones an unsolicited written proposal for the acquisition of the Company by Praxair (the "Praxair Proposal"). Mr. Lichtenberger's letter read in full as follows: October 27, 1995 Mr. John E. Jones Chairman, President and Chief Executive Officer CBI Industries, Inc. 800 Jorie Boulevard Oak Brook, IL 60522-7001 Dear John: As you know, over the past six months you and I have had several discussions regarding a possible transaction to effect a merger of our respective companies. Based on our conversations, I think we both realize that significant benefits could be realized by both our companies from such a transaction. Therefore, I was greatly disappointed when you told me on October 20 that you had decided not to continue our discussions. As I told you during that telephone conversation, in recent weeks we at Praxair have continued to carefully study the dynamics and potential advantages of a business combination of Praxair and CBI. As a result, we now feel even more strongly that such a business combination would result in significant strategic benefits for both our companies and our respective shareholders. In light of your current position which you communicated to me on October 20, and given what we continue to view as the compelling rationale for a business combination, we have decided that the best way to proceed is for Praxair to submit a specific proposal to your Board of Directors for its formal consideration. Accordingly, on behalf of the Board of Directors of Praxair, I am pleased to propose herewith the merger of Praxair and CBI pursuant to which your shareholders would receive $32.00 for each share of CBI common stock, which we would propose to pay in either cash or Praxair common stock. Our proposal to effect a merger of Praxair and CBI is subject to the negotiation of a mutually satisfactory definitive merger agreement containing customary terms and closing conditions. I hope that you will recognize the powerful business logic behind our proposal and that you will promptly submit it to your Board of Directors for its consideration with a favorable recommendation from you. It is our hope that, after appropriate consideration by your Board of Directors, your Board will authorize proceeding with the negotiation of the definitive merger agreement on the terms we have proposed. The price per share in our merger proposal is based on our present knowledge of CBI, which is limited to public information. It is our view that the price we are proposing would be both fair and highly attractive to your shareholders. Our proposal offers your shareholders a significant premium over the current market value of CBI. The transaction we propose represents a clearly attractive opportunity for Praxair to combine the leading industrial gases supplier in North and South America and the premier world supplier of carbon dioxide. The combined enterprise will be strongly positioned to maximize our marketing, engineering and technological skills as it expands its operations further into major global markets. It will also be able to develop significant new applications for a wide range of products and advanced technologies to enable our customers to improve their productivity, product quality and environmental performance. Together, Praxair's and CBI's business portfolios and synergies will provide the enterprise with considerable opportunities to support strong future sales and earnings growth. 4 6 We are prepared to move promptly in connection with our proposal. We would be happy to meet with you and other members of your Board of Directors and senior management as soon as practicable to discuss our proposal in detail and to answer any questions you or they may have. We realize that your Board of Directors will want to carefully consider our proposal, but we do ask that the Board respond to us as soon as possible, and in any event by noon, on November 1, 1995. While we would very much prefer that a business combination of our companies be effected pursuant to the negotiation of a merger on the terms we have proposed, you and your Board should appreciate that if your Board rejects our proposal to negotiate a merger, we reserve the right to propose directly to the shareholders of CBI a cash offer for CBI by Praxair. We look forward to hearing the response of your Board of Directors after it has reviewed our merger proposal. Sincerely, /s/ H.W. LICHTENBERGER On October 29, 1995, Praxair publicly announced that it had delivered the above letter to the Company, and the Company announced that the Board would consider the Praxair Proposal in due course. On October 30, 1995, Praxair filed the lawsuit described below under Item 8. On October 31, 1995, Mr. Jones telephoned Mr. Lichtenberger to inform him that while the Company would give consideration to Praxair's acquisition proposal, the Company would not respond by Praxair's deadline of November 1, 1995 and would respond in due course. On November 1, 1995, Praxair announced that it intended to commence the Praxair Offer on Friday, November 3, 1995 and on November 3 Praxair commenced the Praxair Offer. On November 6, 8 and 14, the Board met with its legal and financial advisors to review the Praxair Offer, resulting in the recommendation set forth above. ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The Company has retained Lehman Brothers and Merrill Lynch as its financial advisors with respect to the Praxair Offer and other matters arising in connection therewith, including assisting the Company in exploring alternatives in light of the Praxair Offer. Pursuant to the letter agreement between Lehman Brothers, Merrill Lynch and the Company dated November 14, 1995 (the "Lehman/Merrill Engagement Letter") the Company has agreed to pay each of Lehman Brothers and Merrill Lynch as follows: (i) a retainer fee of $250,000, payable to each of Lehman Brothers and Merrill Lynch on January 15, 1996 (such retainer fee will be credited to other fees, if any, payable under the Lehman/Merrill Engagement Letter); (ii) if during the term of the Financial Advisors' engagement under the Lehman/Merrill Engagement Letter, or until the later of (x) 18 months after the date of the Lehman/Merrill Engagement Letter or (y) 12 months after the termination of the Financial Advisors' engagement thereunder, an Acquisition (as defined below) involving all or substantially all of the Common Stock or the Company's assets occurs, then the Company shall pay to each of Lehman Brothers and Merrill Lynch a fee of $5,000,000 plus $500,000 (or proportion thereof) for each $1.00 per Share (or proportion thereof) above $32.00 per Share that the Company's stockholders receive, in cash or securities, in connection with or as a result of such Acquisition; (iii) if during the term of the Financial Advisors' engagement under the Lehman/Merrill Engagement Letter, or until the later of (x) 18 months after the date of the Lehman/Merrill Engagement Letter or (y) 12 months after the termination of the Financial Advisors' engagement thereunder, an Acquisition or a Restructuring (each as defined below) occurs other than that described in (ii) above, then the Company shall pay to each of Lehman Brothers and Merrill Lynch fees to be mutually agreed upon based on the consideration involved in such Acquisition or Restructuring and the Financial Advisors' reasonable and customary fees for the services rendered related to such Acquisition or Restructuring. An "Acquisition" is defined as any transaction or series 5 7 or combination of transactions, other than in the ordinary course of business, whereby, directly or indirectly, control of or a material interest in the Company or any of its businesses, or a material amount of any of their respective assets, is transferred for consideration, including, without limitation, by means of a sale or exchange of capital stock or assets, a merger or consolidation, a tender or exchange offer, a leveraged buyout, a minority investment, the formation of a joint venture or partnership, or any similar transaction. A "Restructuring" is defined as any transaction or series or combination of transactions, other than in the ordinary course of business, whereby any payment or distribution of cash, securities or other property is made by the Company to the holders of capital stock of the Company, including, without limitation, any dividend or other distribution (other than normal dividends) on, or any repurchase or redemption of, or any exchange of other securities of the Company or any of its affiliates for, any shares of capital stock of the Company, or any other similar transaction involving a change in the capital structure of the Company. The Company has also agreed to reimburse the Financial Advisors for their reasonable expenses (including, without limitation, professional and legal fees and disbursements) incurred in connection with their engagement with respect to the services to be rendered by them, and to indemnify the Financial Advisors and certain related persons against certain liabilities in connection with their engagement, including certain liabilities under the federal securities laws. The Company has retained MacKenzie Partners, Inc. to distribute information (including this Statement on Schedule 14D-9) on behalf of the Company in connection with the Praxair Offer and related matters. The Company has also retained Abernathy MacGregor Scanlon as public relations advisor in connection with the Praxair Offer and related matters. Such firms will receive customary compensation for services rendered and also will be reimbursed for their out-of-pocket expenses. Except as set forth above, neither the Company nor any person acting on its behalf has employed, retained or compensated any person to make solicitations or recommendations to stockholders with respect to the Praxair Offer. ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES. (a) To the best of the Company's knowledge, except as set forth on Schedule I hereto, no transactions in the Shares have been effected within the past 60 days by the Company or by any executive officer, director, affiliate or subsidiary of the Company. (b) To the best of the Company's knowledge, all of its executive officers, directors, affiliates or subsidiaries currently do not intend to tender any Shares which are held of record or beneficially owned by such persons pursuant to the Praxair Offer. ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY. At the meetings of the Board held on November 6, November 8 and November 14, 1995, the Board considered and reviewed the feasibility and desirability of exploring possible alternative transactions to the Praxair Offer. As stated in Item 4 above, the Board believes that the interests of the Company's stockholders would be best served if the Company were to actively explore alternatives to maximize stockholder value. These alternatives could lead to and involve negotiations which may result in (i) an extraordinary transaction, such as a merger or reorganization involving the Company or any of its subsidiaries, (ii) a purchase, sale or transfer of a material amount of the assets of the Company or any of its subsidiaries, (iii) a tender offer for or other acquisition of securities by or of the Company or (iv) a material change in the present capitalization or dividend policy of the Company. In this connection, the Company is in the preliminary stages of discussion or negotiation concerning a possible transaction involving the Company of the type described above, having entered into confidentiality and standstill agreements concerning the furnishing of confidential information to parties indicating an interest in such a transaction and having responded to due diligence inquiries. In addition, the Company has had preliminary discussions with other parties regarding their potential interest in such a transaction. In the opinion of the Board, disclosure at this time of the possible terms of any transaction of the type described above or the parties thereto might jeopardize the initiation or continuation of such discussions or 6 8 negotiations. Accordingly, the Board, on November 14, 1995, adopted a resolution instructing management not to disclose the possible terms of any such transactions, or the parties thereto, unless and until an agreement in principle relating thereto has been reached. There can be no assurance that any of the foregoing will result in any transaction, or that a transaction other than one of the types described herein will not be authorized or consummated. The initiation or continuation of any of the foregoing may also be dependent upon the future actions of Praxair with respect to the Praxair Offer. The proposal, authorization, announcement or consummation of any transaction of the type referred to in this Item 7 could adversely affect or result in withdrawal of the Praxair Offer. Except as described above and under Item 4 above, the Company is not engaged in any negotiation in response to the Praxair Offer which relates to or would result in (i) an extraordinary transaction, such as a merger or reorganization involving the Company or any of its subsidiaries, (ii) a purchase, sale or transfer of a material amount of the assets of the Company or any of its subsidiaries, (iii) a tender offer for or other acquisition of securities by or of the Company or (iv) a material change in the present capitalization or dividend policy of the Company. Except as described above and under Item 4 above, there are no transactions, Board resolutions, agreements in principle or signed contracts in response to the Praxair Offer which relate to or would result in one or more of the matters referred to in this Item 7. ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED. (a) Litigation. On October 30, 1995, Praxair commenced litigation in the Court of Chancery of the State of Delaware (the "Chancery Court") against the Company and the Board, alleging that the Board has violated its fiduciary duties to the Company's stockholders by failing to pursue a possible transaction with Praxair and employing the Rights Agreement to prevent Praxair from acquiring the Company. Praxair's complaint seeks (a) injunctive relief requiring the Board to redeem the Rights or to amend the Rights Agreement so as to make the Rights inapplicable to any acquisition proposal which equals or exceeds the Praxair Proposal, (b) injunctive relief enjoining the Company and the Board from taking any action to interfere with the Praxair Proposal or any other such proposal, and (c) a declaratory judgment that the Board has breached its fiduciary duties to the Company's stockholders by continuing to deploy the Rights. The time of the Company and the Board to respond to Praxair's complaint has not expired. On October 30, 1995, four purported stockholders of the Company commenced litigation in the Chancery Court against the Company and the Board, asserting claims that are similar to the claims asserted by Praxair. Also, on October 30, one of the four purported stockholders moved to amend a complaint he had filed against the Company and the Board in December 1994 in order to assert claims identical to the ones asserted in his newly-filed action; however, counsel for this stockholder has since advised counsel for the Company and the Board that the action filed in December 1994 will not be actively prosecuted. Two additional stockholder complaints were filed October 31 and November 1. Each of these complaints seeks relief on behalf of a purported class consisting of all holders of the Common Stock. In addition to injunctive and declaratory relief, the stockholder plaintiffs seek to recover damages on behalf of the alleged class and an award of attorneys' fees. The time to respond to these complaints has not yet expired. It is contemplated that all of the purported stockholder actions will be consolidated for all purposes. Attached hereto as Exhibits 24 through 30 are copies of each of the aforementioned complaints and the above descriptions are qualified in their entirety by reference to such exhibits. (b) Rights Agreement. Currently, two-thirds of a Right is associated with each share of Common Stock. Each full Right entitles the registered holder to purchase from the Company a unit consisting of one one-hundredth of a share (a "Unit") of Series A Junior Participating Preferred Stock, $1.00 par value per share (the "Preferred Stock"), at a price of $75.00 per Unit, subject to adjustment (the "Purchase Price"). Under the Rights Agreement, until the close of business on the "Distribution Date," which occurs on the earlier of (i) the tenth day following a public announcement that a person or group of affiliated or associated persons ("Acquiring Persons") has acquired, or obtained the right to acquire, beneficial ownership of 10% or 7 9 more of the outstanding shares of Common Stock (the "Stock Acquisition Date"), or (ii) the tenth business day (or such later date as may be determined by action of the Board prior to such time as any person becomes an Acquiring Person) after the date of commencement of, or first public announcement of the intent to commence, a tender or exchange offer if, upon consummation thereof, such person could be the beneficial owner of 10% or more of the outstanding shares of Common Stock, the Rights are represented by and may be transferred only with the shares of Common Stock. Until the Distribution Date, a share certificate issued upon the transfer or new issuance of shares of Common Stock will contain a notation incorporating the Rights Agreement by reference, and the surrender for transfer of any of such shares of Common Stock also constitutes the transfer of the Rights associated with the shares of Common Stock represented by such certificate. Praxair's public announcement on November 1, 1995 of its intention to commence the Praxair Offer on November 3, 1995 commenced the running of the ten-business day period described in clause (ii) of the first sentence of the immediately preceding paragraph. At a meeting held on November 8, 1995, the Board resolved that the Distribution Date shall not occur until the earlier of (x) the date on which an Acquiring Person becomes such and (y) such date as may be determined by action of the Board prior to the time any person or group becomes an Acquiring Person. As soon as practicable following the Distribution Date, if any, Rights certificates will be mailed to holders of record of the shares of Common Stock as of the close of business on the Distribution Date, and such separate Rights certificates alone will evidence the Rights. At the close of business on the Distribution Date, the Rights will become exercisable and separate Rights certificates will thereafter be distributed. At the time Rights certificates are distributed, the Company will make the necessary and appropriate rounding adjustments so that Rights certificates are distributed representing only whole numbers of Rights and cash is paid in lieu of fractional Rights. Unless the Rights are redeemed earlier, if following a Stock Acquisition Date the Company consummates a merger or other business combination (in which the Company does not survive or the shares of Common Stock are changed into or exchanged for other securities or assets) or more than 50% of the assets or earning power of the Company and its subsidiaries (taken as a whole) are sold or transferred in one or a series of related transactions, then proper provision must be made so that each holder of a Right will thereafter have the right to receive, upon exercise and payment of the Purchase Price, that number of shares of common stock of the acquiring company which at the time of such transaction has a market value equal to twice the Purchase Price. In the event that any person or group becomes an Acquiring Person, other than pursuant to a tender or exchange offer for all outstanding shares of Common Stock that the Board, taking into account the long-term value of the Company and all other factors that the Board considers relevant, determines to be at a price and on terms that are fair to holders of shares of Common Stock, each Right, other than Rights that are or were beneficially owned by an Acquiring Person, will thereafter have the right to receive, upon exercise and payment of the Purchase Price, in lieu of Preferred Stock, that number of shares of Common Stock which at the time of such transaction would have a market value equal to twice the Purchase Price. At any time after the occurrence of an event triggering the Rights specified in the preceding paragraphs and prior to the acquisition by an Acquiring Person of beneficial ownership of 50% or more of the Common Stock, the Board may exchange the Rights, in whole or in part, at an exchange ratio of one share of Common Stock per Right. At any time until 20 days following the Stock Acquisition Date, the Board may redeem the Rights in whole, but not in part, at a price of $.05 per Right (the "Redemption Price"). Immediately upon the action of the Board ordering the redemption of the Rights, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price. The Rights will expire on March 18, 1996, unless (i) extended or (ii) earlier redeemed by the Company. Until a Right is exercised, the holder thereof, as such, has no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends. 8 10 According to the Praxair Offer to Purchase, it is a condition of the Praxair Offer that the Board redeem the Rights or that P Sub is otherwise satisfied in its sole discretion that the Rights have been invalidated or are otherwise inapplicable to the Praxair Offer and the Second Step Cash Merger. (c) Section 203 of the Delaware General Corporation Law. In general, Section 203 of the DGCL ("Section 203") provides that a Delaware corporation, such as the Company, may not engage in any Business Combination (defined to include a variety of transactions, including a merger) with any Interested Stockholder (defined generally as a person that, directly or indirectly, owns 15% or more of the corporation's outstanding voting stock), or any affiliate of an Interested Stockholder, for three years after the date on which the Interested Stockholder becomes an Interested Stockholder. Section 203 provides that an "owner" of voting stock includes any person who, individually or together with any of its affiliates or associates, beneficially owns such stock directly or indirectly, or has (i) the right to acquire voting stock (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options or otherwise, (ii) the right to vote such stock pursuant to any agreement, arrangement or understanding, or (iii) any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of such stock with any other person that beneficially owns, directly or indirectly, such stock. The three-year prohibition on Business Combinations with Interested Stockholders (the "Business Combination Prohibition") does not apply if certain conditions, described below, are satisfied. The Business Combination Prohibition does not apply to a particular Business Combination between a corporation and a particular Interested Stockholder if (i) prior to the date such Interested Stockholder became an Interested Stockholder, the board of directors of such corporation approved either the Business Combination or the transaction which resulted in the stockholder becoming an Interested Stockholder, (ii) upon consummation of the transaction which resulted in the stockholder becoming an Interested Stockholder, the Interested Stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares held by (x) persons who are directors and also officers of the corporation and (y) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer, or (iii) on or subsequent to the date the stockholder becomes an Interested Stockholder, the Business Combination is (a) approved by the board of directors of the corporation and (b) authorized at an annual or special meeting of stockholders by the affirmative vote of at least 66 2/3% of the outstanding voting stock of the corporation which is not owned by the Interested Stockholder. Section 203(b)(6) of the Delaware General Corporation Law provides that the restrictions contained in Section 203 do not apply to a Business Combination that is proposed prior to the consummation or abandonment of and following the announcement or notification of one of certain extraordinary transactions (including a merger) involving the corporation which transaction (i) is with or by a person who either was not an Interested Stockholder during the previous three years or who became an Interested Stockholder with the approval of the corporation's board of directors and (ii) has been approved or has not been opposed by a majority of the members of the board of directors then in office who were directors prior to any person becoming an Interested Stockholder during the previous three years or were recommended for election or elected to succeed such directors by a majority of such directors. (d) Restated Certificate of Incorporation. The Certificate requires a supermajority vote for certain transactions. Article Tenth of the Certificate requires the affirmative vote of holders of not less than two-thirds ( 2/3) of the outstanding Shares entitled to vote and the affirmative vote of not less than two-thirds ( 2/3) of each series of shares of preferred stock of the Company entitled to vote as a class on such issue or, where the Board has recommended such action, the affirmative vote of holders of a majority of the outstanding Shares entitled to vote and the affirmative vote of a majority of each series of the outstanding shares of preferred stock of the Company entitled to vote as a class on such issue to effect, among other things, a merger or consolidation. 9 11 Currently, the Company does not have any series of shares of preferred stock entitled by its terms to vote as a class on any matter. Article Fifteenth of the Certificate requires the affirmative vote by the holders of at least 80% of the then outstanding Shares entitled to vote and the affirmative vote of at least 80% of each series of the outstanding shares of preferred stock of the Company entitled to vote as a class on such issue to approve Business Combinations involving an Interested Stockholder, unless (i) the Business Combination is either approved by a majority of the Continuing Directors or (ii) all of the price and procedural requirements set forth therein are met. ITEM 9. MATERIAL TO BE FILED AS EXHIBITS. **Exhibit 1 -- Pages 5 through 23 of Proxy Statement dated March 24, 1995 relating to the Company's 1995 Annual Meeting of Shareholders. Exhibit 2 -- CBI Industries, Inc. Employment Agreement and addenda for J.E. Jones. Exhibit 3 -- CBI Industries, Inc. Employment Agreement and addenda for A.J. Schneider. Exhibit 4 -- CBI Industries, Inc. Employment Agreement and addenda for C.O. Ziemer. Exhibit 5 -- CBI Industries, Inc. Employment Agreement and addenda for L.E. Akin. Exhibit 6 -- CBI Industries, Inc. Employment Agreement and addenda for C.E. Willoughby. Exhibit 7 -- Form of Liquid Carbonic Industries Corporation Employment Agreement and Form of Addenda. Exhibit 8 -- Letter Agreement between John E. Jones and the Company dated January 4, 1982, and addenda thereto. Exhibit 9 -- CBI Industries, Inc. Stock Option Plan. Exhibit 10 -- CBI Industries, Inc. 1995 Stock Option Plan. Exhibit 11 -- CBI Restricted Stock Award Plan (1978). Exhibit 12 -- CBI 1983 Restricted Stock Award Plan. Exhibit 13 -- CBI 1989 Restricted Stock Award Plan. Exhibit 14 -- CBI 1994 Restricted Stock Award Plan. Exhibit 15 -- CBI Salaried Employee Stock Ownership Plan (1987). *Exhibit 16 -- CBI Employee Stock Purchase and Savings Plan (1987). Exhibit 17 -- CBI Executive Life Insurance Plan. Exhibit 18 -- CBI Benefit Restoration Plan. Exhibit 19 -- CBI Supplemental Survivor's Benefit, Executive Life Insurance and Benefit Restoration Trust. Exhibit 20 -- Letter to John E. Jones, the Company's Chairman, President and Chief Executive Officer, from H. William Lichtenberger, the Chairman and Chief Executive Officer of Praxair, dated October 27, 1995. **Exhibit 21 -- Letter to stockholders of the Company dated November 16, 1995. Exhibit 22 -- Press Release issued by the Company on November 16, 1995. Exhibit 23 -- Letter to holders of Shares issued pursuant to the Company's Restricted Stock Plans with respect to tendering Shares of restricted stock dated November 16, 1995. Exhibit 24 -- Motion to amend Complaint in Steiner v. CBI Industries, Inc. (Delaware Chancery Court). Exhibit 25 -- Complaint in Steiner v. CBI Industries, Inc. (Delaware Chancery Court). Exhibit 26 -- Complaint in Kreisberg v. Jones (Delaware Chancery Court). Exhibit 27 -- Complaint in Lasker v. CBI Industries, Inc. (Delaware Chancery Court). Exhibit 28 -- Complaint in Polikoff v. CBI Industries, Inc. (Delaware Chancery Court). Exhibit 29 -- Complaint in Rosenberg v. Clark (Delaware Chancery Court). Exhibit 30 -- Complaint in Lewis v. Jones (Delaware Chancery Court).
- --------------- * Incorporated by reference to Exhibit A to the Company's 1992 proxy statement for annual meeting of stockholders. ** Included with the Schedule 14D-9 mailed to stockholders. 10 12 SIGNATURE After reasonable inquiry and to the best of its knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. CBI INDUSTRIES, INC. By: /s/ JOHN E. JONES --------------------------------- John E. Jones (CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER) Dated: November 16, 1995 11 13 ANNEX A Certain contracts, agreements, arrangements and understandings between the Company or its affiliates and certain of its executive officers, directors, and affiliates are described under the sections entitled "Executive Compensation," "Compensation Committee Report on Executive Compensation" and "CBI Industries, Inc. - 1995 Stock Option Plan" at pages 5 through 23 of the Company's Proxy Statement dated March 24, 1995 relating to its 1995 Annual Meeting of Shareholders (the "1995 Proxy Statement"), which pages are attached as Exhibit 1 hereto and are incorporated by reference. The Company's 1995 Stock Option Plan, described at pages 20 through 23 of the 1995 Proxy Statement, was approved by the Company's stockholders at the 1995 Annual Meeting of Shareholders. The CBI Industries, Inc. Stock Option Plan, as approved by the Company's shareholders in 1987, and amended through August 1993 (the "1987 Stock Option Plan") provides for the granting of non-qualified options or options qualifying as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") either alone or with a stock appreciation right ("SAR"). It is administered by the compensation committee of the Board (the "Compensation Committee"). The maximum number of Shares issuable pursuant to the grant of options or exercise of rights is 1,200,000 Shares. No more options may be granted under the 1987 Stock Option Plan. The number of options which were granted in 1995 to the following named executive officers, all executive officers as a group, and all employees as a group are: J.E. Jones, 45,000; L.E. Akin, 18,000; C.E. Willoughby, 12,000; A.J. Schneider, 6,000; C.O. Ziemer, 9,000; all executive officers as a group, 96,000; all employees as a group, 292,400.* All options granted in 1995 were granted on January 11, 1995 and the exercise price of all options granted on such date is $24.375. For the period January 1, 1995 through the date of this Schedule 14D-9, no options have been exercised by the executive officers or the active employees as a group. The outstanding grants also have "Limited Rights" to receive cash (equal to the market value of the Common Stock subject to the related option less the exercise price) upon expiration at the end of the 30 day period following a Change in Control (as defined in the option grant) in respect of options which have not been exercised. Agreements between the Company and each of the executive officers of the Company named in the following paragraph provide for each executive's continued employment for a three year period (or to age 65, if earlier) following a Change in Control of the Company ("Change in Control Agreements"). "Change in Control" is defined as the occurrence at any time of any of the following events: an Acquiring Person (as defined below) has become such; or (b) Continuing Directors (as defined below) cease to comprise a majority of the Board of Directors of the Company. The term "Acquiring Person" means any Person (as defined) who or which, together with all Affiliates (as defined) and Associates (as defined) of such Person, shall be the Beneficial Owner (as defined) of 10% or more of the Shares then outstanding (subject to certain exceptions), but shall not include an Exempt Person (as defined). The term "Continuing Director" means any member of the Board, while such person is a member of the Board, who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, and was a member of the Board prior to March 4, 1986 and means any person who subsequently becomes a member of the Board, while such person is a member of the Board, who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, if (a) such person's nomination for election or election to the Board is recommended or approved by resolution of a majority of the Continuing Directors or (b) such person is included as a nominee in a proxy statement of the Company distributed when a majority of the Board consists of Continuing Directors. Compensation and benefits for the three-year period are based generally on the executive's compensation and benefits before the Change in Control, subject to stipulated increases, and are payable in a lump sum on a discounted present value basis upon either (i) termination by the Company of the executive's employment for any reason other than death, disability or wilful and material breach of the agreement during such period, or (ii) resignation of the executive following any of (a) a significant change in the executive's authorities or duties, (b) a reduction in the executive's total compensation and (c) other breach of the executive's Change in Control Agreement. Such benefits payable upon a termination of employment following a Change in - --------------- * Information with respect to two of the officers named in the compensation table in the 1995 proxy statement is not provided herein, because those two officers are no longer with the Company. A-1 14 Control also include a cash payment equal to (a) the fair market value of any restricted stock awards which are forfeited as a result of such termination, and (b) with respect to any stock option that ceases to be exercisable or which terminates, a payment equal to the excess of the fair market value of the stock subject to such option over the option exercise price. The Change in Control Agreement also contains "gross-up" provisions pursuant to which the executive will be paid additional amounts to reimburse such executive for all excise taxes payable pursuant to Code Section 4999 with respect to so-called golden parachutes, which additional payments will also include those amounts necessary to permit the executive to pay all income and excise taxes payable with respect to all such additional payments. The benefits payable to the following executive officers as of November 14, 1995, if a Change in Control had occurred as of such date and a termination causing payment of the benefits had occurred (not including payments with respect to shares of restricted stock awarded to the executive officers under any of the Company's Restricted Stock Plans (as defined and as described below)) are as follows: J.E. Jones, $9,600,000; L.E. Akin, $4,300,000; C.E. Willoughby, $3,400,000; A.J. Schneider, $1,700,000; and C.O. Ziemer, $2,600,000. One other executive officer at the Company has a Change in Control Agreement of the same type as the named executives. Pursuant to addenda to their respective Change in Control Agreements with the Company, L.E. Akin and C.E. Willoughby also entered into Change in Control Agreements with their current employers, Chicago Bridge & Iron Company ("CBIC") and Liquid Carbonic Industries Corporation ("LCI"), respectively, wholly owned subsidiaries of the Company. Messrs. Akin's and Willoughby's Change of Control Agreements become effective upon either a Change in Control of the Company or a Change in Ownership of CBIC or LCI, as the case may be. A "Change in Ownership" of CBIC or LCI means an occurrence of an event pursuant to which the ultimate right to elect the directors of CBIC or LCI, as the case may be, is not exercisable by the Company or another entity which directly or indirectly acquires stock of CBIC or LCI, as the case may be, in a leveraged buyout in which the senior management of the Company participates. Upon the earlier of a Change in Control in the Company, or a Change in Ownership of CBIC or LCI, as the case may be, the executive officer must, within 30 days of such change, notify both its immediate employer and the Company as to which employment arrangement the executive wishes to apply to his employment. Eight other executives have similar arrangements with the wholly owned subsidiary of the Company by which they are employed. LCI has entered into employment agreements with six executive officers of LCI (the "LCI Change in Control Agreements"). The LCI Change in Control Agreements provide that in the event of a Change in Ownership of LCI, the executive is entitled to receive a lump sum payout equaling the aggregate salary (including salary increases and bonuses) which would have been paid to such executive during the remainder of the employment period, which varies from one to two years depending upon the executive, and cash equal to the fair market value of any previously granted restricted stock that is forfeited. "Change in Ownership" is defined in the LCI Change in Control Agreements to mean: the occurrence of an event pursuant to which (a) the ultimate right to elect directors of LCI is not exercisable by the Company or another entity which directly or indirectly acquires stock of LCI in a leveraged buyout in which the senior management of the Company participates, or (b) Continuing Directors, as defined in the Rights Agreement, cease to comprise a majority of the board of directors of the Company at a time when LCI, directly or indirectly, is a subsidiary of the Company. The Company maintains the CBI Employee Stock Purchase and Savings Plan (1987) (the "1987 Stock Purchase and Savings Plan") in which substantially all employees of the Company and certain subsidiaries are eligible to participate. The number of Shares purchased in 1995 under the 1987 Stock Purchase and Savings Plan and the net value of Shares (market value less 85% of market value on the date of purchase) for the following named executive officers, all executive officers as a group, and all employees as a group are, respectively: J.E. Jones, 985 and $3,969.55; L.E. Akin, 1,328 and $5,152.90; C.E. Willoughby, 969 and $3,682.35; A.J. Schneider, 0; C.O. Ziemer, 0; all executive officers as a group, 3,984 and $15,478.42; all employees as a group, 122,358 and $455,933.44. The average price per share with respect to all such Shares was $21.117. A-2 15 The Company restricted stock award plans (the "Restricted Stock Plans") have been adopted by shareholder votes in 1978, 1983, 1989 and 1994 and such plans are intended to encourage long-term employment and provide incentive compensation to participants over an extended period by using specific longer-term financial goals and/or stock vesting restrictions. The 1994 Restricted Stock Plan provides for awarding a target number of restricted Shares to an individual recipient, or a percentage thereof, only after the Company achieves specified performance goals set by the Compensation Committee. Pursuant to the 1978, 1983 and 1989 Restricted Stock Plans the Compensation Committee made awards on a discretionary basis to participants. Restricted Stock Plan participants generally have all the rights of stockholders, with respect to awarded shares, including the right to vote such Shares; however, Shares awarded may not be sold, exchanged, pledged or otherwise disposed of until the restrictions thereon have lapsed. Thus, Shares subject to restrictions tendered into the Praxair Offer would be forfeited. However, the conversion of Shares in a merger is deemed not to be a transaction subject to such forfeiture provisions. Generally, restrictions on 50% of the Shares awarded pursuant to the 1978, 1983 and 1989 Restricted Stock Plans lapse after five years and restrictions lapse on all other Shares awarded pursuant to such plans upon the occurrence of death, retirement or termination of employment for reason of disability. Restrictions on all Shares awarded under the 1994 Restricted Stock Plans lapse at the beginning of the fifth year following the year for which performance is measured. Restrictions on Shares awarded under all of the Restricted Stock Plans lapse during the three year period after a Change in Control upon the termination of employment (in the case of the 1978 and 1983 plans, by the Company) for any reason (other than wilful and material actions causing direct and substantial damage to the Company or its Subsidiaries or affiliates), or (with respect to the 1978 and 1983 Restricted Stock Plans) any termination of such Restricted Stock Plans. Under the 1989 Restricted Stock Plan, the Compensation Committee, and under the 1983 Restricted Stock Plan, the Board, may cause the restrictions to lapse for any participant. The number of outstanding restricted Shares awarded under all plans as of November 14, 1995 to the following named executive officers, all executive officers as a group, and all employees as a group which are still subject to restrictions are: J.E. Jones, 66,350; L.E. Akin, 22,235; C.E. Willoughby, 10,165; A.J. Schneider, 4,304; C.O. Ziemer, 13,740; all executive officers as a group, 120,298; all employees as a group, 920,779. Pursuant to the Executive Life Insurance Plan adopted by the Company in 1992, 23 currently employed executives of the Company are insured under life insurance contracts established under "split-dollar" arrangements intended to allow the Company to ultimately recover the insurance premiums it pays with respect to each insured executive. Under the plan, the executive's pre-retirement death entitles his beneficiaries to between four and six times his annual salary at the date of death. If death occurs after retirement, the executive's beneficiaries are entitled to between two and four times his annual salary as of the date of the executive's retirement. To the extent that the insurance in force at the executive's death is not sufficient to pay his beneficiaries the anticipated death benefit, any shortfall will be paid by the CBI Supplemental Survivor's Benefit, Executive Life Insurance and Benefit Restoration Trust (the "Rabbi Trust"). Such shortfall would include all amounts necessary to pay any income taxes that are due with respect to any life insurance make-up payments that are made from the Rabbi Trust. The Rabbi Trust is a non-qualified, taxable grantor trust established by the Company to hold certain assets as the source of the life insurance premiums and any shortfall in life insurance death benefits as described above, and as the source of certain make-up payments pursuant to the CBI Benefit Restoration Plan. Under this plan, any employee of the Company affected by the limits described below is entitled to retirement benefits ("Excess Benefits") from the Rabbi Trust equal to the additional retirement benefits they would have received under the Company's qualified retirement plans if in computing the benefits thereunder there were no legal limitations on either (a) the amount of salary that could be considered in determining a participant's benefit or (b) the amount of benefits payable from any of such qualified retirement plans. Furthermore, pursuant to an agreement dated January 4, 1982 and amended December 19, 1986 and July 16, 1987 between the Company and Mr. Jones, Mr. Jones's Excess Benefits amount is determined by including in his years of service for pension plan benefit calculation purposes service with a prior unrelated employer. A-3 16 In October 1987, the Board approved and the Company established the CBI Salaried Employee Stock Ownership Plan (1987) and such plan was amended and restated as of June 1, 1994 (the "ESOP"). Salaried employees with at least two years of service with the Company and designated subsidiaries are eligible to participate. Initial funding of the ESOP came from proceeds of surplus assets in the terminated CBI Pension Plan (Salaried) and by borrowings on behalf of the ESOP. Such funds were used to acquire Shares and preferred stock convertible into Shares at the rate of 1.5 Shares per share of preferred stock which are held in a trust for annual allocation to eligible employees. Allocations are based upon a participant's compensation and are fully and immediately vested. Ongoing funding is provided by Company contributions and by dividends received on shares held in the trust. The number of shares allocated in 1995 in the ESOP to the following executive officers, all executive officers as a group, and all employees as a group and the total number of shares held by the ESOP including unallocated shares are:
COMMON PREFERRED ------------- ------------- J.E. Jones............................................. 292.536 787.411 L.E. Akin.............................................. 273.234 752.661 C.E. Willoughby........................................ 257.944 643.406 A.J. Schneider......................................... 213.019 500.519 C.O. Ziemer............................................ 267.943 699.869 All executives......................................... 1,504.819 3,784.062 All employees.......................................... 160,105.642 380,405.079 Held by Trustee -- entire plan......................... 1,680,893.000 3,472,189.000
Each participant is entitled to direct the trustee as to how the Company stock allocated to his or her stock account is to be voted, which includes the power to direct the trustee to abstain from voting on any issue. In addition, each participant has the right to instruct the trustee as to the manner in which the trustee is to respond to a tender offer for any or all of the Company stock allocated to such participant's stock account. Pursuant to the terms of the ESOP, the trustee is to tender that portion of unallocated shares which corresponds pro-rata to the portion of allocated shares for which the trustee has received instructions to tender. With respect to the remaining unallocated shares, the trustee may determine based on its determination as to the best interests of the participants whether or not to tender such shares. LCI and Praxair are currently in negotiations concerning a proposed joint venture arrangement, the purpose of which will be to operate a certain hydrogen pipeline which is owned by Southpaw Leasing Master Trust II and leased to LCI. It is contemplated that such pipeline will connect a hydrogen plant operated by LCI in Louisiana with a pipeline system operated by Praxair in Texas. As part of any such joint venture arrangement it is contemplated that LCI and Praxair will enter into a hydrogen exchange agreement pursuant to which, among other things, Praxair, on an ongoing basis, will agree to purchase a minimum volume of hydrogen (having a current market value of approximately $4,000,000 per year) under a take or pay provision and could purchase hydrogen in quantities having a current market value of up to approximately $8,000,000 per year. A-4 17 SCHEDULE I RECENT TRANSACTIONS IN SHARES I. DIRECTORS' DEFERRED FEE PLAN. The following table sets forth the number of Shares that directors' fees were converted into based on the selling price of the Common Stock on the date such director's fees were earned (including dividends on such shares which were converted into additional Shares):
DIRECTOR DATE EARNED NUMBER OF SHARES PRICE - ------------------------------------------------- ----------- ---------------- ------- Gary E. MacDougal................................ 9/15/95 10.0286 $24.500 John F. Riordan.................................. 10/01/95 252.6316 $23.750 10/11/95 43.9560 $22.750 10/11/95 43.9560 $22.750 10/12/95 43.9560 $22.750 Robert G. Wallace................................ 10/11/95 43.9560 $22.750 10/11/95 43.9560 $22.750 10/12/95 43.9560 $22.750 10/25/95 210.5263 $23.750
II. ESOP DIVIDENDS. The following table sets forth the number of Shares credited since September 15 to the accounts of the following officers in connection with dividends paid:
OFFICER POSITION NUMBER OF SHARES PRICE - ------------------------------- --------------------------------- ---------------- ------ John E. Jones.................. Chairman, President and 21.301 $24.50 Chief Executive Officer Lewis E. Akin.................. Executive Vice President 14.980 $24.50 Calvin E. Willoughby........... Executive Vice President 9.972 $24.50 Charles O. Ziemer.............. Senior Vice President and 13.247 $24.50 General Counsel Alan J. Schneider.............. Vice President and Chief 4.547 $24.50 Financial Officer Stephen M. Duffy............... Vice President -- Human Resources .976 $24.50 John R. Meier.................. Controller 5.533 $24.50
III. DIVIDEND REINVESTMENT PLAN. The following table sets forth the number of Shares purchased for the accounts of the following directors and officers pursuant to the Dividend Reinvestment Plan upon distribution of a common stock dividend on September 15, 1995. All Shares were treasury shares.
OFFICER/DIRECTOR POSITION NUMBER OF SHARES - ----------------------------------------- --------------------------------- ---------------- Stephen M. Duffy......................... Vice President -- Human Resources 4.7710 John T. Horton........................... Director 8.8380 Alan J. Schneider........................ Vice President and Chief 2.0420 Financial Officer
18 IV. OTHER TRANSACTIONS. Mr. MacDougal sold 1,850 Shares on October 25, 1995 at a price of $19.625 per Share in the open market in a transaction unrelated to the Directors' Deferred Fee Plan, the ESOP or the Dividend Reinvestment Plan. Over the course of the past 60 days the Company has in the ordinary course (i) sold Shares to former executives (or their estates) upon exercise of options and to employees in connection with the Company's Dividend Reinvestment Plan; (ii) exchanged Shares for Series C Preferred Stock in connection with ESOP terminations; and (iii) purchased odd-lot holdings from stockholders, fractional Shares related to ESOP terminations and restricted Shares in payment of taxes incurred in connection with the lapse of restrictions. 2 19 ANNEX B-1 LEHMAN BROTHERS November 14, 1995 Board of Directors CBI Industries, Inc. 800 Jorie Boulevard Oak Brook, IL 60521 Dear Members of the Board: We understand that PX Acquisition Corp., a wholly owned subsidiary of Praxair, Inc. (together, the "Bidder"), has made a tender offer to the shareholders of CBI Industries, Inc. (the "Company") to purchase all outstanding shares of the common stock, par value $2.50 per share, together with certain associated rights of the Company for consideration of $32.00 net per share in cash (the "Praxair Offer"). The terms and conditions of the Praxair Offer are set forth in more detail in the Offer to Purchase dated November 3, 1995 (the "Offer to Purchase"). We have been requested by the Board of Directors of the Company to render our opinion with respect to the adequacy, from a financial point of view, to the Company's shareholders of the consideration offered in the Praxair Offer. In arriving at our opinion, we reviewed and analyzed: (1) the Offer to Purchase and the specific terms of the Praxair Offer, (2) such publicly available information concerning the Company and the Bidder which we believe to be relevant to our inquiry, (3) financial and operating information with respect to the business, operations and prospects of the Company furnished to us by the Company including, without limitation, certain projections prepared by the Company, (4) a trading history of the Company's common stock and a comparison of that trading history with those of other companies that we deemed relevant, (5) a comparison of the historical financial results and present financial condition of the Company with those of other companies that we deemed relevant, and (6) a comparison of the financial terms of the Praxair Offer with the financial terms of certain other transactions that we deemed relevant. In addition, we have considered various discussions with third parties with respect to such third parties' potential interest in an acquisition of all or part of the Company or other strategic transactions involving the Company. We also have had discussions with the management of the Company concerning its business, operations, assets, financial condition and prospects and undertook such other studies, analyses and investigations as we deemed appropriate. LEHMAN BROTHERS INC. 190 S. LASALLE STREET CHICAGO, IL 60603 TELEPHONE 312/609 7200 FACSIMILE 312/609 8562 B-1-1 20 In arriving at our opinion, we have assumed and relied upon the accuracy and completeness of the financial and other information used by us without assuming any responsibility for independent verification of such information and have further relied upon the assurances of management of the Company that they are not aware of any facts that would make such information inaccurate or misleading. With respect to the financial forecasts and projections of the Company, upon advice of the Company we have assumed that such forecasts and projections have been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of the Company as to the future financial performance of the Company. In arriving at our opinion, we have not conducted a physical inspection of the properties and facilities of the Company and have not made or obtained any evaluations or appraisals of the assets or liabilities of the Company. Our opinion is necessarily based upon market, economic and other conditions as they exist on, and can be evaluated as of, the date of this letter. Based upon and subject to the foregoing, we are of the opinion as of the date hereof that, from a financial point of view, the consideration offered to the shareholders of the Company in the Praxair Offer is inadequate to such shareholders. We have, in the past, provided financial advisory and financing services to the Company and are acting as financial advisor to the Company in connection with the Praxair Offer. In addition, the Company has agreed to indemnify us for certain liabilities that may arise out of the rendering of this opinion. In the ordinary course of our business, we actively trade in the securities of the Company and the Bidder for our own account and for the accounts of our customers and, accordingly, may at any time hold a long or short position in such securities. This opinion is for the use and benefit of the Board of Directions of the Company. This opinion is not intended to be and does not constitute a recommendation to any shareholder of the Company as to whether to accept the consideration offered to such shareholder in the Praxair Offer. Very truly yours, LEHMAN BROTHERS B-1-2 21 ANNEX B-2 Investment Banking Group 5500 Sears Tower Chicago, Illinois 60606 312 906 6200 FAX 312 906 6262 (LOGO) Merrill Lynch November 14, 1995 Board of Directors CBI Industries, Inc. 800 Jorie Boulevard Oak Brook, IL 60521 Dear Members of the Board: We understand that PX Acquisition Corp., a wholly owned subsidiary of Praxair, Inc. (together, the "Bidder"), has made a tender offer to the shareholders of CBI Industries, Inc. (the "Company") to purchase all outstanding shares of the common stock, par value $2.50 per share, together with certain associated rights of the Company for consideration of $32.00 net per share in cash (the "Praxair Offer"). The terms and conditions of the Praxair Offer are set forth in more detail in the Offer to Purchase dated November 3, 1995 (the "Offer to Purchase"). We have been requested by the Board of Directors of the Company to render our opinion with respect to the adequacy, from a financial point of view, to the Company's shareholders of the consideration offered in the Praxair Offer. In arriving at our opinion, we reviewed and analyzed: (1) the Offer to Purchase and the specific terms of the Praxair Offer, (2) such publicly available information concerning the Company and the Bidder which we believe to be relevant to our inquiry, (3) financial and operating information with respect to the business, operations and prospects of the Company furnished to us by the Company including, without limitation, certain projections prepared by the Company, (4) a trading history of the Company's common stock and a comparison of that trading history with those of other companies that we deemed relevant, (5) a comparison of the historical financial results and present financial condition with those of other companies that we deemed relevant, and (6) a comparison of the financial terms of the Praxair Offer with the financial terms of certain other transactions that we deemed relevant. In addition, we have considered various discussions with third parties with respect to such third parties' potential interest in an acquisition of all or part of the Company or other strategic transactions involving the Company. We have also had discussions with the management of the Company concerning its business, operations, assets, financial condition and prospects and undertook such other studies, analyses and investigations as we deemed appropriate. In arriving at our opinion, we have assumed and relied upon the accuracy and completeness of the financial and other information used by us without assuming any responsibility for independent verification of such information and have further relied upon the assurances of management of the Company that they are not aware of any facts that would make such information inaccurate or misleading. With respect to the financial forecasts and projections of the Company, upon advice of the Company we have assumed that such B-2-1 22 forecasts and projections have been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of the Company as to the future financial performance of the Company. In arriving at our opinion, we have not conducted a physical inspection of the properties and facilities of the Company and have not made or obtained any evaluations or appraisals of the assets or liabilities of the Company. Our opinion is necessarily based upon market, economic and other conditions as they exist on, and can be evaluated as of, the date of this letter. Based upon and subject to the foregoing, we are of the opinion as of the date hereof that, from a financial point of view, the consideration offered to the shareholders of the Company in the Praxair Offer is inadequate to such shareholders. We have, in the past, provided financial advisory and financing services to the Company and are acting as financial advisor to the Company in connection with the Praxair Offer. In addition, the Company has agreed to indemnify us for certain liabilities that may arise out of the rendering of this opinion. In the ordinary course of our business, we actively trade in the securities of the Company and the Bidder for our own account and for the accounts of our customers and, accordingly, may at any time hold a long or short position in such securities. This opinion is for the use and benefit of the Board of Directors of the Company. This opinion is not intended to be and does not constitute a recommendation to any shareholder of the Company as to whether to accept the consideration offered to such shareholder in the Praxair Offer. Very truly yours, MERRILL LYNCH B-2-2 23 EXHIBIT INDEX Exhibit 1 -- Pages 5 through 23 of Proxy Statement dated March 24, 1995 relating to the Company's 1995 Annual Meeting of Shareholders. Exhibit 2 -- CBI Industries, Inc. Employment Agreement and addenda for J.E. Jones. Exhibit 3 -- CBI Industries, Inc. Employment Agreement and addenda for A.J. Schneider. Exhibit 4 -- CBI Industries, Inc. Employment Agreement and addenda for C.O. Ziemer. Exhibit 5 -- CBI Industries, Inc. Employment Agreement and addenda for L.E. Akin. Exhibit 6 -- CBI Industries, Inc. Employment Agreement and addenda for C.E. Willoughby. Exhibit 7 -- Form of Liquid Carbonic Industries Corporation Employment Agreement and Form of Addenda. Exhibit 8 -- Letter Agreement between John E. Jones and the Company dated January 4, 1982, amendment thereto dated December 19, 1986, and amendment thereto dated July 16, 1987. Exhibit 9 -- CBI Industries, Inc. Stock Option Plan. Exhibit 10 -- CBI Industries, Inc. 1995 Stock Option Plan. Exhibit 11 -- CBI Restricted Stock Award Plan (1978). Exhibit 12 -- CBI 1983 Restricted Stock Award Plan. Exhibit 13 -- CBI 1989 Restricted Stock Award Plan. Exhibit 14 -- CBI 1994 Restricted Stock Award Plan. Exhibit 15 -- CBI Salaried Employee Stock Ownership Plan (1987). Exhibit 16 -- CBI Employee Stock Purchase and Savings Plan (1987) (incorporated by reference). Exhibit 17 -- CBI Executive Life Insurance Plan. Exhibit 18 -- CBI Benefit Restoration Plan. Exhibit 19 -- CBI Supplemental Survivor's Benefit, Executive Life Insurance and Benefit Restoration Trust. Exhibit 20 -- Letter to John E. Jones, the Company's Chairman, President and Chief Executive Officer, from H. William Lichtenberger, the Chairman and Chief Executive Officer of Praxair, dated October 27, 1995. Exhibit 21 -- Letter to Stockholders of the Company dated November 16, 1995. Exhibit 22 -- Press Release issued by the Company on November 16, 1995. Exhibit 23 -- Letter to holders of Shares issued pursuant to the Company's Restricted Stock Plans with respect to tendering Shares of restricted stock dated November 16, 1995. Exhibit 24 -- Motion to amend Complaint in Steiner v. CBI Industries, Inc. (Delaware Chancery Court). Exhibit 25 -- Complaint in Steiner v. CBI Industries, Inc. (Delaware Chancery Court). Exhibit 26 -- Complaint in Kreisberg v. Jones (Delaware Chancery Court). Exhibit 27 -- Complaint in Lasker v. CBI Industries, Inc. (Delaware Chancery Court). Exhibit 28 -- Complaint in Polikoff v. CBI Industries, Inc. (Delaware Chancery Court). Exhibit 29 -- Complaint in Rosenberg v. Clark (Delaware Chancery Court). Exhibit 30 -- Complaint in Lewis v. Jones (Delaware Chancery Court).
EX-99.1 2 PAGES 5 THROUGH 23 OF PROXY STATEMENT 1 EXHIBIT 1 ing compensation for certain other officers; administers the Company's stock option plans and restricted stock award plans; and makes determinations as to which key officers of the Company or its subsidiaries should be offered employment and/or termination agreements. The Nominating Committee, which held two meetings in 1994, establishes criteria regarding the size and composition of the Board and its Committees, recommends criteria relating to tenure and eligibility, identifies, reviews and recommends prospective Board members, recommends candidates for the position of Chief Executive Officer and Chief Financial Officer, and approves the nominees for new positions on the Board and vacancies on the Board. It will consider nominees for the Board recommended by shareholders. Pursuant to the Company's by-laws, recommendations must be submitted in writing and addressed to the Chairman of the Nominating Committee, c/o Secretary of the Company, Charlotte C. Toerber, CBI Industries, Inc., 800 Jorie Boulevard, Oak Brook, IL 60521-2268 not less than sixty days prior to the first anniversary of the date of the last meeting of shareholders called for the election of directors and set forth the name, age, business and residential address, principal occupation, number of shares of Common Stock owned and such other information concerning the nominee as may be required by the Federal securities laws with respect to an individual nominated as a director for whom proxies are solicited. The Environmental and Safety Committee, which was established, but did not meet, in 1994, reviews and makes recommendations concerning the environmental and safety philosophies and standards of the Company and its operating subsidiaries, reviews existing compliance programs and monitors environmental and safety compliance of the Company and its subsidiaries. COMMON STOCK OWNERSHIP BY CERTAIN PERSONS AND MANAGEMENT SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS The following table sets forth certain information with respect to each person known to the Company to be the beneficial owner of more than 5% of any class of the Company's outstanding stock.
TITLE NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS -------- ------------------- -------------------- -------- Common Stock LaSalle National Trust, N.A. 7,063,258(1) 16.30% 135 South LaSalle Street Chicago, IL 60603 Common Stock The Capital Group Companies, Inc. 3,642,710(2) 9.57% 333 South Hope Street Los Angeles, CA 90071 Common Stock Putnam Investments, Inc. 2,088,700(3) 5.5% One Post Office Square Boston, MA 02109
5 2 (1) According to an amended Schedule 13G dated February 13, 1995, these shares are held by LaSalle National Trust, N.A. in its capacity as Trustee of the CBI Salaried Employee Stock Ownership Plan (1987) (the "ESOP"). It has shared power to vote the shares and sole power to dispose of the shares. Includes 859,082.464 shares of Common Stock and 2,115,318.001 shares of Series C Preferred Stock (which are convertible into 3,172,977.002 shares of Common Stock) which are not allocated to accounts of ESOP participants, and 868,798.536 shares of Common Stock and 1,441,599.999 shares of Series C Preferred Stock (which are convertible into 2,162,399.999 shares of Common Stock) which are allocated to accounts of ESOP participants. (2) According to an amended Schedule 13G dated February 6, 1995 filed by The Capital Group Companies, Inc. and its subsidiaries, Capital Guardian Trust Company and Capital Research and Management Company, it had sole power to vote 2,572,610 shares and sole power to dispose of 3,642,710 shares. (3) According to an amended Schedule 13G dated January 23, 1995 filed by Putnam Investments, Inc. and its subsidiaries, Putnam Investment Management, Inc. and The Putnam Advisory Company, Inc., it had shared power to dispose of 2,088,700 shares. SECURITY OWNERSHIP OF MANAGEMENT OF THE COMPANY The following table sets forth certain information regarding the Company's Common Stock beneficially owned on February 15, 1995, by each director and nominee, each named executive officer and by all directors and executive officers as a group.
SHARES OF COMMON STOCK PERCENT OF NAME OF BENEFICIALLY OWNED OUTSTANDING BENEFICIAL OWNER AS OF FEBRUARY 15, 1995(1) COMMON STOCK - ---------------- --------------------------- ------------ John E. Jones 71,776(2) * Lewis E. Akin 28,957(2) * Wiley N. Caldwell 1,500 * E. Hubert Clark, Jr. 1,350 * Robert J. Daniels 23,327(2) * Robert J. Day 1,650 * John T. Horton 1,536,439(3) 4.2% Gary E. MacDougal 4,650 * Stephanie Pace Marshall 200 * Edward J. Mooney 1,950 * John F. Riordan 1,100 * George L. Schueppert 40,682(2) * Robert T. Stewart 1,100 * Robert G. Wallace 1,650 * Charles O. Ziemer 26,600(2) * All directors and executive officers as a group (18 in number) 1,766,053(2) 4.6%
6 3 *Beneficially owns less than one percent of the Company's outstanding shares of Common Stock. (1) Share amounts for individual directors and officers and all directors and officers as a group include shares awarded pursuant to the CBI restricted stock award plans for which restrictions have not lapsed, shares of Common Stock held pursuant to the CBI Salaried Employee Stock Ownership Plan (1987) and shares owned by spouses and certain other immediate family members. (2) Excludes shares which are subject to presently exercisable stock options as follows: John E. Jones, 165,500 shares; Lewis E. Akin, 52,800 shares; Robert J. Daniels, 75,500 shares; George L. Schueppert, 78,450 shares; Charles O. Ziemer 40,200 shares; and directors and executive officers as a group, 436,250 shares, and excludes shares of Series C Preferred Stock held pursuant to the CBI Salaried Employee Stock Ownership Plan (1987) as follows: John E. Jones, 5,317 shares; Lewis E. Akin, 4,750 shares; Robert J. Daniels, 4,896 shares; George L. Schueppert, 4,946 shares; Charles O. Ziemer, 3,887 shares; and directors and executive officers as a group, 28,461 shares. (3) Includes 1,534,140 shares owned by Mr. Horton as co-trustee of twenty-one trusts of which he has a one-sixth beneficial interest. SECTION 16(A) REPORTING DELINQUENCIES Under rules adopted by the Securities and Exchange Commission effective May 1, 1991, the Company is required to report certain information about any director, officer, beneficial owner of more than ten percent of its Common Stock or its Preferred Stock, or any other person subject to Section 16 of the Securities Exchange Act of 1934 that failed to file on a timely basis the reports required by Section 16(a) of the Exchange Act (the "Reports") during the last fiscal year. Based upon information furnished to the Company, including the Reports in question, as contemplated by the rules, it appears that Mr. MacDougal filed one Form 4 late with regard to one sale transaction and that two officers, Mr. Duffy, Vice President-Human Resources, and Mr. Schneider, Vice President and Controller, each filed one Form 5 late with regard to reporting transactions under the Company's Dividend Reinvestment Plan. 7 4 EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following table sets forth the cash and noncash compensation for each of the last three fiscal years awarded to or earned by the Chief Executive Officer of the Company and the four other most highly compensated executive officers of the Company.
LONG TERM COMPENSATION ANNUAL COMPENSATION AWARDS ------------------------- ------------------------------------------- (a) (b) (c) (d) (f) (g) (i) SECURITIES RESTRICTED UNDERLYING ALL OTHER STOCK OPTIONS/ COMPEN- BONUS AWARDS SARS SATIONS NAME AND PRINCIPAL POSITION YEAR SALARY($) ($)(1) ($)(2)(3) (#SHARES)(4) ($)(5) - --------------------------- ---- --------- ------- ---------- ------------ --------- John E. Jones Chairman of the Board, 1994 530,000 552,497 137,000 31,000 115,042 President, Chief Executive 1993 530,000 77,000 515,250 28,000 133,222 Officer and Director 1992 495,000 456,667 0 28,000 78,395 Lewis E. Akin, Executive Vice President 1994 290,000 210,189 48,020 14,000 96,045 and Director, President of 1993 290,000 35,000 200,375 12,000 76,575 Chicago Bridge & Iron Company 1992 275,000 201,822 0 13,500 42,428 Robert J. Daniels Executive Vice President 1994 265,000 193,507 48,020 14,000 89,021 and Director, President of Liquid Carbonic 1993 265,000 43,515 171,750 11,000 67,456 Industries Corporation 1992 252,000 148,057 0 12,000 40,191 George L. Schueppert Executive Vice President, 1994 305,000 261,591 48,020 14,000 105,848 Chief Financial Officer 1993 305,000 35,000 200,375 12,000 87,047 and Director 1992 290,000 218,895 0 13,500 46,156 Charles O. Ziemer 1994 195,000 101,056 20,580 7,000 63,725 Senior Vice President 1993 192,000 25,000 85,875 6,500 48,064 and General Counsel 1992 185,000 86,589 0 7,000 30,634
8 5 (1) The amounts were earned in the stated year and paid in the following year pursuant to annual incentive bonus opportunities described under the caption "Compensation Committee Report on Compensation Awards." (2) Amounts earned in 1994 (but awarded in 1995) were pursuant to the CBI 1994 Restricted Stock Award Plan (see description under the caption "Long Term Incentive Plans" and "Compensation Committee Report on Compensation Awards") and reflects restricted stock earned pursuant to 50% of the target awards granted in 1994 for which performance is measured at the end of 1994. Restrictions on these shares expire January 1, 1999. Amounts awarded in 1993 were pursuant to the CBI 1989 Restricted Stock Award Plan. (3) Restricted Stock Awards are valued at the closing price on the date of grant. Participants receive dividends on the Restricted Stock reported in this column. The number and value of the aggregate restricted stock holdings at the end of the last completed fiscal year, based on the NYSE composite closing price of $25.625 per share on 12/31/94, for each named executive officer are: John E. Jones 60,750, $1,556,719; Lewis E. Akin 20,275, $519,547; Robert J. Daniels 16,125, $413,203; George L. Schueppert 24,250, $621,406; and Charles O. Ziemer 12,900, $330,562. (4) It is the present policy of the Compensation Committee not to award SARs either at the time of grant or during the term of the option. (5) The compensation reported represents (a) contributions pursuant to the CBI Salaried Employee Stock Ownership Plan (1987)(the "ESOP") for shares allocated to the executive officer's account, (b) the cost of stock allocated in the form of units to each executive officer's account in an irrevocable trust under the CBI Benefit Restoration Plan (described under the caption "Pension and other retirement benefits") for allocations pursuant to the ESOP which otherwise exceed the maximum limit imposed upon such plan by the Internal Revenue Code (the "Code"), and (c) the dollar value of split-dollar life insurance benefits. Those three amounts, expressed in the same order identified above, for each named executive officer are as follows: John E. Jones, $57,048, $19,375, $38,619; Lewis E. Akin $54,866, $17,500, $23,679; Robert J. Daniels $55,635, $14,375, $19,011; George L. Schueppert $55,586, $19,375, $30,887; Charles O. Ziemer $45,064, $5,625, $13,036. OPTIONS AND STOCK APPRECIATION RIGHTS The following tables summarize option grants and exercises during the fiscal year 1994 to and by the executive officers named in the Summary Compensation Table above, and the value of the options held by such persons at the end of fiscal 1994. No SARs were granted or exercised during fiscal 1994. 9 6 OPTION/SAR(1) GRANTS IN LAST FISCAL YEAR
GRANT INDIVIDUAL GRANTS DATE VALUE - ----------------------------------------------------------------------------- ----------- (A) (B) (C) (D) (E) (F) NUMBER OF % OF TOTAL SECURITIES OPTIONS UNDERLYING SARS EXERCISE OPTIONS/SARS GRANTED TO OR BASE GRANT DATE GRANTED EMPLOYEES PRICE EXPIRATION PRESENT NAME (# SHARES)(2) IN FISCAL YEAR ($/SHARE) DATE VALUE($)(3) - ---- ------------- -------------- --------- ---------- ----------- John E. Jones 31,000 13.5% 30.125 5/02/04 364,560 Lewis E. Akin 14,000 6.1% 30.125 5/02/04 164,640 Robert J. Daniels 14,000 6.1% 30.125 5/02/04 164,640 George L. Schueppert 14,000 6.1% 30.125 5/02/04 164,640 Charles O. Ziemer 7,000 3.0% 30.125 5/02/04 82,320
(1) It is the present policy of the Compensation Committee not to award SARs either at the time of grant or during the term of the option. (2) All options were granted at market value and are subject to a one-year holding period. Each option will terminate and cease to be exercisable if the Participant's employment with the Company terminates for any reason other than death, retirement for disability or retirement under a retirement plan of the Company. (3) The estimated grant date present value reflected in the above table is determined using the Black-Scholes model. The material assumptions and adjustments incorporated in the Black Scholes model in estimating the value of the options reflected in the above table include the following: (a) an exercise price of the option of $30.125 equal to the fair market value of the underlying stock on the date of grant; (b) an interest rate 6.48% that represents the interest rate on a U.S. treasury security with a maturity date corresponding to that of the option term; (c) volatility of 33.249% calculated using daily stock prices for the one-year period prior to the grant date; (d) dividends at the rate of $0.48 per share, representing the annualized dividends paid with respect to a share of Common Stock at the date of grant; (e) an approximately 4.0% reduction to reflect the probability of forfeiture due to termination prior to vesting and approximately 12.33% reduction to reflect the probability of a shortened option term due to termination of employment prior to the option expiration date; and (f) an option term of ten years. The ultimate values of options will depend on the future market price of Common Stock, which cannot be forecast with reasonable accuracy. The actual value, if any, an optionee will realize upon exercise of an option will depend on the excess of the market value of the Common Stock over the exercise price on the date the option is exercised. 10 7 AGGREGATED OPTION/SAR(1) EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
(a) (b) (c) (d) (e) NUMBER VALUE OF OF SECURITIES UNEXERCISED UNDERLYING IN-THE- UNEXERCISED MONEY OPTION/SARS OPTIONS/SARS AT FY-END(#) AT FY-END ($) SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/ NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE(2) - ---- --------------- ----------- -------------- ---------------- John E. Jones 0 NA 165,500/31,000 464,710/0 Lewis E. Akin 0 NA 52,800/14,000 0/0 Robert J. Daniels 0 NA 75,500/14,000 231,798/0 George L. Schueppert 0 NA 78,450/14,000 218,158/0 Charles O. Ziemer 0 NA 40,200/ 7,000 107,385/0
(1) It is the present policy of the Compensation Committee not to award SARs either at the time of grant or during the term of the option. (2) Value is based on the NYSE composite closing price of $25.625/share on 12/31/94. LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR Under the Company's 1994 Restricted Stock Award Plan, at the beginning of each year, the performance goals and target awards are set. Target awards are allocated 50% to the current year for which the target award was made ("50% award"), 25% to the first year following ("first year award") and 25% to the second year following ("second year award"). Target awards are subject to adjustment based upon measurement of pre-tax operating income as a return on net assets over a three year period ending with the year in which the measurement of performance is made. The 50% award is adjusted at the end of the year in which the target award is made. The first year award is adjusted at the end of the year in which the target award is made and at the end of the subsequent year. The second year award is adjusted at the end of the year in which the target award is made and again at the end of the second year following the year the target award is made. The target award, as it may be adjusted, will be earned if 100% of the performance goal is achieved. The threshold number of shares will be earned at the achievement of 75% of the performance goal, and the maximum number of shares will be earned at the achievement of 125% of the performance goal. No dividends will be paid during the performance period. 11 8 LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
ESTIMATED FUTURE PAYOUTS UNDER PERFORMANCE OR NON-STOCK PRICE-BASED PLANS NUMBER OF OTHER PERIOD UNTIL --------------------------------- SHARES, UNITS, MATURATION THRESHOLD TARGET MAXIMUM NAME OR OTHER RIGHTS(#) OR PAYOUT (#) (#) (#) - ------------------------------------------------------------------------------------------------- John E. Jones 2,500 1992-4, 1993-5 1400 2,800 5,600 2,500 1992-4, 1994-6 1400 2,800 5,600 Lewis E. Akin 875 1992-4, 1993-5 490 980 1,960 875 1992-4, 1994-6 490 980 1,960 Robert J. Daniels 875 1992-4, 1993-5 490 980 1,960 875 1992-4, 1994-6 490 980 1,960 George L. Schueppert 875 1992-4, 1993-5 490 980 1,960 875 1992-4, 1994-6 490 980 1,960 Charles O. Ziemer 375 1992-4, 1993-5 94 420 840 375 1992-4, 1994-6 94 420 840
Actual performance against the performance goal for the three year period ended December 31, 1994 has been certified by the Compensation Committee and the restricted stock earned pursuant to the 50% award for 1994 has been allocated. (See Summary Compensation Table - Restricted Stock). The amounts listed in the table above under "Number of Shares, Units, or other Rights" indicate the first year award and second year award that are part of a target award made in 1994. Amounts listed under "Estimated Future Payouts Under Non-Stock Price Based Plans" have been adjusted as aforesaid to take into account actual performance against the performance goal for the three year period ended December 31, 1994. PENSION AND OTHER RETIREMENT BENEFITS The CBI Pension Plan (the "Pension Plan") is non-contributory and covers substantially all salaried employees and certain hourly employees of the Company and its participating subsidiaries. The following table shows approximate annual pensions payable to salaried employees, including executive officers, assuming normal retirement at age 65 and that the current social security tax base remains unchanged: 12 9 PENSION PLAN TABLE
AVERAGE ANNUAL YEARS OF SERVICE AT RETIREMENT EARNINGS 15 20 25 30 35 40 -------- ------- -------- -------- -------- -------- -------- $100,000 $21,540 $ 28,720 $ 35,900 $ 43,080 $ 50,260 $ 57,440 200,000 42,540 56,720 70,900 85,080 99,260 113,440 300,000 63,540 84,720 105,900 127,080 148,260 169,440 400,000 84,540 112,720 140,900 169,080 197,260 225,440 500,000 105,540 140,720 175,900 211,080 246,260 281,440 600,000 126,540 168,720 210,900 253,080 295,260 337,440 700,000 147,540 196,720 245,900 295,080 344,260 393,440 800,000 168,540 224,720 280,900 337,080 393,260 449,440 900,000 189,540 252,720 315,900 379,080 442,260 505,440 1,000,000 210,540 280,720 350,900 421,080 491,260 561,440 1,100,000 231,540 308,720 385,900 463,080 540,260 617,440 1,200,000 252,540 336,720 420,900 505,080 589,260 673,440
Pensions for salaried employees, including Executive Officers, are based on years of service and the greater of the average of their last thirty-six consecutive months or any three consecutive full calendar years of salary and bonuses (excluding profit-sharing, overseas living adjustments, remuneration related to Company securities, and compensation otherwise constituting qualified earnings in excess of an annually adjusted limitation imposed by the Internal Revenue Code.) Pension benefits are computed on the basis of a single life annuity with a surviving spouse benefit. Pension Plan benefits shown above are offset by a portion of primary Social Security benefits. In the case of all the named executive officers, such reduction would not substantially affect their benefits. Benefits are also offset by an amount equal to the amount of a monthly annuity that could have been purchased from an insurance company at the time a participant retires with one-half the cash value of the participant's ESOP account up to a maximum of one-half the pension accrued by the participant after 1987. The Internal Revenue Code limited the annual benefits which may be paid to any person under the Pension Plan to $120,000 per year in 1994. In addition, compensation to be used in the determination of benefits was limited by the Internal Revenue Code to $150,000 for 1994. The Company has adopted the CBI Benefit Restoration Plan through which it pays retirement benefits otherwise determined under the Pension Plan formulas but in excess of the maximum limit imposed upon qualified pension plans by the Internal Revenue Code. Certain assets have been placed in trust with an independent trustee to support the CBI Benefit Restoration Plan. The Company may not unilaterally amend such trust after a defined change in control of the Company and may not revoke the trust in any event. The number of years of credited service, as of December 31, 1994, for the named executive officers are: John E. Jones, 37.7 years; George L. Schueppert, 29.4 years; Lewis E. Akin, 34.3 years; Robert J. Daniels, 28.9 years; and Charles O. Ziemer, 32.3 years. Pursuant to an agreement between Mr. Jones and the Company, the years credited to him include years of service with his former employer, but any pension payable by the Company 13 68427 10 to him will be offset by any pension he receives from his former employer. Pursuant to an agreement between Mr. Schueppert and the Company the years credited to him include years of service with a former employer, but any pension payable by the Company to him will be offset by the amount of accrued and vested pension to which he was entitled at the former employer. COMPENSATION OF DIRECTORS Directors who were not officers of the Company received in 1994 an annual retainer of $20,000, paid in quarterly installments, plus an amount equal to the value of 300 shares of Common Stock, valued on the first business day of July, which each eligible director in 1994 elected to take in the form of shares of Common Stock, and $1,000 for attendance at each Board meeting. Directors who were chairpersons of committees received in 1994 an additional retainer of $4,000. Those who serve on Board Committees receive $1,000 for each Committee meeting attended. Directors who are not employees of the Company may elect on an annual basis to defer their fees. Such electing director is credited with investment units equivalent to the number of shares of Common Stock that could have been purchased on the open market with the amounts to which the director was entitled under the standard compensation arrangements, plus credit for dividends that would have been paid on such shares. TERMINATION AGREEMENTS Agreements between the Company and each of the named Executive Officers of the Company provide for each executive's continued employment for a three year period (or to age 65, if earlier) following a defined change in control of the Company. Compensation and benefits for such period are based generally on the executive's compensation and benefits before such defined change in control, subject to stipulated increases, and are payable notwithstanding termination (other than by death, disability or wilful and material breach of the agreement) of the executive's employment during such period. COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The Compensation Committee of the Board of Directors (the "Committee") is composed entirely of outside directors and is responsible for reviewing and approving compensation practices and benefits, in particular those affecting the executive and management group of employees of the Company and its subsidiaries, and including recommendations proposed by management. The Committee determines compensation and awards and grants under corporate plans for officers of the Company (subject to review by the Board of Directors), reviews management recommendations concerning compensation for certain other executives, and administers the Company's stock option plans, the CBI Officers' Bonus Plan and the CBI 1994 Restricted Stock Award Plan. The Committee uses the services of Hewitt Associates LLC, a nationally-recognized, independent compensation consultant which provides relevant competitive compensation data, to assist the Committee in making its decisions. The consultant conducts an annual review of the Company's executive compensation program and reports its findings to the Committee. This review is based on a study of the current comparative compensation practices of an appropriate sample of other large public corporations comparable in size to the Company. Throughout this report, reference to "competitive data," "market levels," "market data," etc., is 14 11 reference to the information and values provided by this study. The Company relies on this array of companies for analysis of executive compensation rather than the Peer Group chosen for comparing stockholder return in the Performance Graph because the Committee believes the Company's competition for executive talent, based on both the Company's geographic location and the industries in which the Company operates, is better reflected by this array of companies. OVERALL COMPENSATION PHILOSOPHY The Company's executive compensation program is designed to support the achievement of corporate performance goals, to attract, retain and motivate talented people, and to link executive and shareholder interests through equity-based plans with a long-term perspective. The program consists of short and long-term incentive plans which emphasize pay for both individual and corporate performance and stock based incentives. Because the Committee believes that it is in the best interest of shareholders to operate the business with a long term perspective and reward those who do so, the program is intended to more greatly emphasize its longer-term components. Cash compensation, which includes base salary and bonus, is designed to be at or near competitive market levels with base salaries approaching market levels and annual target performance bonus opportunities at market levels. Long-term incentives, which are a) stock option grants and b) restricted stock awards based on longer-term corporate performance, are designed to provide opportunity for resulting compensation from such incentives at or above the median values indicated by the competitive data and to provide an incentive to an executive which is aligned with shareholder interests. The following is a detailed description of the current compensation program. BASE SALARY The Committee annually reviews the salaries of the executive officers of the Company. In determining appropriate salary levels, the Committee primarily considered (weighing all the factors on a generally equivalent basis) level of responsibility, experience, individual performance, and competitive pay levels as reflected in the compensation consultant's study. ANNUAL INCENTIVES Through the CBI Officers' Bonus Plan, annual incentive bonus opportunities are made available to executive officers, including the CEO, to recognize and reward corporate, business unit, and individual performance. The plan provides incentives to executive officers of the Company by making cash payments to those who achieve their business unit and/or Company annual goals and a discretionary payment for individual performance as described below. The performance portion of the plan uses income and return on invested capital performance goals for the Company. Threshold, target and maximum goals for Company and business unit performances are established at the beginning of each year. An executive's target bonus depends upon his position, responsibility, and ability to impact the achievement of the Company's performance goals. The competitive market data is reviewed annually in considering appropriate levels of incentive bonus opportunities for individual employees. The 15 12 Committee annually reviews and approves the plan's target opportunities and performance goals. Annual incentive bonus opportunities are made available pursuant to the discretionary portion of the CBI Officers' Bonus Plan by permitting cash payments to executive officers for the effort and skill exhibited in supervising their respective areas of responsibility and the personnel who report to them. Individual target and maximum amounts payable under this portion of the Plan are established and approved by the Committee. In 1994, the Company and its business units' performance goals were exceeded, and the amounts paid consisted of both a performance portion and a discretionary portion under the Plan. STOCK OPTION PLAN AND RESTRICTED STOCK AWARD PLAN The overall compensation philosophy is to stress long-term stock based incentives related to shareholder value. Opportunities for such incentives are provided in the form of stock options and restricted stock at a level targeted slightly above competitive market levels. STOCK OPTION PLAN Stock options are granted under the CBI Stock Option Plan to encourage and reward long-term corporate financial success, as measured by stock price appreciation. Under the plan, the Committee annually considers grants to executives of options to purchase shares of Company stock at the closing market price on the day of the grant. These grants may be exercised after one year and up to a maximum of ten years from date of grant. The number of shares granted to an individual employee is based on, in general order of importance, the employee's potential impact on the Company's performance based upon the employee's position and level of responsibility, a qualitative evaluation of the employee's past performance, a review of the competitive compensation data and the number of options granted in previous years. RESTRICTED STOCK AWARD PLAN The Restricted Stock Award Plan is intended to encourage long-term employment and provide incentive compensation to Participants over an extended period by using a combination of specific longer-term financial goals and stock vesting restrictions. The Plan provides for awarding a target number of restricted shares to an individual recipient, or a percentage thereof, only after the Company achieves the performance goals set by the Committee. Restrictions on shares awarded lapse at the beginning of the fifth year following the year for which performance is measured. Assignment of a target award of restricted stock to an individual employee is based on, in general order of importance, the employee's potential impact on the Company's performance based upon the employee's position and level of responsibility, a qualitative evaluation of the employee's past performance, a review of the competitive compensation data and the number of restricted shares awarded in previous years. The performance goal is based on pre-tax operating income, as a return on net assets. The Committee each year also approves the levels of the target awards. In 1994, the Company exceeded its performance goals under the Plan. 16 13 CEO COMPENSATION Mr. John Jones has been Chairman, CEO and President of CBI Industries since 1989. Mr. Jones' 1994 base salary was $530,000, the same as in 1993. In light of the financial results for 1993, Mr. Jones recommended to the Committee no adjustment to his salary for 1994, and upon consideration the Committee accordingly granted no salary increase to him. The amount of Mr. Jones' 1994 base salary remained slightly below the median value as reflected in the competitive data of the compensation study. Based on 1994 financial results, Mr. Jones earned an incentive bonus of $552,497. This amount was up from the $77,000 paid for 1993, which consisted solely of a bonus paid under the discretionary portion of the Plan. As the corporate performance goals under the CBI Officers' Bonus Plan were exceeded in 1994, this amount consisted of both a performance-based portion and a discretionary portion under the Plan. Mr. Jones' bonus target was set as a percentage of his base salary, taking into consideration the competitive data for such targets, with most of the amount paid based upon net income and return on invested capital performance goals for the Company, and a discretionary portion. The discretionary portion of Mr. Jones' bonus was based on the Committee's consideration of Mr. Jones' leadership in long-term strategic planning, his focus on the increasing global market Opportunities for the Company, and his management ability as the Company undergoes change to adapt to these conditions. The total amount paid to Mr. Jones could have ranged from a minimum of 0% to a maximum of 114% of his base pay, depending on the degree of achievement of net income and return on invested capital performance goals, and the amount of the discretionary portion under the Plan. The 1994 stock option grant of 31,000 shares to Mr. Jones was based on his potential impact on the Company's performance based upon his position and level of responsibility within the Company, and its consideration of the factors described above relating to the discretionary bonus. The Committee also considered the number of options granted in previous years. The potential value represented by this grant was close to the median value of similar stock option grants as reflected in the competitive data. In 1994, the Committee established a target of 10,000 shares for Mr. Jones under the 1994 CBI Restricted Stock Award Plan. The amount of the target award was determined separately from the amount of the stock option grant. The Committee also considered the number of restricted shares awarded under previous plans in previous years in setting Mr. Jones' 1994 target award under the Plan. The amount of the target award was slightly above the median value as reflected in the competitive data of the compensation study. Taken together, the value of the options granted and the restricted stock target award was slightly above the median value of total long term incentive compensation as reflected in the compensation study. Based upon 1994 financial results, Mr. Jones earned a restricted stock award of 11,200 shares, of which 5,600 shares were awarded subject to restrictions and 5,600 shares are subject to adjustment based upon attainment of the performance goals for 1995 and 1996. 17 14 INTERNAL REVENUE CODE LIMITATION ON DEDUCTIBILITY OF COMPENSATION The Committee has discussed and considered certain provisions of Section 162(m) of the Internal Revenue Code of 1986, as amended, relating to the deduction of compensation-related expenses in excess of $1,000,000. The Committee has determined not to take further action at this time with regard to the Company's executive compensation programs. It will continue to consider these Code provisions with regard to such programs and any changes to them; however, the Committee believes the Company's interests are best served by retaining a flexible approach and that there may be circumstances in which it is appropriate to pay certain amounts or forms of compensation that will not be fully deductible under these Code provisions. The Compensation Committee Report below shall not be deemed incorporated by reference by a general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts. COMPENSATION COMMITTEE Edward J. Mooney (Chairman) Robert J. Day John T. Horton Gary E. MacDougal Robert T. Stewart 18 15 STOCK PERFORMANCE CHART The Stock Performance Chart below shall not be deemed incorporated by reference by a general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts. The chart below compares the cumulative total shareholder return on the Common Stock of the Company for the last five fiscal years with the cumulative total return on the S&P 500 Index and the Dow Jones Diversified Industrial Index for the same period. The comparison assumes $100 was invested in the Company's Common Stock, the S&P 500 Index and the Dow Jones Diversified Industrial Index on December 31, 1989, and reinvestment of all dividends. COMPARISON OF TOTAL RETURNS VALUE FOR EACH ONE HUNDRED DOLLARS INVESTED ON 12/31/89 (GAINS IN STOCK PRICE, DIVIDENDS AND REINVESTED DIVIDENDS)
Measurement Period (Fiscal Year Covered) CBI S&P 500 PEER Group* - --------------------- ---- ------- ----------- Measurement Pt. -- 12/31/89 $100 $100 $100 Fiscal Year Ended 12/31/90 127 97 93 Fiscal Year Ended 12/31/91 155 127 115 Fiscal Year Ended 12/31/92 144 136 134 Fiscal Year Ended 12/31/93 150 150 164 Fiscal Year Ended 12/31/94 129 152 150
[FN] * Dow Jones Diversified Industrial Index 19 16 PROPOSAL 1 CBI INDUSTRIES, INC. 1995 STOCK OPTION PLAN The Board of Directors recommends that the shareholders approve the CBI Industries, Inc. 1995 Stock Option Plan (referred to in the following discussion of Proposal 1 as the "Plan"), which has been approved by the Board. The description of the Plan set forth below is qualified in its entirety by reference to the complete text of the Plan as set forth in Exhibit A. PURPOSE OF THE PLAN The purpose of the Plan is to aid the Company and its subsidiaries in securing and retaining key employees of outstanding ability by making it possible to offer them an increased incentive in the form of a proprietary interest in the Company, to join or continue in the service of the Company and to increase their efforts for its welfare. CREATION OF THE PLAN The Board of Directors adopted the Plan on January 11, 1995, to be effective as of January 1, 1995, subject to approval by the shareholders of the Company at the Annual Meeting on May 11, 1995. The Plan replaces the CBI Industries, Inc. Stock Option Plan which expires on May 10, 1995. As of March 1, 1995, 1,000 shares remained reserved under that plan. DESCRIPTION OF THE PLAN The Plan authorizes the granting of incentive stock options qualified under Section 422A under the Code and non-qualified stock options ("Non-Qualified Stock Options") to purchase, or stock appreciation rights to receive, a maximum of 1,700,000 shares of Common Stock. This number is subject to adjustment by the Committee (described below) to reflect stock dividends, split-ups and other changes in the capitalization of the Company. The fair market value (as of the date an option is granted) of the shares for which a participant may exercise Incentive Stock Options in any calendar year (regardless of the total value of such options granted) cannot exceed $100,000. This Code limitation may be amended by the Board of Directors if the Code is amended. Shares subject to options that expire without exercise will be available again for option under the Plan. However, the shares subject to Non-Qualified Stock Options that are cancelled upon exercise of an associated stock appreciation right (as described below) shall no longer be available for grant. The Plan shall be administered by the Compensation Committee of the Company's Board of Directors (the "Committee"), no member of which shall be eligible to participate in the Plan or any other stock option plan maintained by the Company during Committee membership or within one year prior thereto. The Committee shall administer and interpret the Plan. The designation of the key employees (defined in the Plan to be any full time employee of the Company, including officers, who in the opinion of the Committee are or are expected to 20 17 be primarily responsible for the management, growth or protection of some part or all of the business of the Company), the number of shares that may be optioned to any such employee and, subject to the limitations of the Plan, the terms and conditions upon which such options are granted, are entirely within the discretion of the Committee. Under the Plan: (a) the option price of all options shall not be less than fair market value of the Common Stock at the time of grant; (b) an option may be exercised for ten years after the date of grant unless an earlier expiration date is provided in the option; (c) payment of the option price shall be made in full and, in the discretion of the Committee, made either in cash, shares of Common Stock or by a combination of cash and such shares; (d) no option or stock appreciation rights shall be granted after the tenth anniversary of shareholder approval, but options and stock appreciation rights already granted may be extended beyond that date; (e) during the lifetime of a Participant, an option or stock appreciation right may only be exercised by the optionee, and, unless otherwise designated by the Committee, may not be transferred other than by will, the laws of descent and distribution, or by the provision for the designation of a beneficiary in accordance with the Plan; and (f) a stock appreciation right may not be transferred on death except to the transferee of the related option. An unexercised option will expire upon termination of employment for other than death, retirement for disability or retirement under a retirement plan of the Company. If an optionee dies while employed or retires due to disability, an Incentive Stock Option will expire at the earlier of ten years from the date of grant or one year from the date of death or such retirement; if an optionee retires under a Company plan, other than for disability, then an Incentive Stock Option will expire at the earlier of ten years from the date of grant or three months after retirement. A Non-Qualified Stock Option will expire at the expiration date set forth in the option, if employment terminates due to any retirement; if employment terminates due to death, then a Non-Qualified Stock Option will expire at the earlier of ten years from the date of grant or one year after death. The Plan permits the Committee to extend the expiration date of an option initially granted for less than ten years, but not beyond ten years. The Plan permits the grant of stock appreciation rights in conjunction with options in the form of "Rights", either at the time of the option grant or during the option's term. Stock appreciation rights permit an optionee to receive (a) shares of Common Stock, (b) cash or (c) a combination of such shares and cash in value equal to the amount by which the fair market value of all shares subject to the related option exceeds the exercise price of such option. The determination of whether stock appreciation rights will be settled in stock, cash or a combination will be made by the Committee. To the extent an option is exercised, in whole or in part, any related stock appreciation right shall terminate. Likewise, to the extent a stock appreciation right is exercised, the related option shall terminate. To the extent any stock appreciation right is not exercised or cancelled, it shall be deemed exercised automatically on the last day on which its related option may be exercised. It is the present policy of the Committee not to award Rights either at the time of grant or during the term of the option. The Plan also permits the grant of "Limited Rights" in conjunction with the grant of options, whereby the Committee may specify, as to individual options, other conditions or circumstances under which options may be terminated by payment of cash in lieu of the exercise of the related option. Such circumstances may include automatic termination following a substantial change in the ownership, control or management of the Company. The exercise of either the Limited Right or the related option shall pro rata cancel the other. 21 18 The Board of Directors may amend the Plan at any time, but may not change the Plan without shareholder approval to (a) increase the maximum number of shares authorized, (b) reduce the minimum option price, (c) extend the period within which options or stock appreciation rights may be granted, (d) change the basis upon which shares or cash may be distributed upon exercise of a stock appreciation right or (e) provide for an option or stock appreciation right exercisable more than ten years from the date of grant. The terms of any previously granted option may not be changed to adversely affect the rights of the holder without the holder's consent. The Board of Directors may suspend or terminate the Plan at any time, but any such action shall not affect options or stock appreciation rights then in effect. FEDERAL INCOME TAX CONSEQUENCES Under present laws and regulations, the Federal income tax consequences of receiving options and purchasing shares under the Plan, and ultimately disposing of such shares, are as follows: The grant of an option under the Plan will not, by itself, result in the recognition of taxable income to the optionee or entitle the Company or any of its subsidiaries to a deduction at the time of such grant. The exercise of an Incentive Stock Option within the meaning of Section 422A of the Code will not, by itself, result in the recognition of taxable income to the optionee or entitle the Company or any of its subsidiaries to a deduction at the time of such exercise. The excess of the market value of the shares over the option price at the time of exercise will be a tax preference item for purposes of the alternative minimum tax determination of the optionee. The exercise of a Non-Qualified Stock Option will result in the recognition of ordinary income by the optionee, and entitle the optionee's employer to a deduction in an amount equal to the difference between the exercise price and the fair market value of the shares acquired pursuant to the option. The exercise of a stock appreciation right (whether a Right or a Limited Right) will result in the recognition of ordinary income by the optionee in an amount equal to the amount of cash received and/or the fair market value of the shares acquired pursuant to the exercise, and entitle the optionee's employer to a deduction equal to the amount of ordinary income recognized by the optionee at the time the optionee recognizes it. For these purposes, the tax is imposed and the fair market value of the shares is determined as of the date of exercise unless the shares are not then freely transferable due to insider trading restrictions under the securities laws, in which case the applicable date is six months after the date of exercise unless the optionee elects to be taxed and have the fair market value of the shares determined as of the date of exercise. The optionee will recognize capital gain or loss upon resale of the shares received upon the exercise of an Incentive Stock Option, provided that the optionee held such shares for at least one year after transfer of the shares to the optionee or two years after the grant of the option, whichever is later. The amount of gain or loss will be the difference between the amount realized by the seller and the seller's tax basis for the stock (the price paid for the stock if the option price is paid in cash, the basis in the stock exchanged to the extent an equal number of shares are received if the option price is paid in shares of Common Stock, and zero for those shares received in excess of the number of shares exchanged if the option price is paid in shares of Common Stock). Generally, if the shares are not held for the requisite period, the optionee will recognize ordinary income upon disposition in an amount equal to the lesser of (a) the difference between the exercise price and the fair market 22 19 value on the date of exercise of the shares acquired pursuant to the option or (b) the excess of the fair market value on the date of disposition over the exercise price; and the optionee's employer will be allowed a deduction equal to the amount of ordinary income, if any, recognized by the optionee at such time as the optionee recognizes it. NEW PLAN BENEFITS This plan is substantially the same as the CBI Industries, Inc. Stock Option Plan which expires May 10, 1995. The following sets forth the number of stock options granted under the expiring plan in January, 1995, which is the same number of options each person would have received under the proposed Plan if options had been granted under the proposed Plan in 1995.
NAMED OFFICERS NUMBER OF STOCK OPTIONS -------------- ----------------------- John E. Jones 45,000 Lewis E. Akin 18,000 Robert J. Daniels 9,000 George L. Schueppert 18,000 Charles O. Ziemer 9,000 All Current Executive Officers 116,000 Non-Executive Directors or Nominees -0- Non-Executive Officers -0- All Employees (excluding Current Executive Officers) 176,400
VOTE REQUIRED This proposal requires the affirmative vote of the holders of a majority of the outstanding shares of the Common Stock and the Series C Preferred Stock voting as a class and represented at the Annual Meeting. THE BOARD RECOMMENDS A VOTE FOR PROPOSAL 1. 23 EX-99.2 3 EMPLOYMENT AGREEMENT AND ADDENDA - J.E. JONES 1 Exhibit 2 AGREEMENT THIS AGREEMENT between CBI INDUSTRIES, INC., a Delaware corporation ("CBI"), and John E. Jones ("Executive"), dated this 12th day of September, 1986. WITNESSETH THAT WHEREAS, CBI wishes to attract and retain well-qualified executives and both CBI and the Executive desire continuity of management in the event of any Change in Control of CBI; NOW, THEREFORE, it is hereby agreed by and between the parties as follows: 1. Effective Date. The "Effective Date" of this Agreement shall be the date on which a Change in Control of CBI (as defined in Section 2) occurs. 2. Change in Control. The term "Change in Control" shall mean the occurrence at any time of any of the following events: (a) An Acquiring Person (as defined below), has become such; or (b) Continuing Directors (as defined below) cease to comprise a majority of the board of directors of CBI. 2 For purposes of this Agreement, the terms "Acquiring Person" and "Continuing Directors" shall have the respective meanings ascribed to such terms in that certain Rights Agreement dated March 4, 1986, between CBI and Morgan Guaranty Trust Company of New York as rights agent, the relevant portions of which for convenience of reference are reproduced as Exhibit I to this Agreement. 3. Employment. CBI hereby agrees that if the Executive continues as an employee of CBI from the date of execution hereof until the Effective Date, CBI shall continue the Executive in its employ for the period commencing on the Effective Date and ending on the earlier to occur of the third anniversary of such date or the 65th birthday of the Executive (the "Employment Period"), to exercise such authority and perform such executive duties as are requested of him by CBI, which authority and duties shall be commensurate with the authority being exercised and duties being performed by the Executive immediately prior to the Effective Date. The Executive shall perform such requested services at the location where the Executive was employed immediately prior to the Effective Date, except for required travel on CBI's business to an extent substantially consistent with the Executive's business travel obligations prior to the Effective Date. The Executive agrees that while an employee during the Employment Period he shall, to the extent required, devote substantially - 2 - 3 all of his business time to his executive duties as described herein and perform such duties faithfully and efficiently. 4. Compensation, Compensation Plans, Benefits. During the Employment Period, the Executive shall be compensated as follows: (a) He shall receive an annual salary (to be paid in equal biweekly installments) which is not less than his rate of annual salary in effect immediately prior to the Effective Date, increased on each January 1 within the remainder of the Employment Period by at least the greater of (i) the average annual percentage salary increase for the Executive during the period of three full calendar years immediately preceding the Effective Date, or (ii) the percentage increase in the Implicit Price Deflator for Gross National Product for the calendar year immediately preceding such January 1, as published by the United States Department of Commerce in its Survey of Current Business in December of each year, over such Implicit Price Deflator for the calendar year next preceding such year. (b) He shall be awarded and receive bonus, restricted stock award, stock option, and other incentive compensation for each calendar year (or other applicable bonus or incentive compensation - 3 - 4 period) any part of which is included in the Employment Period, which in the aggregate shall not in value be a lesser percentage of his annual salary, as determined in subsection (a) above, for such calendar year (or period), than the aggregate bonus, restricted stock award, stock option, and other incentive compensation during the period of three full calendar years immediately preceding the Effective Date was of the Executive's aggregate base salary for such three year period. (c) He shall be entitled to receive all employee benefits to the extent of the greater of the employee benefits provided by CBI to executives with comparable duties or the employee benefits to which he was entitled immediately prior to the Effective Date. (d) During any period that Executive is unable to perform the services for CBI specified in Section 3, whether as a result of total disability or as a result of a physical or mental disability that is not total or is not permanent and therefore is not a total disability, Executive shall continue to receive base salary at the rate in effect at the commencement of any such period, together with all other compensation and benefits that are payable under this Agreement. - 4 - 5 (e) He shall be furnished at CBI's expense with an automobile, office, reasonable secretarial help, club memberships, reimbursement for reasonable entertainment expenses, and such other supplies, equipment, facilities, services and emoluments appertinent to his position to the extent of the greater of such emoluments provided by CBI to executives with comparable duties or the emoluments to which he was entitled immediately prior to the Effective Date. (f) He shall be covered by directors and officers liability and indemnity insurance or equivalent protection arranged and funded by CBI, and by corporate indemnity protection, to the extent of the greatest level of protection afforded to such Executive under any and all policies of directors and officers liability and indemnity insurance, by-law provisions or any other arrangements or agreements, at any time within the period of three full calendar years immediately preceding the Effective Date. 5. Termination. The term "Termination" shall mean the occurrence during the Employment Period of: (a) termination by CBI of the employment of the Executive for any reason other than (i) death, (ii) - 5 - 6 physical or mental incapacity which would entitle Executive to permanent disability benefits under CBI's appropriate plans, or (iii) a willful and material breach of this Agreement by the Executive which causes a direct and substantial injury to CBI or to its business, which is not cured by Executive within 30 days after receiving written notice of such breach and reasonable directions for cure from CBI; or (b) the resignation of the Executive from his employment upon 30 days written notice to CBI at any time following (i) a significant change in the nature or scope of the Executive's authorities or duties from those described in Section 3, a reduction in total compensation from that provided in Section 4, or the breach by CBI of any other provision of this Agreement, which change, reduction or breach is not restored or cured by CBI within 30 days after receiving written notice of such change, reduction or breach and reasonable directions for restoration or cure from the Executive; or (ii) a reasonable determination by the Executive that, as a result of the Change in Control and a change in circumstances thereafter significantly affecting his position, he is unable to exercise the authorities, powers, functions or duties attached to his position as contemplated by Section 3. - 6 - 7 A Termination as contemplated by this Section 5, whether or not a breach of this Agreement by CBI, shall entitle the Executive to Termination benefits as provided by this Agreement. Nothing in this Agreement shall prevent the Executive from voluntarily resigning from his Employment upon 90 days written notice to CBI under circumstances which do not constitute Termination as defined in this Section 5, and no such resignation shall be deemed a breach of this Agreement by the Executive. 6. Termination Payment. In the event of Termination of Executive during the Period of Employment, CBI shall pay to the Executive a lump sum amount equal (without discount to present value) to the sum of the amounts determined in accordance with subsections (a), (b), (c) and (d) below, and provide the additional benefits described in subsections (w), (x), (y) and (z) below: (a) An amount equal to the aggregate salary which would have been paid to the Executive during the remainder of the Employment Period if he had received the base salary specified by Section 4(a) above, increased by assuming the salary increase on each January 1 during the remainder of the Employment Period to be the greatest of the average annual percentage salary increase or the percentage increase in the Implicit Price Deflator, whichever is - 7 - 8 applicable, as of any January 1 within the three calendar years including or preceding the Termination date. (b) Bonus and incentive compensation for any calendar year (or other applicable bonus or incentive compensation period) ending prior to the Termination date but not previously paid. (c) An amount equal to the aggregate bonus and incentive compensation which would have been paid to the Executive during each calendar year (or other applicable bonus or incentive compensation period) any part of which is included in the remainder of the Employment Period if he had received bonus and incentive compensation for any such year (or period) in the minimum amount specified by Section 4(b) based on his increased salary determined under subsection (a) above; provided, however, that in the event any bonus year (or period) extends beyond the end of the Employment Period, bonus or other incentive compensation for such year (or period) shall be pro-rated in proportion to the number of days within and without the Employment Period. (d) In the event any shares of CBI common stock (or other securities into which such shares may have - 8 - 9 been converted) previously awarded to Executive under any restricted stock award plans of CBI or separate agreements between Executive and CBI are forfeited by reason of such Termination, an amount in cash equal to the fair market value of such forfeited common stock (or other securities) as of the date of Termination. The rights afforded to Executive under this subsection (d) are without prejudice to any other rights Executive has to shares of CBI common stock (or other securities) under such plans or agreements or by reason of the action of the CBI Board of Directors heretofore taken in causing restrictions on such shares to be removed under certain circumstances including Termination of the Executive. CBI shall also provide to the Executive: (w) In addition to the benefits provided under any pension benefit plan, benefit restoration plan, profit sharing plan, or employee stock ownership plan (whether or not funded or qualified under the Internal Revenue Code) maintained by CBI ("Retirement Plans"), the difference (the "Benefit Enhancement") between such benefits and the benefits (the "Enhanced Benefits") that would have been provided under such Retirement Plans if Executive had remained in the employ of CBI throughout the Employment Period at the - 9 - 10 salary determined under subsection (a) above accruing additional age and service credits under such Retirement Plans accordingly. If after giving effect to such additional age and service credit Executive shall not have the necessary age or credited service at the end of the Employment Period to qualify under the CBI Pension Plan (the "Pension Plan") for an early retirement pension, the Enhanced Benefits under this subsection (w) shall nevertheless include an early retirement pension under the Pension Plan beginning upon Executive attaining age 55 or upon the date Executive would have attained 30 years of credited service had Executive remained continuously employed by CBI but for Termination (whichever occurs first) (the "Enhanced Early Retirement Pension"). The Enhanced Early Retirement Pension shall be payable to the Executive or to the spouse of the Executive (if applicable) commencing at the time Executive attains (or would have attained) age 55 or would have otherwise attained 30 years of credited service as provided aforesaid (whichever occurs first). The Enhanced Early Retirement Pension shall only be subject to reduction at the rate of four (4) percentum for each year by which the Executive's age is less than age 65 or the Executive's credited service is less than 40 years, whichever produces the lesser - 10 - 11 reduction, pursuant to the first sentence of Section 5.2.3 of the Pension Plan (as in effect on the date hereof). If Executive shall die after the end of the Employment Period but before the date the Enhanced Early Retirement Pension is payable, the spouse of Executive shall be entitled to an enhanced survivor's pension under the Pension Plan as if Executive had died as an employee of CBI, giving effect to service through the date of Executive's death and Executive's earnings through the end of the Employment Period. Such Benefit Enhancement will be paid beginning on the date the Enhanced Benefits would have commenced and thereafter concurrently with the benefits actually provided under such Retirement Plans; except that if the Executive receives a distribution from any profit sharing or employee stock ownership plan before the Benefit Enhancement required by this subsection in respect of such Retirement Plan become determinable, the Benefit Enhancement in respect of such plan shall be paid as soon thereafter as such benefits become determinable. Nothing in this subsection (w) shall prevent the actual commencement of benefits under any Retirement Plan, and the Benefit Enhancements required by this subsection (w), before the end of the Employment Period to the extent required or permitted under the terms of the applicable Retirement Plan, - 11 - 12 giving effect to the additional age and service credit required by this subsection (w). (x) Participation in or coverage by all other employee benefits, including, but not limited to, coverage under any health or medical benefit insurance, plans, or arrangements, supplemental survivors' benefit plans, or life insurance arrangements or programs, to the same extent to which he would have been entitled under all employee benefit plans, programs, arrangements or practices maintained by CBI if he had remained in the employ of CBI through the Employment Period at the salary determined under subsection (a) above. (y) Continuation of disability income benefits pursuant to Section 4(d) for so long as any disability may continue and continuation of directors and officers liability and indemnity insurance and corporate indemnity protection pursuant to Section 4(f) for so long as any liability may arise; in either case without regard to the Termination of the Employment Period. (z) Within 30 days after each written request therefor by the Executive, cash advances or reimbursement for any fees or expenses actually incurred or reasonably expected to be incurred by the Executive in seeking other - 12 - 13 employment, including without limitation all travel and relocation expenses and all fees charged by any executive recruitment firm or firms or employment consulting or counseling firm or firms selected by the Executive in his sole discretion. The amount of Termination payments described in subsections (a), (b), (c) and (d) of this Section 6 shall be determined and paid in a lump sum within 30 days of the Termination date by cashier's check or certified check of CBI or any of its affiliated corporations delivered to Executive together with such calculations, worksheets, or other information as may be necessary or appropriate to ascertain the correctness of the computation of such amount and, if applicable, of any reduction pursuant to Section 7. Any Termination payment (or the value thereof) not paid on or before the date provided therefor by this Section 6 shall bear interest after such date until paid at a rate per annum during each month such amount remains unpaid of five percentage points in excess of the prime rate as publicly announced by the First National Bank of Chicago or its successor from time to time as in effect on the first day of each such month. 7. Overall Limitations. Solely for the purposes of the computation of benefits under this Agreement and notwithstanding any other provisions hereof, payments to any Executive under this Agreement shall be reduced (but not below - 13 - 14 zero) so that the present value, as determined in accordance with Section 280G(d)(4) of the Code, of such payments plus any other payments that must be taken into account for purposes of any computation relating to Executive under Section 280G(b)(2)(A)(ii) of the Code, shall not, in the aggregate, exceed 2.99 times Executive's "base amount," as that term is defined in Section 280G(b)(3) of the Code. Notwithstanding any other provision hereof, no reduction in payments under the limitation contained in the immediately preceding sentence shall be applied to payments hereunder which do not constitute excess parachute payments" within the meaning the Code. Any payments in excess of the limitation of this Section 7 or otherwise determined to be "excess parachute payments" made to Executive hereunder are deemed to be overpayments which shall constitute an amount owing from the Executive receiving them to CBI with interest from the date of receipt by the Executive to the date of repayment (or offset) at the applicable federal rate under Section 1274(d) of the Code, compounded semi-annually, which shall be payable to CBI upon demand; provided, however, that no repayment shall be required under this sentence if in the written opinion of tax counsel satisfactory to the Executive and delivered to the Executive and CBI such repayment does not allow such overpayment to be excluded for federal income and excise tax purposes from the Executive's income for the year of receipt or afford the - 14 - 15 Executive a compensating federal income tax deduction for the year of repayment. 8. Non-Competition. Whether or not a Termination occurs, the Executive agrees to continue all non-competition and confidentiality provisions, as specified in any other agreement in effect on the Effective Date between the Executive and CBI relating to confidential information, during (and to the extent specified in such agreement, after) the Employment Period. 9. Mitigation. The Executive shall not be required to mitigate the amount of any payment provided for under this Agreement by seeking other employment or otherwise; provided, however, that if during the Employment Period Executive accepts other employment in a position substantially equivalent to or better than the position held by him with CBI, current cash compensation actually received by the Executive during the Employment Period from such other employment shall be applied to reduce Termination payments otherwise due under subsections (a) and (c) of Section 6 of this Agreement. 10. Legal Fees and Expenses: (a) It is the intent of CBI that no Executive be required to incur the expenses associated with the enforcement of his rights under this Agreement by - 15 - 16 litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Executive hereunder. Accordingly, if it should appear to the Executive that CBI has failed to comply with any of its obligations under this Agreement, or in the event that CBI or any other person takes any action to declare this Agreement void or unenforceable, or institutes any litigation designed to deny, or to recover from, the Executive the benefits intended to be provided to Executive hereunder, CBI irrevocably authorizes Executive from time to time to retain counsel of his choice, at the expense of CBI as hereafter provided, to represent Executive in connection with the initiation or defense of any litigation, arbitration or other legal action, whether by or against CBI or any director, officer, stockholder or other person affiliated with CBI, in any jurisdiction. CBI shall advance to the Executive within 30 days after each written request therefor any and all attorneys' and related fees and expenses actually incurred or reasonably expected to be incurred by the Executive in any such proceeding or otherwise as a result of CBI's failure to perform this Agreement or any provision hereof or as a result of CBI or any person contesting the validity or - 16 - 17 enforceability of this Agreement or any provision hereof; provided, however, that to the extent the Executive does not prevail in any such litigation, arbitration, or other legal action, the Executive shall repay to CBI the amount (without interest) of such attorney's fees and related fees and expenses previously advanced. (b) CBI shall at its sole cost and expense obtain a committment for an irrevocable clean letter of credit, substantially in the form of that attached hereto as Exhibit II and incorporated herein by reference (the "Letter of Credit"), to be issued by a commercial bank selected by CBI having total assets equivalent to at least $6 billion and either incorporated under the laws of, or having an office in, the United States or any State (the "Bank"), to secure for the benefit of Executive the total value of performance of CBI's obligations under this Agreement by providing that the total amount of all payments due to be paid by CBI to Executive under this Agreement shall be paid on a regular, periodic basis upon presentation by Executive to the Bank of a statement or statements prepared by Executive's counsel that such payments are due and owing, and that CBI has not performed its obligation to make such payments. CBI - 17 - 18 shall at its sole cost and expense obtain the issuance of the Letter of Credit pursuant to such committment not later than the Effective Date and shall pay all amounts and take all action necessary to maintain such Letter of Credit during the Employment Period and for two years thereafter and if, notwithstanding CBI's complete discharge of such obligations, such Letter of Credit shall be terminated or not renewed, CBI shall obtain a replacement irrevocable clean letter of credit on substantially the same terms and conditions as contained in the Letter of Credit drawn upon a commercial bank having total assets equivalent to at least $6 billion and either incorporated under the laws of, or having an office in, the United States or any State, which assures the Executive the benefits of this Agreement. 11. Notices. Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and if sent by registered or certified mail to the Executive at the last address he has filed in writing with CBI or, in the case of CBI, at its principal executive offices. 12. Non-Alienation. The Executive shall not have any right to pledge, hypothecate, anticipate or in any way create a - 18 - 19 lien upon any amounts provided under this Agreement; and no benefits payable hereunder shall be assignable in anticipation of payment either by voluntary or involuntary acts, or by operation of law. 13. Governing Law. The provisions of this Agreement shall be construed in accordance with the laws of the State of Illinois. 14. Amendment. This Agreement may be amended or cancel led by mutual agreement of the parties in writing without the consent of any other person and, so long as the Executive lives, no person, other than the parties hereto, shall have any rights under or interest in this Agreement or the subject matter hereof. 15. Successors to the Company. Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of CBI and any successor of CBI. 16. Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions of this - 19 - 20 Agreement shall be unaffected thereby and shall remain in full force and effect. /s/ John E. Jones ------------------------------ CBI INDUSTRIES, INC. Executive By: /s/ W. A. Pogue Title: Vice Chairman --------------------------- ------------------------ Title: Chairman of the Board ----------------------- ATTEST: /s/ Donald H. Craigmile - ----------------------------- Secretary (SEAL) - 20 - 21 EXHIBIT I Section 1. Certain Definitions. For purposes of this Agreement, the following terms have the meanings indicated: 1.1 "Acquiring Person" shall mean any Person (as such term is hereinafter defined) who or which, together with all Affiliates (as such term is hereinafter defined) and Associates (as such term is hereinafter defined) of such Person, shall be the Beneficial Owner (as such term is hereinafter defined) of 20% or more of the shares of Common Stock, then outstanding, but shall not include the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, or any entity organized, appointed or established by the Company for or pursuant to the terms of any such plan. 1.3 "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act 22 of 1934, as amended (the "Exchange Act"), as in effect on the date of this Agreement. 1.4 A Person shall be deemed the "Beneficial Owner" of, and shall be deemed to "beneficially own," any securities: (a) which such Person or any of such Person's Affiliates or Associates beneficially owns, directly or indirectly; (b) which such Person or any of such Person's Affiliates or Associates has (i) the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights (other than the Rights), warrants or options, or otherwise; provided, however, that a Person shall not be deemed the 23 "Beneficial Owner" of, or to "beneficially own," securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for purchase or exchange; or (ii) the right to vote pursuant to any agreement, arrangement or understanding (whether or not in writing); provided, however, that a Person shall not be deemed the "Beneficial Owner" of, or to "beneficially own," any security under this clause (ii) if the agreement, arrangement or understanding to vote such security: (A) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations of the Exchange Act, and (B) is not also then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or (c) which are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with 24 which such Person or any of such Person's Affiliates or Associates has any agreement, arrangement or understanding (whether or not in writing), for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in clause (ii) of paragraph (b) of this subsection 1.4) or disposing of any voting securities of the Company. 1.7 "Common Stock" shall mean the common stock, $2.50 par value per share, of the Company, except that "Common Stock" when used with reference to any Person other than the Company shall mean the capital stock of such Person with the greatest voting power, or the equity securities or other equity interest having power to control or direct the management, of such Person. 25 1.8 "Continuing Director" shall mean any member of the Board, while such person is a member of the Board, who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, and was a member of the Board prior to the date of this Agreement. A "Continuing Director" shall also mean any person who subsequently becomes a member of the Board, while such person is a member of the Board, who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, if (a) such person's nomination for election or election to the Board is recommended or approved by resolution of a majority of the Continuing Directors or (b) such person is included as a nominee in a proxy statement of the Company distributed when a majority of the Board consists of Continuing Directors. 1.9 "Person" shall mean any individual, firm, corporation, partnership or other entity. 26 Exhibit II From: ------------------------ Date: ------------------------ To: -------------------------- By order of: CBI Industries, Inc. 800 Jorie Boulevard Oak Brook, Illinois 60521 We hereby issue our irrevocable Letter of Credit #__________ effective __________________, 1986 for a principal amount of U.S. $____________ only, expiring __________________, 1987, in Chicago, Illinois representing support for an "Agreement" dated ______________ between CBI Industries, Inc. and the beneficiary of this Letter of Credit. Whole or partial drawings of the above Letter of Credit are available against presentation of your draft(s) drawn at sight on us mentioning thereon our Letter of Credit number and accompanied by (1) beneficiary's signed and dated statement designating his counsel and (2) a signed and dated statement prepared by his counsel reading to the effect that payments are due and owing under the "Agreement" referred to above and that CBI Industries, Inc. has not performed its obligation to make such payments. We hereby engage that drafts drawn under and in complicance with the terms and conditions of this Letter of Credit will be duly honored upon presentation if presented to us on or before __________________. This credit is subject to the "Uniform Customs and Practices for Documentary Credits" (1983 revision), International Chamber of Commerce publication 400. SIGNATURE 27 ADDENDUM TO AGREEMENT THIS ADDENDUM dated this 14 day of May, 1987, to the AGREEMENT between CBI Industries, Inc., a Delaware Corporation ("CBI") and John E. Jones ("Executive") of September 12, 1986 (the "Agreement"): WITNESSETH THAT WHEREAS, CBI and the Executive mutually desire to amend and modify the Agreement to verify and confirm that it is the intent of CBI and the Executive that the benefits to be provided to Executive under that certain letter agreement dated January 4, 1982, as amended, shall be and are intended to be included in the benefits to be provided to Executive by CBI under the Agreement; NOW, THEREFORE, in consideration of the premises hereof, it is AGREED by and between CBI and the Executive as follows: 1. Section 6(w) of the Agreement is amended by inserting the following language between the phrases "pension benefit plan" and "benefit restoration plan" in the second line of Section 6(w): "supplemental pension arrangement (includ- ing letter to Executive dated January 4, 1982, as amended)" 2. Except as specifically modified herein, all terms and conditions of the Agreement remain unchanged. CBI INDUSTRIES, INC. /s/ John E. Jones ------------------------------ Executive By: /s/ W. A. Pogue ------------------------- Title: Vice Chairman ----------------------- Title: Chairman of the Board ---------------------- ATTEST: /s/ Donald H. Craigmile ---------------------------- Secretary [Seal] 28 ADDENDUM TO AGREEMENT THIS ADDENDUM dated this 5th day of June, 1987, to the AGREEMENT between CBI Industries, Inc., a Delaware Corporation ("CBI") and John E. Jones ("Executive") dated the 12th day of September, 1986 (the "Agreement"): WITNESSETH THAT: WHEREAS, CBI and the Executive mutually desire to modify the Agreement in light of the enactment of the Tax Reform Act of 1986; NOW, THEREFORE, in consideration of the premises, it is hereby AGREED by and between CBI and the Executive that the Agreement shall be modified as follows: 1. Section 3 of the Agreement is amended by adding the following sentence immediately after the first sentence thereof: CBI shall maintain the position of Executive such that Executive is able to exercise the authorities, powers, functions and duties attached thereto as contemplated by this Section 3. 2. Subsection (b) of Section 5 of the Agreement is amended to read as follows: (b) the resignation of the Executive from his employment upon 30 days written notice to CBI at any time following a significant change in the nature or scope of the Executive's authorities or duties from those described in Section 3, a reduction in total compensation Page 1 29 from that provided in Section 4, or the breach by CBI of any other provision of this Agreement, which change, reduction or breach is not restored or cured by CBI within 30 days after receiving written notice of such change, reduction or breach, reasonable directions for restoration or cure, and an offer to work from the Executive. 3. Section 5 of the Agreement is amended by deleting the words ", whether or not a breach of this Agreement by CBI," from the sentence following subsection (b). 4. Section 6 of the Agreement is amended (i) by deleting from the introductory material preceding subsection (a) the words "equal (without discount to present value) to the sum of" and substituting in lieu thereof the words "equal to the present value (discounted at the greatest rate of interest then payable by the First National Bank of Chicago on any federally insured account into which Executive could deposit such lump sum amount and made withdrawals therefrom without penalty at least as rapidly as compensation under Section 4 would have been payable) of"; (ii) deleting from subsections (a) and (c) the words "An amount equal to the aggregate" and substituting in lieu thereof the word "The"; and (iii) deleting from the sentence following subsection (z) the word "reduction" and substituting in lieu thereof the word "enhancement". 5. The first sentence of subsection (d) of Section 6 is amended to read as follows: In the event any shares of CBI common stock (or other securities into which such shares may have been converted) previously awarded to Executive under any restricted stock award plans of CBI or separate agreements between Executive and CBI are forfeited by reason of such Termination, or in the event any stock option previously granted to Executive under any stock option plan of CBI terminates or ceases to be exercisable by Page 2 30 reason of such Termination, an amount in cash equal to the fair market value of such forfeited common stock (or other securities) as of the date of Termination plus the excess of the fair market value as of the date of Termination of stock subject to any such terminated option over the exercise price of such terminated option. 6. Section 7 of the Agreement is amended to read as follows: 7. Overall Indemnity. The parties intend that the payments in the nature of compensation to be made by CBI to Executive under this. Agreement shall be reasonable compensation for personal services to be rendered on or after the date of the Change in Control, including payments to an individual as damages for breach of contract, within the meaning of Section 280G(b)(4)(A) of the Internal Revenue Code of 1986, as amended (the "Code"). In the event that notwithstanding the previous sentence any excise tax under Section 4999 of the Code is imposed on Executive as a direct or indirect result of payments made by CBI or its affiliates, whether or not such payments are made pursuant to this Agreement, CBI shall pay Executive an amount or, from time to time, amounts, equal to (i) the sum of all excise taxes imposed on Executive in respect of such payments, plus (ii) the aggregate amount of any interest, penalties, fines or additions to any tax which are imposed in connection with the imposition of such excise tax, plus (iii) all income and excise taxes imposed on Executive under the laws of any United States Federal, state or local government or taxing authority by reason of the payments required under clause (i) and clause (ii) and this clause (iii). CBI's obligation to pay such amounts to Executive pursuant to this Section 7 shall continue for the period specified in Section 6501 of the Code during Page 3 31 which a tax may be assessed under Section 4999 of the Code (including any extensions of such period provided under Section 6503(a)(i) of the Code or requested by the Internal Revenue Service in connection with an audit of one or more of Executive's tax returns). If the Internal Revenue Service makes a claim against Executive which, if successful, would require CBI to make a payment under this Section 7, Executive agrees to contest the claim on request of CBI subject to the following conditions: (a) Executive shall notify CBI of any such claim within 10 days of becoming aware thereof. In the event CBI desires the claim to be contested, it shall promptly (but in no event more than 30 days after the notice from Executive or such shorter time as the Internal Revenue Service may specify for responding to such claim) request Executive to contest the claim. Executive shall not make any payment of any tax which is the subject of the claim before Executive has given the notice or during the 30-day period thereafter unless Executive receives written instructions from CBI to make such payment together with an advance of funds sufficient to make the requested payment plus any amounts determined pursuant to clause (ii) and clause (iii) above as if such advance were an amount described in clause (i) above, in which case Executive will act promptly in accordance with such instructions. (b) If CBI so requests, Executive will contest the claim by, at the direction of CBI, either paying the tax claimed and suing for a refund in the appropriate court or contesting the claim in the United States Tax Court; provided, however, that any request by CBI for Page 4 32 Executive to pay the tax shall be accompanied by an advance from CBI to Executive of funds sufficient to make the requested payment plus any amounts determined pursuant to clause (ii) and clause (iii) above as if such advance were an amount described in clause (i) above. If directed by CBI in writing Executive will take all action necessary to compromise or settle the claim, but in no event will Executive compromise or settle the claim or cease to contest the claim without the written consent of CBI; provided, however, that Executive may take any such action if Executive waives in writing his right to a payment under this Section 7 for any amounts payable in connection with such claim. Executive agrees to cooperate in good faith with CBI in contesting the claim and to comply with any reasonable request from CBI concerning the contest of the claim, including the pursuit of administrative remedies, the appropriate forum for any judicial proceeding, and the legal basis for contesting the claim. Upon request of CBI, Executive shall take appropriate appeals of any judgment or decision that would require CBI to make a payment under this Section 7. Provided that Executive is in compliance with the provisions of this section, CBI shall be liable for and indemnify Executive against any loss in connection with all costs and expenses, including attorneys' fees, which may be incurred as a result of contesting the claim, and shall provide to Executive within 30 days after each written request therefor by the Executive cash advances or reimbursement for all such costs and expenses actually incurred or reasonably expected to be incurred by the Executive as a result of contesting the claim. (c) If CBI requests that Executive contest a claim and otherwise complies with its obligations under Page 5 33 this Section 7, it shall, except as otherwise stipulated in this Section 7, have no obligation to pay any amounts under Section 7 in respect of the claim until final determination occurs regarding Executive's liability under the claim. CBI's obligation to pay amounts under this Section 7 will be reduced by any refund obtained by Executive and interest paid thereon. 7. Section 9 of the Agreement is amended to read as follows: If during the Employment Period Executive accepts other employment in a position substantially equivalent to or better than the position held by him with CBI, compensation actually received by the Executive during the Employment Period from such other employment shall be applied to reduce Termination payments otherwise due under subsections (a) and (c) of Section 6 of this Agreement; and coverage of the Executive under employee benefit plans described in subsection (x) of Section 6 of this Agreement shall be reduced or eliminated to the extent Executive is covered under similar plans incident to such other employment. In the event of any reduction under this Section 9 of Termination payments already paid by CBI to Executive, Executive shall upon 30 days written request from CBI repay to CBI the amount by which such Termination payment is reduced, without interest, and further reduced by any taxes attributable to such Termination payments to the extent Executive cannot recover such taxes through deductions of equivalent or greater value. Nothing in this Section 9 shall be construed to require Executive in mitigation of damages to accept employment in a position not substantially equivalent to or better than position held by him with CBI or to accept employment more than reasonable daily commuting Page 6 34 distance from the principal residence of the Executive as of the date of Termination. CBI INDUSTRIES, INC. /s/ John E. Jones ------------------------------ Executive By: /s/ W.A. Pogue Title: Vice Chairman -------------------------- ------------------------ Title: Chairman of the Board ----------------------- ATTEST: /s/ Donald H. Craigmile - ----------------------------- Secretary [SEAL] Page 7 35 ADDENDUM TO AGREEMENT THIS ADDENDUM dated this 8th day of September, 1987, to the Agreement between CBI Industries, Inc., a Delaware corporation ("CBI") and J.E. Jones ("Executive") of September 12, 1986 (the "Agreement"). WITNESSETH THAT WHEREAS, the Board of Directors of CBI approved an early retirement change in the CBI Pension Plan effective September 8, 1987, and CBI desires to make such change applicable to the Agreement. NOW, THEREFORE, it is hereby agreed by and between the parties to this Addendum as follows: 1. The sentence appearing in Subsection 6(w) of the Agreement commencing in the sixth line from the bottom of page 10 and ending in the third line of page 11 presently reading: "The Enhanced Early Retirement Pension shall only be subject to reduction at the rate of four (4) percentum for each year by which the Executive's age is less than age 65 or the Executive's credited service is less than 40 years, whichever produces the lesser reduction, pursuant to the first sentence of Section 5.2.3 of the Pension Plan (as in effect on the date hereof)." Is hereby amended to read: "The Enhanced Early Retirement Pension shall only be subject to reduction at the rate of four (4) percentum Page 1 36 for each year by which the Executive's age is less than age 62 or the Executive's credited service is less than 35 years, whichever produces the lesser reduction, pursuant to the first sentence of Section 5.2.3 of the Pension Plan (as in effect on the date hereof)." CBI INDUSTRIES, INC. By: /s/ William A. Pogue /s/ John E. Jones -------------------------- ------------------------------ Title: Chairman of the Board Executive ----------------------- ATTEST: /s/ Donald H. Craigmile - ----------------------------- Secretary Page 2 37 ADDENDUM TO AGREEMENT THIS ADDENDUM dated this 8th day of September, 1987, to the Agreement between CBI Industries, Inc., a Delaware corporation ("CBI") and J.E. Jones ("Executive") of September 12, 1986 (the "Agreement"). WITNESSETH THAT WHEREAS, the Board of Directors of CBI approved an early retirement change in the CBI Pension Plan effective September 8, 1987, and CBI desires to make such change applicable to the Agreement. NOW, THEREFORE, it is hereby agreed by and between the parties to this Addendum as follows: 1. The sentence appearing in Subsection 6(w) of the Agreement commencing in the sixth line from the bottom of page 10 and ending in the third line of page 11 presently reading: "The Enhanced Early Retirement Pension shall only be subject to reduction at the rate of four (4) percentum for each year by which the Executive's age is less than age 65 or the Executive's credited service is less than 40 years, whichever produces the lesser reduction, pursuant to the first sentence of Section 5.2.3 of the Pension Plan (as in effect on the date hereof)." Is hereby amended to read: "The Enhanced Early Retirement Pension shall only be subject to reduction at the rate of four (4) percentum Page 1 38 for each year by which the Executive's age is less than age 62 or the Executive's credited service is less than 35 years whichever produces the lesser reduction, pursuant to the first sentence of Section 5.2.3 of the Pension Plan (as in effect on the date hereof)." CBI INDUSTRIES, INC. By: /s/ W. A. Payne /s/ John E. Jones -------------------------- ------------------------------ Title: Chairman of the Board Executive ----------------------- ATTEST: /s/ Donald H. Craigmile - ----------------------------- Secretary Page 2 39 ADDENDUM TO AGREEMENT THIS ADDENDUM effective the 1st day of June, 1993, to the AGREEMENT between CBI Industries, Inc., a Delaware corporation ("CBI") and J.E. Jones ("Executive") dated the 12th day of September, 1986, as previously amended (the "Agreement"). WITNESSETH THAT: WHEREAS, CBI and the Executive mutually desire to modify the Agreement to eliminate the requirement for CBI to provide an irrevocable clean letter of credit to secure for the benefit of the Executive the total value of performance of CBI's obligations under the Agreement; NOW, THEREFORE, in consideration of $10 and the premises herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, it is hereby AGREED by and between CBI and the Executive that the Agreement shall be modified as follows: 1. Subsection 10(b) is deleted. 2. Exhibit II is deleted. CBI INDUSTRIES, INC. By: /s/ George L. Schueppert Executive: /s/ John E. Jones ---------------------------- ------------------- Title: Executive Vice President Title: Chairman ----------------------- ATTEST: /s/ Charlotte C. Toerber - ------------------------------- Secretary [SEAL] 40 ADDENDUM TO AGREEMENT THIS ADDENDUM dated as of and made effective the 27th day of August, 1993 to the Agreement between CBI Industries, Inc., a Delaware corporation ("CBI") and J.E. Jones ("Executive") of September 12, 1986 (the "Agreement"). WITNESSETH THAT WHEREAS, CBI and the Executive mutually desire to modify the Agreement to include a requirement that CBI provide an irrevocable clean letter of credit to secure for the benefit of the Executive the payment of up to $100,000 for attorneys fees incurred in enforcing the Agreement following a Change of Control; NOW, THEREFORE, it is hereby agreed by and between the parties to this Addendum that the Agreement shall be modified as follows: 1. Section 10 of the Agreement is amended by adding a new subsection (b) to read as follows: (b) CBI shall at its sole cost and expense obtain a commitment for an irrevocable clean letter of credit, substantially in the form of that attached hereto as Exhibit II and incorporated herein by reference (the "Letter of Credit"), to be issued by a commercial bank selected by CBI having total assets equivalent to at least $6 billion and either incorporated under the laws of, or having an office in, the United States or any State (the "Bank"), to secure for the benefit of Executive the payment of up to $100,000 for attorneys fees incurred in enforcing the Agreement pursuant to Section 10(a) upon presentation by Executive to the Bank of a statement or statements prepared by Executive's counsel that such payments are due and owing and that CBI has not performed its obligations to make such payments. CBI shall at its sole cost and expense obtain the issuance of the Letter of Credit pursuant to such commitment not later than the Effective Date and shall pay all amounts and take all action necessary to maintain such Letter of Credit during the Employment Period and for two years thereafter and if, notwithstanding CBI's complete discharge of such obligations, such Letter of Credit shall be terminated or not renewed, CBI shall obtain a replacement irrevocable clean letter of credit on substantially the same terms and conditions as contained in the Letter of Credit drawn upon a commercial bank having total assets equivalent to at least $6 billion and either incorporated under the laws of, or having an office in, the United States of any State, which 41 assures the Executive the benefits of this Agreement. Nothing in this subsection (b) shall limit in any way CBI's obligations under subsection 10(a). CBI INDUSTRIES, INC. EXECUTIVE By: /s/ George L. Schueppert By: /s/ John E. Jones --------------------------- --------------------------- Title: Executive Vice President - Title: Finance ------------------------ ----------------------- 42 EXHIBIT II ROYAL BANK OF CANADA, NEW YORK BRANCH IRREVOCABLE STANDBY LETTER OF CREDIT _______________________, 19 Letter of Credit No. ______________ (Beneficiary's Name and Address) Dear ____________________: At the request and for the account of CBI Industries, Inc., 800 Jorie Boulevard, Oak Brook, Illinois, we hereby establish our Irrevocable Standby Letter of Credit No. _______________ (this "Letter of Credit") in your favor in an aggregate amount of One Hundred Thousand Dollars ($100,000), representing support of the "Agreement") dated ________________, by and between yourself and CBI Industries, Inc., as it may be amended from time to time, available by your draft drawn at sight, presented to this Bank, bearing this Letter of Credit Number and accompanied by this Letter of Credit and both: 1. Your signed certificate dated the date of such draft indicating the name, address and signature of your designated counsel, with both your signature and your designated counsel's signature notarized; and 2. Your designated counsel's signed and notarized statement dated the date of such draft stating: "Payments are due and payable to (Beneficiary) under the Agreement dated _______________ between (Beneficiary) and CBI Industries, Inc., as such Agreement may have been amended from time to time, and CBI Industries, Inc. has not performed its obligation to make such payments. (Beneficiary) through the undersigned counsel is enforcing his/her rights under such Agreement." Only one draft, in the amount of $100,000 may be presented under this Letter of Credit. We hereby agree that all drafts drawn under and in compliance with the terms of this Letter of Credit will be honored upon presentation at Royal Bank of Canada, New York Branch, New York Operations Center, Pierrepont Plaza, 300 Cadman Plaza West, Brooklyn, New York 11201-2701, Attention: Loan Administration Manager, facsimile number (___) ___-___. Presentation is to be 43 made by facsimile transmission of all required documents to this Bank, followed by overnight courier delivery of all originals as provided in this paragraph. Any Draft hereunder must be presented on or before _________________. This Letter of Credit shall automatically expire and be null and void at the close of business on _________________ or, in the event the expiry date hereof is extended by us in writing, at the close of business upon such extended expiry date. This Letter of Credit sets forth in full the terms of our undertaking, and this undertaking shall not in any way be modified, amended, amplified or limited by reference to any document, instrument or agreement referred to herein or in which this Letter of Credit is referred to or to which this Letter of Credit relates, except for the certificates, statements and the sight drafts referred to therein. This Letter of Credit is not transferrable. This irrevocable Letter of Credit is subject to The Uniform Customs and Practices for Documentary Credits (1983 Revision), ICC Publication 400. ROYAL BANK OF CANADA, NEW YORK BRANCH By ----------------------------- Its ------------------------- By ----------------------------- Its ------------------------- 44 ADDENDUM TO AGREEMENT THIS ADDENDUM dated this 12th day of January, 1995 to the Agreement between CBI Industries, Inc., a Delaware corporation ("CBI") and John E. Jones ("Executive") of September 12, 1986 (the "Agreement"). WITNESSETH THAT WHEREAS, the Board of Directors of CBI on January 11, 1995, adopted a resolution amending Section 2 of the Agreement, and CBI and the Executive mutually desire to modify the Agreement by incorporating said amendment into the Agreement. NOW THEREFORE, it is hereby agreed by and between the parties to this Addendum as follows: 1. Section 2 of the Agreement is hereby amended to read as follows: Change in Control. The Term "Change in Control" shall mean the occurrence at any time of any of the following events: (a) An "Acquiring Person" (as defined below) has become such; or (b) "Continuing Directors" (as defined below) cease to comprise a majority of the Board of Directors of CBI. For purposes of this Agreement, the terms "Acquiring Person" and "Continuing Directors" shall have the same meaning as ascribed to such terms in that certain Amendment and Restatement dated as of August 8, 1989, of Rights Agreement dated as of March 4, 1986, 45 between CBI and First Chicago Trust Company of New York, as Rights Agent, as has been or may be amended from time to time. CBI INDUSTRIES, INC. EXECUTIVE By: /s/ George L. Schueppert By: /s/ John E. Jones ----------------------------------- ----------------------------- Title: Executive Vice President - Finance ----------------------------------- ATTEST: /s/ Charlotte C. Toerber - ----------------------------- Secretary [Seal] EX-99.3 4 EMPLOYMENT AGREEMENT AND ADDENDA - A.J. SCHNEIDER 1 Exhibit 3 AGREEMENT THIS AGREEMENT between CBI INDUSTRIES, INC., a Delaware corporation ("CBI") and Alan J. Schneider ("Executive"), dated this 3rd day of January, 1995. WITNESSETH THAT WHEREAS, CBI wishes to attract and retain well-qualified executives for itself and for its wholly-owned subsidiaries and both CBI and the Executive desire continuity of management in the event of any Change in Control of CBI; NOW, THEREFORE, it is hereby agreed by and between the parties as follows: 1. Effective Date. The "Effective Date" of this Agreement shall be the date on which a Change in Control of CBI (as defined in Section 2) occurs. 2. Change in Control. The term "Change in Control" shall mean the occurrence at any time of any of the following events: (a) An Acquiring Person (as defined below), has become such; or (b) Continuing Directors (as defined below) cease to comprise a majority of the board of directors of CBI. For purposes of this Agreement, the terms "Acquiring Person" and "Continuing Directors" shall have the respective meanings ascribed to such terms in that certain Rights Agreement dated March 4, 1986, between CBI and Morgan Guaranty Trust Company of New York as rights agent, the relevant portions of which for convenience of reference are reproduced as Exhibit I to this Agreement. 3. Employment. CBI hereby agrees that if the Executive continues as an employee of CBI or any wholly-owned subsidiary from the date of execution hereof until the Effective Date, CBI shall continue the Executive in its employ for the period commencing on the Effective Date and ending on the earlier to occur of the third anniversary of such date or the 65th birthday of the Executive (the "Employment Period"), to exercise such authority and perform such executive duties as are requested of him by CBI, which authority and duties shall be commensurate with the authority being exercised and duties being performed by the Executive immediately prior to the Effective Date. The Executive shall perform such requested services at the location where the Executive was employed immediately prior to the Effective Date, except for required travel on CBI's business to an extent substantially consistent with the Executive's business travel obligations prior to the Effective Date. The Executive agrees that while an employee during the Employment Period he -1- 2 shall, to the extent required, devote substantially all of his business time to his executive duties as described herein and perform such duties faithfully and efficiently. 4. Compensation, Compensation Plans, Benefits. During the Employment Period, the Executive shall be compensated as follows: (a) He shall receive an annual salary (to be paid in equal biweekly installments) which is not less than his rate of annual salary in effect immediately prior to the Effective Date, increased on each January 1 within the remainder of the Employment Period by at least the greater of (i) the average annual percentage salary increase for the Executive during the period of three full calendar years immediately preceding the Effective Date, or (ii) the percentage increase in the Implicit Price Deflator for Gross National Product for the calendar year immediately preceding such January 1, as published by the United States Department of Commerce in its Survey of Current Business in December of each year, over such Implicit Price Deflator for the calendar year next preceding such year. (b) He shall be awarded and receive bonus, restricted stock award, stock option, and other incentive compensation for each calendar year (or other applicable bonus or incentive compensation period) any part of which is included in the Employment Period, which in the aggregate shall not in value be a lesser percentage of his annual salary, as determined in subsection (a) above, for such calendar year (or period), than the aggregate bonus, restricted stock award, stock option, and other incentive compensation during the period of three full calendar years immediately preceding the Effective Date was of the Executive's aggregate base salary for such three year period. (c) He shall be entitled to receive all employee benefits to the extent of the greater of the employee benefits provided by CBI to executives with comparable duties or the employee benefits to which he was entitled immediately prior to the Effective Date. (d) During any period that Executive is unable to perform the services for CBI specified in Section 3, whether as a result of total disability or as a result of a physical or mental disability that is not total or is not permanent and therefore is not a total disability, Executive shall continue to receive base salary at the rate in effect at the commencement of any such period, together with all other compensation and benefits that are payable under this Agreement. -2- 3 (e) He shall be furnished at CBI's expense with an automobile, office, reasonable secretarial help, club memberships, reimbursement for reasonable entertainment expenses, and such other supplies, equipment, facilities, services and emoluments appertaining to his position to the extent of the greater of such emoluments provided by CBI to executives with comparable duties or the emoluments to which he was entitled immediately prior to the Effective Date. (f) He shall be covered by directors and officers liability and indemnity insurance or equivalent protection to the extent of the greatest level of protection arranged and funded by CBI, and by corporate indemnity protection afforded to such Executive under any and all policies of directors and officers liability and indemnity insurance, by-law provisions or any other arrangements or agreements, at any time within the period of three full calendar years immediately preceding the Effective Date. 5. Termination. The term "Termination" shall mean the occurrence during the Employment Period of: (a) termination by CBI of the employment of the Executive for any reason other than (i) death, (ii) physical or mental incapacity which would entitle Executive to permanent disability benefits under CBI's appropriate plans, or (iii) a willful and material breach of this Agreement by the Executive which causes a direct and substantial injury to CBI or to its business, which is not cured by Executive within 30 days after receiving written notice of such breach and reasonable directions for cure from CBI; or (b) the resignation of the Executive from his employment upon 30 days written notice to CBI at any time following (i) a significant change in the nature or scope of the Executive's authorities or duties from those described in Section 3, a reduction in total compensation from that provided in Section 4, or the breach by CBI of any other provision of this Agreement, which change, reduction or breach is not restored or cured by CBI within 30 days after receiving written notice of such change, reduction or breach and reasonable directions for restoration or cure from the Executive; or (ii) a reasonable determination by the Executive that, as a result of the Change in Control and a change in circumstances thereafter significantly affecting his position, he is unable to exercise the authorities, powers, functions or duties attached to his position as contemplated by Section 3. -3- 4 A Termination as contemplated by this Section 5, whether or not a breach of this Agreement by CBI, shall entitle the Executive to Termination benefits as provided by this Agreement. Nothing in this Agreement shall prevent the Executive from voluntarily resigning from his Employment upon 90 days written notice to CBI under circumstances which do not constitute Termination as defined in this Section 5, and no such resignation shall be deemed a breach of this Agreement by the Executive. 6. Termination Payment. In the event of Termination of Executive during the Period of Employment, CBI shall pay to the Executive a lump sum amount equal (without discount to present value) to the sum of the amounts determined in accordance with subsections (a), (b), (c) and (d) below, and provide the additional benefits described in subsections (w), (x), (y) and (z) below: (a) An amount equal to the aggregate salary which would have been paid to the Executive during the remainder of the Employment Period if he had received the base salary specified in Section 4(a) above, increased by assuming the salary increase on each January 1 during the remainder of the Employment Period to be the greatest of the average annual percentage salary increase or the percentage increase in the Implicit Price Deflator, whichever is applicable, as of any January 1 within the three calendar years including or preceding the Termination date. (b) Bonus and incentive compensation for any calendar year (or other applicable bonus or incentive compensation period) ending prior to the Termination date but not previously paid. (c) An amount equal to the aggregate bonus and incentive compensation which would have been paid to the Executive during each calendar year (or other applicable bonus or incentive compensation period) any part of which is included in the remainder of the Employment Period if he had received bonus and incentive compensation for any such year (or period) in the minimum amount specified by Section 4(b) based on his increased salary determined under subsection (a) above; provided, however, that in the event any bonus year (or period) extends beyond the end of the Employment Period, bonus or other incentive compensation for such year (or period) shall be pro-rated in proportion to the number of days within and without the Employment Period. (d) In the event any shares of CBI common stock (or other securities into which such shares may have been converted) previously awarded to Executive under any restricted -4- 5 stock award plans of CBI or separate agreements between Executive and CBI are forfeited by reason of such Termination, an amount in cash equal to the fair market value of such forfeited common stock (or other securities) as of the date of Termination. The rights afforded to Executive under this subsection (d) are without prejudice to any other rights Executive has to shares of CBI common stock (or other securities) under such plans or agreements or by reason of the action of the CBI Board of Directors heretofore taken in causing restrictions on such shares to be removed under certain circumstances including Termination of the Executive. CBI shall also provide to the Executive: (w) In addition to the benefits provided under any pension benefit plan, benefit restoration plan, profit sharing plan, or employee stock ownership plan (whether or not funded or qualified under the Internal Revenue Code) maintained by CBI ("Retirement Plans"), the difference (the "Benefit Enhancement") between such benefits and the benefits (the "Enhanced Benefits") that would have been provided under such Retirement Plans if Executive had remained in the employ of CBI throughout the Employment Period at the salary determined under subsection (a) above accruing additional age and service credits under such Retirement Plans accordingly. If after giving effect to such additional age and service credit Executive shall not have the necessary age or credited service at the end of the Employment Period to qualify under the CBI Pension Plan (the "Pension Plan") for an early retirement pension, the Enhanced Benefits under this subsection (w) shall nevertheless include an early retirement pension under the Pension Plan beginning upon Executive attaining age 55 or upon the date Executive would have attained 30 years of credited service had Executive remained continuously employed by CBI but for Termination (whichever occurs first) (the "Enhanced Early Retirement Pension"). The Enhanced Early Retirement Pension shall be payable to the Executive or to the spouse of the Executive (if applicable) commencing at the time Executive attains (or would have attained) age 55 or would have otherwise attained 30 years of credited service as provided aforesaid (whichever occurs first). The Enhanced Early Retirement Pension shall only be subject to reduction at the rate of four (4) percentum for each year by which the Executive's age is less than age 65 or the Executive's credited service is less than 40 years, whichever produces the lesser reduction, pursuant to the first sentence of Section 5.2.3 of the Pension Plan (as in effect on the date hereof). If Executive shall die -5- 6 after the end of the Employment Period but before the date the Enhanced Early Retirement Pension is payable, the spouse of Executive shall be entitled to an enhanced survivor's pension under the Pension Plan as if Executive had died as an employee of CBI, giving effect to service through the date of Executive's death and Executive's earnings through the end of the Employment Period. Such Benefit Enhancement will be paid beginning on the date the Enhanced Benefits would have commenced and thereafter concurrently with the benefits actually provided under such Retirement Plans; except that if the Executive receives a distribution from any profit sharing or employee stock ownership plan before the Benefit Enhancement required by this subsection in respect of such Retirement Plan become determinable, the Benefit Enhancement in respect of such plan shall be paid as soon thereafter as such benefits become determinable. Nothing in this subsection (w) shall prevent the actual commencement of benefits under any Retirement Plan, and the Benefit Enhancements required by this subsection (w), before the end of the Employment Period to the extent required or permitted under the terms of the applicable Retirement Plan, giving effect to the additional age and service credit required by this subsection (w). (x) Participating in or coverage by all other employee benefits, including, but not limited to, coverage under any health or medical benefit insurance, plans, or arrangements, supplemental survivors' benefit plans, or life insurance arrangements or programs, to the same extent to which he would have been entitled under all employee benefit plans, programs, arrangements or practices maintained by CBI if he had remained in the employ of CBI through the Employment Period at the salary determined under subsection (a) above. (y) Continuation of disability income benefits pursuant to Section 4(d) for so long as any disability may continue and continuation of directors and officers liability and indemnity insurance and corporate indemnity protection pursuant to Section 4(f) for so long as any liability may arise; in either case without regard to the Termination of the Employment Period. (z) Within 30 days after each written request therefor by the Executive, cash advances or reimbursement for any fees or expenses actually incurred or reasonably expected to be incurred by the Executive in seeking other employment, including without limitation all travel and relocation expenses and all fees charged by any executive recruitment firm or firms or employment consulting or counseling firm or firms selected by the Executive in his sole discretion. -6- 7 The amount of Termination payments described in subsections (a), (b), (c) and (d) of this Section 6 shall be determined and paid in a lump sum within 30 days of the Termination date by cashier's check or certified check of CBI or any of its affiliated corporations delivered to the Executive together with such calculations, worksheets, or other information as may be necessary or appropriate to ascertain the correctness of the computation of such amount and, if applicable, of any reduction pursuant to Section 7. Any Termination payment (or the value thereof) not paid on or before the date provided therefor by this Section 6 shall bear interest after such date until paid at a rate per annum during each month such amount remains unpaid of five percentage points in excess of the prime rate as publicly announced by the First National Bank of Chicago or its successor from time to time as in effect on the first day of each such month. 7. Overall Limitations. Solely for the purposes of the computation of benefits under this Agreement and notwithstanding any other provisions hereof, payments to any Executive under this Agreement shall be reduced (but not below zero) so that the present value, as determined in accordance with Section 280G(d)(4) of the Code, of such payments plus any other payments that must be taken into account for purposes of any computation relating to Executive under Section 280G(b)(2)(A)(ii) of the Code, shall not, in the aggregate, exceed 2.99 times Executive's "base amount," as that term is defined in Section 280G(b)(3) of the Code. Notwithstanding any other provision hereof no reduction in payments under the limitation contained in the immediately preceding sentence shall be applied to payments hereunder which do not constitute "excess parachute payments" within the meaning of the Code. Any payments in excess of the limitation of this Section 7 or otherwise determined to be "excess parachute payments" made to Executive hereunder are deemed to be overpayments which shall constitute an amount owing from the Executive receiving them to CBI with interest from the date of receipt by the Executive to the date of repayment (or offset) at the applicable federal rate under Section 1274(d) of the Code, compounded semi-annually, which shall be payable to CBI upon demand; provided, however, that no repayment shall be required under this sentence if in the written opinion of tax counsel satisfactory to the Executive and delivered to the Executive and CBI such repayment does not allow such overpayment to be excluded for federal income and excise tax purposes from the Executive's income for the year of receipt or afford the Executive a compensating federal income tax deduction for the year of repayment. 8. Non-Competition. Whether or not a Termination occurs, the Executive agrees to continue all non-competition and confidentiality provisions, as specified in any other agreement -7- 8 in effect on the Effective Date between the Executive and CBI relating to confidential information, during (and to the extent specified in such agreement, after) the Employment Period. 9. Mitigation. The Executive shall not be required to mitigate the amount of any payment provided for under this Agreement by seeking other employment or otherwise; provided, however, that if during the Employment Period Executive accepts other employment in a position substantially equivalent to or better than the position held by him with CBI, current cash compensation actually received by the Executive during the Employment Period from such other employment shall be applied to reduce Termination payments otherwise due under subsections (a) and (c) of Section 6 of this Agreement. 10. Legal Fees and Expenses. (a) It is the intent of CBI that no Executive be required to incur the expenses associated with the enforcement of his rights under this Agreement by litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Executive hereunder. Accordingly, if it should appear to the Executive that CBI has failed to comply with any of its obligations under this Agreement, or in the event that CBI or any other person takes any action to declare this Agreement void or unenforceable, or institutes any litigation designed to deny, or to recover from, the Executive the benefits intended to be provided to Executive hereunder, CBI irrevocably authorizes Executive from time to time to retain counsel of his choice, at the expense of CBI as hereafter provided, to represent Executive in connection with the initiation or defense of any litigation, arbitration or other legal action, whether by or against CBI or any director, officer, stockholder or other person affiliated with CBI, in any jurisdiction. CBI shall advance to the Executive within 30 days after each written request therefor any and all attorneys' and related fees and expenses actually incurred or reasonably expected to be incurred by the Executive in any such proceeding or otherwise as a result of CBI's failure to perform this Agreement or any provision hereof or as a result of CBI or any person contesting the validity or enforceability of this Agreement or any provision hereof; provided, however, that to the extent the Executive does not prevail in any such litigation, arbitration, or other legal action, the Executive shall repay to CBI the amount (without interest) of such attorney's fees and related fees and expenses previously advanced. -8- 9 (b) CBI shall at its sole cost and expense obtain a commitment for an irrevocable clean letter of credit, substantially in the form of that attached hereto as Exhibit II and incorporated herein by reference (the "Letter of Credit"), to be issued by a commercial bank selected by CBI having total assets equivalent to at least $6 billion and either incorporated under the laws of, or having an office in, the United States or any State (the "Bank"), to secure for the benefit of Executive the total value of performance of CBI's obligations under this Agreement by providing that the total amount of all payments due to be paid by CBI to Executive under this Agreement shall be paid on a regular, periodic basis upon presentation by Executive to the Bank of a statement or statements prepared by Executive's counsel that such payments are due and owing, and that CBI has not performed its obligations to make such payments. CBI shall at its sole cost and expense obtain the issuance of the Letter of Credit pursuant to such commitment not later than the Effective Date and shall pay all amounts and take all action necessary to maintain such Letter of Credit during the Employment Period and for two years thereafter and if, notwithstanding CBI's complete discharge of such obligations, such Letter of Credit shall be terminated or not renewed, CBI shall obtain a replacement irrevocable clean letter of credit on substantially the same terms and conditions as contained in the Letter of Credit drawn upon a commercial bank having total assets equivalent to at least $6 billion and either incorporated under the laws of, or having an office in, the United States or any State, which assures the Executive the benefits of this Agreement. 11. Notices. Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and if sent by registered or certified mail to the Executive at the last address he has filed in writing with CBI or, in the case of CBI, at its principal executive offices. 12. Non-Alienation. The Executive shall not have any right to pledge, hypothecate, anticipate or in any way create a lien upon any amounts provided under this Agreement; and no benefits payable hereunder shall be assignable in anticipation of payment either by voluntary or involuntary acts, or by operation of law. 13. Governing Law. The provisions of this Agreement shall be construed in accordance with the laws of the State of Illinois. -9- 10 14. Amendment. This Agreement may be amended or cancelled by mutual agreement of the parties in writing without the consent of any other person and, so long as the Executive lives, no person, other than the parties hereto, shall have any rights under or interest in this Agreement or the subject matter hereof. 15. Successors to the Company. Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of CBI and any successor of CBI. 16. Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect. CBI INDUSTRIES, INC. EXECUTIVE By: /s/ John E. Jones By: /s/ Alan J. Schneider ------------------------- ----------------------- Title: Pres, CEO, & Chairman Title: VP and Controller --------------------- -------------------- ATTEST: /s/ CCT - ---------------------------- Secretary (SEAL) -10- 11 EXHIBIT I Section 1. Certain Definitions. For purposes of this Agreement, the following terms have the meanings indicated: 1.1 "Acquiring Person" shall mean any Person (as such term is hereinafter defined) who or which, together with all Affiliates (as such term is hereinafter defined) and Associates (as such term is hereinafter defined) of such Person, shall be the Beneficial Owner (as such term is hereinafter defined) of 20% or more of the shares of Common Stock then outstanding, but shall not include the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, or any entity organized, appointed or established by the Company for or pursuant to the terms of any such plan. 1.3 "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act 12 of 1934, as amended (the "Exchange Act"), as in effect on the date of this Agreement. 1.4 A Person shall be deemed the "Beneficial Owner" of, and shall be deemed to "beneficially own," any securities: (a) which such Person or any of such Person's Affiliates or Associates beneficially owns, directly or indirectly; (b) which such Person or any of such Person's Affiliates or Associates has (i) the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights (other than the Rights), warrants or options, or otherwise; provided, however, that a Person shall not be deemed the 13 "Beneficial Owner" of, or to "beneficially own," securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for purchase or exchange; or (ii) the right to vote pursuant to any agreement, arrangement or understanding (whether or not in writing); provided, however, that a Person shall not be deemed the "Beneficial Owner" of, or to "beneficially own," any security under this clause (ii) if the agreement, arrangement or understanding to vote such security: (A) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations of the Exchange Act, and (B) is not also then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or (c) which are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with 14 which such Person or any of such Person's Affiliates or Associates has any agreement, arrangement or understanding (whether or not in writing), for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in clause (ii) of paragraph (b) of this subsection 1.4) or, disposing of any voting securities of the Company. 1.7 "Common Stock" shall mean the common stock, $2.50 par value per share, of the Company, except that "Common Stock" when used with reference to any Person other than the Company shall mean the capital stock of such Person with the greatest voting power, or the equity securities or other equity interest having power to control or direct the management, of such Person. 15 1.8 "Continuing Director" shall mean any member of the Board, while such person is a member of the Board, who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, and was a member of the Board prior to the date of this Agreement. A "Continuing Director" shall also mean any person who subsequently becomes a member of the Board, while such person is a member of the Board, who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative of an Acquiring person or of any such Affiliate or Associate, if (a) such person's nomination for election or election to the Board is recommended or approved by resolution of a majority of the Continuing Directors or (b) such person is included as a nominee in a proxy statement of the Company distributed when a majority of the Board consists of Continuing Directors. 1.9 "Person" shall mean any individual, firm, corporation, partnership or other entity. 16 ADDENDUM TO AGREEMENT THIS ADDENDUM dated this 3rd day of January, 1995 to the Agreement between CBI Industries, Inc., a Delaware corporation ("CBI") and Alan J. Schneider ("Executive") of January 3, 1995 (the "Agreement"). WITNESSETH THAT WHEREAS, the Board of Directors of CBI approved an early retirement change in the CBI Pension Plan effective September 8, 1987, and CBI desires to make such change applicable to the Agreement. NOW, THEREFORE, it is hereby agreed by and between the parties to this Addendum as follows: 1. The sentence appearing in Subsection 6(w) of the Agreement commencing in the seventeenth line of page 5 presently reading: "The Enhanced Early Retirement Pension shall only be subject to reduction at the rate of four (4) percentum for each year by which the Executive's age is less than age 65 or the Executive's credited service is less than 40 years, whichever produces the lesser reduction, pursuant to the first sentence of Section 5.2.3 of the Pension Plan (as in effect on the date hereof)." Is hereby amended to read: "The Enhanced Early Retirement Pension shall only be subject to reduction at the rate of four (4) percentum for each year by which the Executive's age is less than age 62 or the Executive's credited service is less than 35 years, whichever produces the lesser reduction, pursuant to the first sentence of Section 5.2.3 of the Pension Plan (as in effect on the date hereof)." CBI INDUSTRIES, INC. EXECUTIVE By: /s/ John E. Jones By: /s/ Alan J. Schneider ------------------------ ------------------------ Title: Pres, CEO & Chairman --------------------- -1- 17 ATTEST: /s/ CCT - --------------------- Secretary [Seal] -2- 18 ADDENDUM TO AGREEMENT THIS ADDENDUM dated this 3rd day of January, 1995 to the Agreement between CBI Industries, Inc., a Delaware corporation ("CBI") and Alan J. Schneider ("Executive") dated the 3rd day of January, 1995 (the "Agreement"). WITNESSETH THAT WHEREAS, CBI and the Executive mutually desire to modify the Agreement in light of the enactment of the Tax Reform Act of 1986; NOW, THEREFORE, in consideration of the premises, it is hereby agreed by and between CBI and the Executive that the Agreement shall be modified as follows: 1. Section 3 of the Agreement is amended by adding the following new sentence immediately after the first sentence thereof: CBI shall maintain the position of Executive such that Executive is able to exercise the authorities, powers, functions and duties attached thereto as contemplated by this Section 3. 2. Subsection (b) of Section 5 of the Agreement is amended to read as follows: (b) the resignation of the Executive from his employment upon 30 days written notice to CBI at any time following a significant change in the nature or scope of the Executive's authorities or duties from those described in Section 3, a reduction in total compensation from that provided in Section 4, or the breach by CBI of any other provision of this Agreement, which change, reduction or breach is not restored or cured by CBI within 30 days after receiving written notice of such change, reduction or breach, reasonable directions for restoration or cure, and an offer to work from the Executive. 3. Section 5 of the Agreement is amended by deleting the words ", whether or not a breach of this Agreement by CBI," from the sentence following subsection (b). 4. Section 6 of the Agreement is amended (i) by deleting from the introductory material preceding subsection (a) the words "equal (without discount to present value) to the sum of" and substituting in lieu thereof the words "equal to the present value (discounted at the greatest rate of interest then payable by the First National Bank of Chicago on any federally insured account into which Executive could deposit such lump sum amount and made withdrawals therefrom without -1- 19 penalty at least as rapidly as compensation under Section 4 would have been payable) of"; (ii) deleting from subsections (a) and (c) the words "An amount equal to the aggregate" and substituting in lieu thereof the word "The"; and (iii) deleting from the sentence following subsection (z) the word "reduction" and substituting in lieu thereof the word "enhancement". 5. The first sentence of subsection (d) of Section 6 is amended to read as follows: In the event any shares of CBI common stock (or other securities into which such shares may have been converted) previously awarded to Executive under any restricted stock award plans of CBI or separate agreements between Executive and CBI are forfeited by reason of such Termination, or in the event any stock option previously granted to Executive under any stock option plan of CBI terminates or ceases to be exercisable by reason of such Termination, an amount in cash equal to the fair market value of such forfeited common stock (or other securities) as of the date of Termination plus the excess of the fair market value as of the date of Termination of stock subject to any such terminated option over the exercise price of such terminated option. 6. Section 7 of the Agreement is amended to read as follows: 7. Overall Indemnity. The parties intend that the payments in the nature of compensation to be made by CBI to Executive under this Agreement shall be reasonable compensation for personal services to be rendered on or after the date of the Change in Control, including payments to an individual as damages for breach of contract, within the meaning of Section 280G(b)(4)(A) of the Internal Revenue Code of 1986, as amended (the "Code"). In the event that notwithstanding the previous sentence any excise tax under Section 4999 of the Code is imposed on Executive as a direct or indirect result of payments made by CBI or its affiliates, whether or not such payments are made pursuant to this Agreement, CBI shall pay Executive an amount or, from time to time, amounts, equal to (i) the sum of all excise taxes imposed on Executive in respect of such payments, plus (ii) the aggregate amount of any interest, penalties, fines or additions to any tax which are imposed in connection with the imposition of such excise tax, plus (iii) all income and excise taxes -2- 20 imposed on Executive under the laws of any United States Federal, state or local government or taxing authority by reason of the payments required under clause (i) and (ii) and this clause (iii). CBI's obligation to pay such amounts to Executive pursuant to this Section 7 shall continue for the period specified in Section 6501 of the Code during which a tax may be assessed under Section 4999 of the Code (including any extensions of such period provided under Section 6503(a)(1) of the Code or requested by the Internal Revenue Service in connection with an audit of one or more of Executive's tax returns). If the Internal Revenue Service makes a claim against Executive which, if successful, would require CBI to make a payment under this Section 7, Executive agrees to contest the claim on request of CBI subject to the following conditions: (a) Executive shall notify CBI of any such claim within 10 days of becoming aware thereof. In the event CBI desires the claim to be contested, it shall promptly (but in no event more than 30 days after the notice from Executive or such shorter time as the Internal Revenue Service may specify for responding to such claim) request Executive to contest the claim. Executive shall not make any payment of any tax which is the subject of the claim before Executive has given the notice or during the 30-day period thereafter unless Executive receives written instructions from CBI to make such payment together with an advance of funds sufficient to make the requested payment plus any amounts determined pursuant to clause (ii) and clause (iii) above as if such advance were an amount described in clause (i) above, in which case Executive will act promptly in accordance with such instructions. (b) If CBI so requests, Executive will contest the claim by, at the direction of CBI, either paying the tax claimed and suing for a refund in the appropriate court or contesting the claim in the United States Tax Court; provided, however, that any request by CBI for -3- 21 Executive to pay the tax shall be accompanied by an advance from CBI to Executive of funds sufficient to make the requested payment plus any amounts determined pursuant to clause (ii) and clause (iii) above as if such advance were an amount described in clause (i) above. If directed by CBI in writing Executive will take all action necessary to compromise or settle the claim, but in no event will Executive compromise or settle the claim or cease to contest the claim without the written consent of CBI; provided, however, that Executive may take any such action if Executive waives in writing his right to a payment under this Section 7 for any amounts payable in connection with such claim. Executive agrees to cooperate in good faith with CBI in contesting the claim and to comply with any reasonable request from CBI concerning the contest of the claim, including the pursuit of administrative remedies, the appropriate forum for any judicial proceeding, and the legal basis for contesting the claim. Upon request of CBI, Executive shall take appropriate appeals of any judgment or decision that would require CBI to make a payment under this Section 7. Provided that Executive is in compliance with the provisions of this section, CBI shall be liable for and indemnify Executive against any loss in connection with all costs and expenses, including attorneys' fees, which may be incurred as a result of contesting the claim, and shall provide to Executive within 30 days after each written request therefor by the Executive cash advances or reimbursement for all such costs and expenses actually incurred or reasonably expected to be incurred by the Executive as a result of contesting the claim. (c) If CBI requests that Executive contest a claim and otherwise complies with its obligations under this Section 7, it shall, except as otherwise stipulated in this Section 7, have no obligation to pay any amounts under Section 7 in respect of the claim until final determination occurs regarding Executive's liability under the claim. -4- 22 CBI's obligation to pay amounts under this Section 7 will be reduced by any refund obtained by Executive and interest paid thereon. 7. Section 9 of the Agreement is amended to read as follows: If during the Employment Period Executive accepts other employment in a position substantially equivalent to or better than the position held by him with CBI, compensation actually received by the Executive during the Employment Period from such other employment shall be applied to reduce Termination payments otherwise due under subsections (a) and (c) of Section 6 of this Agreement; and coverage of the Executive under employee benefit plans described in subsection (x) of Section 6 of this Agreement shall be reduced or eliminated to the extent Executive is covered under similar plans incident to such other employment. In the event of any reduction under this Section 9 of Termination payments already paid by CBI to Executive, Executive shall upon 30 days written request from CBI repay to CBI the amount by which such Termination payment is reduced, without interest, and further reduced by any taxes attributable to such Termination payments to the extent Executive cannot recover such taxes through deductions of equivalent or greater value. Nothing in this Section 9 shall be construed to require Executive in mitigation of damages to accept employment in a position not substantially equivalent to or better than position held by him with CBI or to accept employment more than reasonable daily commuting distance from the principal residence of the Executive as of the date of Termination. CBI INDUSTRIES, INC. EXECUTIVE By: /s/ John E. Jones By: /s/ Alan J. Schneider ------------------------ ----------------------- Title: Pres., CEO & Chairman --------------------- ATTEST: /s/ CCT - ---------------------------- Secretary [SEAL] -5- 23 ADDENDUM TO AGREEMENT THIS ADDENDUM effective the 3rd day of January, 1995 to the Agreement between CBI Industries, Inc., a Delaware Corporation ("CBI") and Alan J. Schneider ("Executive") dated the 3rd day of January, 1995, as previously amended (the "Agreement"). WITNESSETH THAT WHEREAS, CBI and the Executive mutually desire to modify the Agreement to eliminate the requirement for CBI to provide an irrevocable clean letter of credit to secure for the benefit of the Executive the total value of performance of CBI's obligations under the Agreement; NOW, THEREFORE, in consideration of $10 and the premises herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, it is hereby AGREED by and between CBI and the Executive that the Agreement shall be modified as follows: 1. Subsection 10(b) is deleted. 2. Exhibit II is deleted. CBI INDUSTRIES, INC. EXECUTIVE By: /s/ John E. Jones By: /s/ Alan J. Schneider ------------------------ ---------------------- Title: Pres., CEO & Chairman --------------------- ATTEST: /s/ CCT - ---------------------------- Secretary [SEAL] -1- 24 ADDENDUM TO AGREEMENT THIS ADDENDUM effective the 4th day of January, 1995 to the Agreement between CBI Industries, Inc., a Delaware Corporation ("CBI") and Alan J. Schneider ("Executive") dated the 3rd day of January, 1995, as previously amended (the "Agreement"). WITNESSETH THAT WHEREAS, CBI and the Executive mutually desire to modify the Agreement to include a requirement that CBI provide an irrevocable clean letter of credit to secure for the benefit of the Executive the payment of up to $100,000 for attorneys fees incurred in enforcing the Agreement following a Change in Control; NOW, THEREFORE, it is hereby agreed by and between the parties to this Addendum that the Agreement shall be modified as follows: 1. Section 10 of the Agreement is amended by adding a new subsection (b) to read as follows: (b) CBI shall at its sole cost and expense obtain a commitment for an irrevocable clean letter of credit, substantially in the form of that attached hereto as Exhibit II and incorporated herein by reference (the "Letter of Credit"), to be issued by a commercial bank selected by CBI having total assets equivalent to at least $6 billion and either incorporated under the laws of, or having an office in, the United States or any State (the "Bank"), to secure for the benefit of Executive the payment of up to $100,000 for attorneys fees incurred in enforcing the Agreement pursuant to Section 10(a) upon presentation by Executive to the Bank of a statement or statements prepared by Executive's counsel that such payments are due and owing and that CBI has not performed its obligations to make such payments. CBI shall at its sole cost and expense obtain the issuance of the Letter of Credit pursuant to such commitment not later than the Effective Date and shall pay all amounts and take all action necessary to maintain such Letter of Credit during the Employment Period and for two years thereafter and if, notwithstanding CBI's complete discharge of such obligations, such Letter of Credit shall be terminated or not renewed, CBI shall obtain a replacement irrevocable clean letter of credit on substantially the same terms and conditions as contained in the Letter of Credit drawn upon a commercial bank having -1- 25 total assets equivalent to at least $6 billion and either incorporated under the laws of, or having an office in, the United States or any State, which assures the Executive the benefits of this Agreement. Nothing in this subsection (b) shall limit in any way CBI's obligations under subsection 10(a). CBI INDUSTRIES, INC. EXECUTIVE By: /s/ John E. Jones By: /s/ Alan J. Schneider ------------------------ ----------------- Title: Pres, CEO & Chairman ATTEST: /s/ CCT - ---------------------------- Secretary -2- 26 EXHIBIT II ROYAL BANK OF CANADA, NEW YORK BRANCH IRREVOCABLE STANDBY LETTER OF CREDIT _______________________ , 19__ Letter of Credit No. ______________ (Beneficiary's Name and Address) Dear ___________________: At the request and for the account of CBI Industries, Inc., 800 Jorie Boulevard, Oak Brook, Illinois, we hereby establish our Irrevocable Standby Letter of Credit No. _______________ (this "Letter of Credit") in your favor in an aggregate amount of One Hundred Thousand Dollars ($100,000), representing support of the "Agreement") dated ________________, by and between yourself and CBI Industries, Inc., as it may be amended from time to time, available by your draft drawn at sight, presented to this Bank, bearing this Letter of Credit Number and accompanied by this Letter of Credit and both: 1. Your signed certificate dated the date of such draft indicating the name, address and signature of your designated counsel, with both your signature and your designated counsel's signature notarized; and 2. Your designated counsel's signed and notarized statement dated the date of such draft stating: "Payments are due and payable to (Beneficiary) under the Agreement dated ______________ between (Beneficiary) and CBI Industries, Inc., as such Agreement may have been amended from time to time, and CBI Industries, Inc. has not performed its obligation to make such payments. (Beneficiary) through the undersigned counsel is enforcing his/her rights under such Agreement." Only one draft, in the amount of $100,000 may be presented under this Letter of Credit. We hereby agree that all drafts drawn under and in compliance with the terms of this Letter of Credit will be honored upon presentation at Royal Bank of Canada, New York Branch, New York Operations Center, Pierrepont Plaza, 300 Cadman Plaza West, Brooklyn, New York 11201-2701, Attention: Loan Administration Manager, facsimile number (___)___-_______, Presentation is to be 27 made by facsimile transmission of all required documents to this Bank, followed by overnight courier delivery of all originals as provided in this paragraph: Any Draft hereunder must be presented on or before _________________. This Letter of Credit shall automatically expire and be null and void at the close of business on _________________ or, in the event the expiry date hereof is extended by us in writing, at the close of business upon such extended expiry date. This Letter of Credit sets forth in full the terms of our undertaking, and this undertaking shall not in any way be modified, amended, amplified or limited by reference to any document, instrument or agreement referred to herein or in which this Letter of Credit is referred to or to which this Letter of Credit relates, except for the certificates, statements and the sight drafts referred to therein. This Letter of Credit is not transferrable. This irrevocable Letter of Credit is subject to The Uniform Customs and Practices for Documentary Credits (1983 Revision), ICC Publication 400: ROYAL BANK OF CANADA, NEW YORK BRANCH By ------------------------------ Its ----------------------------- By ------------------------------ Its ----------------------------- 28 ADDENDUM TO AGREEMENT THIS ADDENDUM dated this 12th day of January, 1995 to the Agreement between CBI Industries, Inc., a Delaware corporation ("CBI") and Alan J. Schneider ("Executive") of January 3, 1995 (the "Agreement"). WITNESSETH THAT WHEREAS, the Board of Directors of CBI on January 11, 1995, adopted a resolution amending Section 2 of the Agreement, and CBI and the Executive mutually desire to modify the Agreement by incorporating said amendment into the Agreement. NOW THEREFORE, it is hereby agreed by and between the parties to this Addendum as follows: 1. Section 2 of the Agreement is hereby amended to read as follows: Change in Control. The Term "Change in Control" shall mean the occurrence at any time of any of the following events: (a) An "Acquiring Person" (as defined below) has become such; or (b) "Continuing Directors" (as defined below) cease to comprise a majority of the Board of Directors of CBI. For purposes of this Agreement, the terms "Acquiring Person" and "Continuing Directors" shall have the same meaning as ascribed to such terms in that certain Amendment and Restatement dated as of August 8, 1989, of Rights Agreement dated as of March 4, 1986, 29 between CBI and First Chicago Trust Company of New York, as Rights Agent, as has been or may be amended from time to time. CBI INDUSTRIES, INC. EXECUTIVE By: /s/ John E. Jones By: /s/ Alan J. Schneider ------------------------ ------------------------- Title: --------------------- ATTEST /s/ CCT - --------------------------- Secretary [Seal] EX-99.4 5 EMPLOYMENT AGREEMENT AND ADDENDA - C.O. ZIEMER 1 EXHIBIT 4 AGREEMENT THIS AGREEMENT between CBI INDUSTRIES, INC., a Delaware corporation ("CBI"), and Charles O. Ziemer ("Executive"), dated this 12th day of September , 1986. WITNESSETH THAT WHEREAS, CBI wishes to attract and retain well-qualified executives and both CBI and the Executive desire continuity of management in the event of any Change in Control of CBI; NOW, THEREFORE, it is hereby agreed by and between the parties as follows: 1. Effective Date. The "Effective Date" of this Agreement shall be the date on which a Change in Control of CBI (as defined in Section 2) occurs. 2. Change in Control. The term "Change in Control" shall mean the occurrence at any time of any of the following events: (a) An Acquiring Person (as defined below), has become such; or (b) Continuing Directors (as defined below) cease to comprise a majority of the board of directors of CBI. 2 For purposes of this Agreement, the terms "Acquiring Person" and "Continuing Directors" shall have the respective meanings ascribed to such terms in that certain Rights Agreement dated March 4, 1986, between CBI and Morgan Guaranty Trust Company of New York as rights agent, the relevant portions of which for convenience of reference are reproduced as Exhibit I to this Agreement. 3. Employment. CBI hereby agrees that if the Executive continues as an employee of CBI from the date of execution hereof until the Effective Date, CBI shall continue the Executive in its employ for the period commencing on the Effective Date and ending on the earlier to occur of the third anniversary of such date or the 65th birthday of the Executive (the "Employment Period"), to exercise such authority and perform such executive duties as are requested of him by CBI, which authority and duties shall be commensurate with the authority being exercised and duties being performed by the Executive immediately prior to the Effective Date. The Executive shall perform such requested services at the location where the Executive was employed immediately prior to the Effective Date, except for required travel on CBI's business to an extent substantially consistent with the Executive's business travel obligations prior to the Effective Date. The Executive agrees that while an employee during the Employment Period he shall, to the extent required, devote substantially - 2 - 3 all of his business time to his executive duties as described herein and perform such duties faithfully and efficiently. 4. Compensation, Compensation Plans, Benefits. During the Employment Period, the Executive shall be compensated as follows: (a) He shall receive an annual salary (to be paid in equal biweekly installments) which is not less than his rate of annual salary in effect immediately prior to the Effective Date, increased on each January 1 within the remainder of the Employment Period by at least the greater of (i) the average annual percentage salary increase for the Executive during the period of three full calendar years immediately preceding the Effective Date, or (ii) the percentage increase in the Implicit Price Deflator for Gross National Product for the calendar year immediately preceding such January 1, as published by the United States Department of Commerce in its Survey of Current Business in December of each year, over such Implicit Price Deflator for the calendar year next preceding such year. (b) He shall be awarded and receive bonus, restricted stock award, stock option, and other incentive compensation for each calendar year (or other applicable bonus or incentive compensation - 3 - 4 period) any part of which is included in the Employment Period, which in the aggregate shall not in value be a lesser percentage of his annual salary, as determined in subsection (a) above, for such calendar year (or period), than the aggregate bonus, restricted stock award, stock option, and other incentive compensation during the period of three full calendar years immediately preceding the Effective Date was of the Executive's aggregate base salary for such three year period. (c) He shall be entitled to receive all employee benefits to the extent of the greater of the employee benefits provided by CBI to executives with comparable duties or the employee benefits to which he was entitled immediately prior to the Effective Date. (d) During any period that Executive is unable to perform the services for CBI specified in Section 3, whether as a result of total disability or as a result of a physical or mental disability that is not total or is not permanent and therefore is not a total disability, Executive shall continue to receive base salary at the rate in effect at the commencement of any such period, together with all other compensation and benefits that are payable under this Agreement. - 4 - 5 (e) He shall be furnished at CBI's expense with an automobile, office, reasonable secretarial help, club memberships, reimbursement for reasonable entertainment expenses, and such other supplies, equipment, facilities, services and emoluments appurtenant to his position to the extent of the greater of such emoluments provided by CBI to executives with comparable duties or the emoluments to which he was entitled immediately prior to the Effective Date. (f) He shall be covered by directors and officers liability and indemnity insurance or equivalent protection arranged and funded by CBI, and by corporate indemnity protection, to the extent of the greatest level of protection afforded to such Executive under any and all policies of directors and officers liability and indemnity insurance, by-law provisions or any other arrangements or agreements, at any time within the period of three full calendar years immediately preceding the Effective Date. 5. Termination. The term "Termination" shall mean the occurrence during the Employment Period of: (a) termination by CBI of the employment of the Executive for any reason other than (i) death, (ii) - 5 - 6 physical or mental incapacity which would entitle Executive to permanent disability benefits under CBI's appropriate plans, or (iii) a willful and material breach of this Agreement by the Executive which causes a direct and substantial injury to CBI or to its business, which is not cured by Executive within 30 days after receiving written notice of such breach and reasonable directions for cure from CBI; or (b) the resignation of the Executive from his employment upon 30 days written notice to CBI at any time following (i) a significant change in the nature or scope of the Executive's authorities or duties from those described in Section 3, a reduction in total compensation from that provided in Section 4, or the breach by CBI of any other provision of this Agreement, which change, reduction or breach is not restored or cured by CBI within 30 days after receiving written notice of such change, reduction or breach and reasonable directions for restoration or cure from the Executive; or (ii) a reasonable determination by the Executive that, as a result of the Change in Control and a change in circumstances thereafter significantly affecting his position, he is unable to exercise the authorities, powers, functions or duties attached to his position as contemplated by Section 3. - 6 - 7 A Termination as contemplated by this Section 5, whether or not a breach of this Agreement by CBI, shall entitle the Executive to Termination benefits as provided by this Agreement. Nothing in this Agreement shall prevent the Executive from voluntarily resigning from his Employment upon 90 days written notice to CBI under circumstances which do not constitute Termination as defined in this Section 5, and no such resignation shall be deemed a breach of this Agreement by the Executive. 6. Termination Payment. In the event of Termination of Executive during the Period of Employment, CBI shall pay to the Executive a lump sum amount equal (without discount to present value) to the sum of the amounts determined in accordance with subsections (a), (b), (c) and (d) below, and provide the additional benefits described in subsections (w), (x), (y) and (z) below: (a) An amount equal to the aggregate salary which would have been paid to the Executive during the remainder of the Employment Period if he had received the base salary specified by Section 4(a) above, increased by assuming the salary increase on each January 1 during the remainder of the Employment Period to be the greatest of the average annual percentage salary increase or the percentage increase in the implicit Price Deflator, whichever is - 7 - 8 applicable, as of any January 1 within the three calendar years including or preceding the Termination date. (b) Bonus and incentive compensation for any calendar year (or other applicable bonus or incentive compensation period) ending prior to the Termination date but not previously paid. (c) An amount equal to the aggregate bonus and incentive compensation which would have been paid to the Executive during each calendar year (or other applicable bonus or incentive compensation period) any part of which is included in the remainder of the Employment Period if he had received bonus and incentive compensation for any such year (or period) in the minimum amount specified by Section 4(b) based on his increased salary determined under subsection (a) above; provided, however, that in the event any bonus year (or period) extends beyond the end of the Employment Period, bonus or other incentive compensation for such year (or period) shall be pro-rated in proportion to the number of days within and without the Employment Period. (d) In the event any shares of CBI common stock (or other securities into which such shares may have - 8 - 9 been converted) previously awarded to Executive under any restricted stock award plans of CBI or separate agreements between Executive and CBI are forfeited by reason of such Termination, an amount in cash equal to the fair market value of such forfeited common stock (or other securities) as of the date of Termination. The rights afforded to Executive under this subsection (d) are without prejudice to any other rights Executive has to shares of CBI common stock (or other securities) under such plans or agreements or by reason of the action of the CBI Board of Directors heretofore taken in causing restrictions on such shares to be removed under certain circumstances including Termination of the Executive. CBI shall also provide to the Executive: (w) In addition to the benefits provided under any pension benefit plan, benefit restoration plan, profit sharing plan, or employee stock ownership plan (whether or not funded or qualified under the Internal Revenue Code) maintained by CBI ("Retirement Plans"), the difference (the "Benefit Enhancement") between such benefits and the benefits (the "Enhanced Benefits") that would have been provided under such Retirement Plans if Executive had remained in the employ of CBI throughout the Employment Period at the - 9 - 10 salary determined under subsection (a) above accruing additional age and service credits under such Retirement Plans accordingly. If after giving effect to such additional age and service credit Executive shall not have the necessary age or credited service at the end of the Employment Period to qualify under the CBI Pension Plan (the "Pension Plan") for an early retirement pension, the Enhanced Benefits under this subsection (w) shall nevertheless include an early retirement pension under the Pension Plan beginning upon Executive attaining age 55 or upon the date Executive would have attained 30 years of credited service had Executive remained continuously employed by CBI but for Termination (whichever occurs first) (the Enhanced Early Retirement Pension"). The Enhanced Early Retirement Pension shall be payable to the Executive or to the spouse of the Executive (if applicable) commencing at the time Executive attains (or would have attained) age 55 or would have otherwise attained 30 years of credited service as provided aforesaid (whichever occurs first). The Enhanced Early Retirement Pension shall only be subject to reduction at the rate of four (4) percentum for each year by which the Executive's age is less than age 65 or the Executive's credited service is less than 40 years, whichever produces the lesser - 10 - 11 reduction, pursuant to the first sentence of Section 5.2.3 of the Pension Plan (as in effect on the date hereof). If Executive shall die after the end of the Employment Period but before the date the Enhanced Early Retirement Pension is payable, the spouse of Executive shall be entitled to an enhanced survivor's pension under the Pension Plan as if Executive had died as an employee of CBI, giving effect to service through the date of Executive's death and Executive's earnings through the end of the Employment Period. Such Benefit Enhancement will be paid beginning on the date the Enhanced Benefits would have commenced and thereafter concurrently with the benefits actually provided under such Retirement Plans; except that if the Executive receives a distribution from any profit sharing or employee stock ownership plan before the Benefit Enhancement required by this subsection in respect of such Retirement Plan become determinable, the Benefit Enhancement in respect of such plan shall be paid as soon thereafter as such benefits become determinable. Nothing in this subsection (w) shall prevent the actual commencement of benefits under any Retirement Plan, and the Benefit Enhancements required by this subsection (w), before the end of the Employment Period to the extent required or permitted under the terms of the applicable Retirement Plan, - 11 - 12 giving effect to the additional age and service credit required by this subsection (w). (x) Participation in or coverage by all other employee benefits, including, but not limited to, coverage under any health or medical benefit insurance, plans, or arrangements, supplemental survivors' benefit plans, or life insurance arrangements or programs, to the same extent to which he would have been entitled under all employee benefit plans, programs, arrangements or practices maintained by CBI if he had remained in the employ of CBI through the Employment Period at the salary determined under subsection (a) above. (y) Continuation of disability income benefits pursuant to Section 4(d) for so long as any disability may continue and continuation of directors and officers liability and indemnity insurance and corporate indemnity protection pursuant to Section 4(f) for so long as any liability may arise; in either case without regard to the Termination of the Employment Period. (z) Within 30 days after each written request therefor by the Executive, cash advances or reimbursement for any fees or expenses actually incurred or reasonably expected to be incurred by the Executive in seeking other - 12 - 13 employment, including without limitation all travel and relocation expenses and all fees charged by any executive recruitment firm or firms or employment consulting or counseling firm or firms selected by the Executive in his sole discretion. The amount of Termination payments described in subsections (a), (b), (c) and (d) of this Section 6 shall be determined and paid in a lump sum within 30 days of the Termination date by cashier's check or certified check of CBI or any of its affiliated corporations delivered to Executive together with such calculations, worksheets, or other information as may be necessary or appropriate to ascertain the correctness of the computation of such amount and, if applicable, of any reduction pursuant to Section 7. Any Termination payment (or the value thereof) not paid on or before the date provided therefor by this Section 6 shall bear interest after such date until paid at a rate per annum during each month such amount remains unpaid of five percentage points in excess of the prime rate as publicly announced by the First National Bank of Chicago or its successor from time to time as in effect on the first day of each such month. 7. Overall Limitations. Solely for the purposes of the computation of benefits under this Agreement and notwithstanding any other provisions hereof, payments to any Executive under this Agreement shall be reduced (but not below - 13 - 14 zero) so that the present value, as determined in accordance with Section 280G(d)(4) of the Code, of such payments plus any other payments that must be taken into account for purposes of any computation relating to Executive under Section 280G(b)(2)(A)(ii) of the Code, shall not, in the aggregate, exceed 2.99 times Executive's "base amount," as that term is defined in Section 280G(b)(3) of the Code. Notwithstanding any other provision hereof, no reduction in payments under the limitation contained in the immediately preceding sentence shall be applied to payments hereunder which do not constitute "excess parachute payments" within the meaning the Code. Any payments in excess of the limitation of this Section 7 or otherwise determined to be "excess parachute payments" made to Executive hereunder are deemed to be overpayments which shall constitute an amount owing from the Executive receiving them to CBI with interest from the date of receipt by the Executive to the date of repayment (or offset) at the applicable federal rate under Section 1274(d) of the Code, compounded semi-annually, which shall be payable to CBI upon demand; provided, however, that no repayment shall be required under this sentence if in the written opinion of tax counsel satisfactory to the Executive and delivered to the Executive and CBI such repayment does not allow such overpayment to be excluded for federal income and excise tax purposes from the Executive's income for the year of receipt or afford the - 14 - 15 Executive a compensating federal income tax deduction for the year of repayment. 8. Non-Competition. Whether or not a Termination occurs, the Executive agrees to continue all non-competition and confidentiality provisions, as specified in any other agreement in effect on the Effective Date between the Executive and CBI relating to confidential information, during (and to the extent specified in such agreement, after) the Employment Period. 9. Mitigation. The Executive shall not be required to mitigate the amount of any payment provided for under this Agreement by seeking other employment or otherwise; provided, however, that if during the Employment Period Executive accepts other employment in a position substantially equivalent to or better than the position held by him with CBI, current cash compensation actually received by the Executive during the Employment Period from such other employment shall be applied to reduce Termination payments otherwise due under subsections (a) and (c) of Section 6 of this Agreement. 10. Legal Fees and Expenses: (a) It is the intent of CBI that no Executive be required to incur the expenses associated with the enforcement of his rights under this Agreement by - 15 - 16 litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Executive hereunder. Accordingly, if it should appear to the Executive that CBI has failed to comply with any of its obligations under this Agreement, or in the event that CBI or any other person takes any action to declare this Agreement void or unenforceable, or institutes any litigation designed to deny, or to recover from, the Executive the benefits intended to be provided to Executive hereunder, CBI irrevocably authorizes Executive from time to time to retain counsel of his choice, at the expense of CBI as hereafter provided, to represent Executive in connection with the initiation or defense of any litigation, arbitration or other legal action, whether by or against CBI or any director, officer, stockholder or other person affiliated with CBI, in any jurisdiction. CBI shall advance to the Executive within 30 days after each written request therefor any and all attorneys' and related fees and expenses actually incurred or reasonably expected to be incurred by the Executive in any such proceeding or otherwise as a result of CBI's failure to perform this Agreement or any provision hereof or as a result of CBI or any person contesting the validity or - 16 - 17 enforceability of this Agreement or any provision hereof; provided, however, that to the extent the Executive does not prevail in any such litigation, arbitration, or other legal action, the Executive shall repay to CBI the amount (without interest) of such attorney's fees and related fees and expenses previously advanced. (b) CBI shall at its sole cost and expense obtain a commitment for an irrevocable clean letter of credit, substantially in the form of that attached hereto as Exhibit II and incorporated herein by reference (the "Letter of Credit"), to be issued by a commercial bank selected by CBI having total assets equivalent to at least $6 billion and either incorporated under the laws of, or having an office in, the United States or any State (the "Bank"), to secure for the benefit of Executive the total value of performance of CBI's obligations under this Agreement by providing that the total amount of all payments due to be paid by CBI to Executive under this Agreement shall be paid on a regular, periodic basis upon presentation by Executive to the Bank of a statement or statements prepared by Executive's counsel that such payments are due and owing, and that CBI has not performed its obligation to make such payments. CBI - 17 - 18 shall at its sole cost and expense obtain the issuance of the Letter of Credit pursuant to such commitment not later than the Effective Date and shall pay all amounts and take all action necessary to maintain such Letter of Credit during the Employment Period and for two years thereafter and if, notwithstanding CBI's complete discharge of such obligations, such Letter of Credit shall be terminated or not renewed, CBI shall obtain a replacement irrevocable clean letter of credit on substantially the same terms and conditions as contained in the Letter of Credit drawn upon a commercial bank having total assets equivalent to at least $6 billion and either incorporated under the laws of, or having an office in, the United States or any State, which assures the Executive the benefits of this Agreement. 11. Notices. Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and if sent by registered or certified mail to the Executive at the last address he has filed in writing with CBI or, in the case of CBI, at its principal executive offices. 12. Non-Alienation. The Executive shall not have any right to pledge, hypothecate, anticipate or in any way create a - 18 - 19 lien upon any amounts provided under this Agreement; and no benefits payable hereunder shall be assignable in anticipation of payment either by voluntary or involuntary acts, or by operation of law. 13. Governing Law. The provisions of this Agreement shall be construed in accordance with the laws of the State of Illinois. 14. Amendment. This Agreement may be amended or cancelled by mutual agreement of the parties in writing without the consent of any other person and, so long as the Executive lives, no person, other than the parties hereto, shall have any rights under or interest in this Agreement or the subject matter hereof. 15. Successors to the Company. Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of CBI and any successor of CBI. 16. Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions of this - 19 - 20 Agreement shall be unaffected thereby and shall remain in full force and effect. CBI INDUSTRIES, NC. /s/ CHARLES O. ZIEMER ------------------------------ Executive Title: S. VP & General Counsel ----------------------- By: /s/ W.A. Pogue ------------------------ Title: Chairman of the Board --------------------- ATTEST: /s/ Donald H. Craigmile - ---------------------------- Secretary (SEAL) - 20 - 21 EXHIBIT 1 Section 1. Certain Definitions. For purposes of this Agreement, the following terms have the meanings indicated: 1.1 "Acquiring Person" shall mean any Person (as such term is hereinafter defined) who or which, together with all Affiliates (as such term is hereinafter defined) and Associates (as such term is hereinafter defined) of such Person, shall be the Beneficial Owner (as such term is hereinafter defined) of 20% or more of the shares of Common Stock then outstanding, but shall not include the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, or any entity organized, appointed or established by the Company for or pursuant to the terms of any such plan. 1.3 "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act 22 of 1934, as amended (the "Exchange Act"), as in effect on the date of this Agreement. 1.4 A Person shall be deemed the "Beneficial Owner" of, and shall be deemed to "beneficially own," any securities: (a) which such Person or any of such Person's Affiliates or Associates beneficially owns, directly or indirectly; (b) which such Person or any of such Person's Affiliates or Associates has (i) the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights (other than the Rights), warrants or options, or otherwise; provided, however, that a Person shall not be deemed the 23 "Beneficial Owner" of, or to "beneficially own," securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for purchase or exchange; or (ii) the right to vote pursuant to any agreement, arrangement or understanding (whether or not in writing); provided, however, that a Person shall not be deemed the "Beneficial Owner" of, or to "beneficially own," any security under this clause (ii) if the agreement, arrangement or understanding to vote such security: (A) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations of the Exchange Act, and (B) is not also then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or (c) which are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with 24 which such Person or any of such Person's Affiliates or Associates has any agreement, arrangement or understanding (whether or not in writing), for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in clause (ii) of paragraph (b) of this subsection 1.4) or disposing of any voting securities of the Company. 1.7 "Common Stock" shall mean the common stock, $2.50 par value per share, of the Company, except that "Common Stock" when used with reference to any Person other than the Company shall mean the capital stock of such Person with the greatest voting power, or the equity securities or other equity interest having power to control or direct the management, of such Person. 25 1.8 "Continuing Director" shall mean any member of the Board, while such person is a member of the Board, who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, and was a member of the Board prior to the date of this Agreement. A "Continuing Director" shall also mean any person who subsequently becomes a member of the Board, while such person is a member of the Board, who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, if (a) such person's nomination for election or election to the Board is recommended or approved by resolution of a majority of the Continuing Directors or (b) such person is included as a nominee in a proxy statement of the Company distributed when a majority of the Board consists of Continuing Directors. 1.9 "Person" shall mean any individual, firm, corporation, partnership or other entity. 26 Exhibit II From:_____________________________ Date:____________________________ To:___________________________ By order of: CBI Industries. Inc. 800 Jorie Boulevard Oak Brook, Illinois 60521 We hereby issue our irrevocable Letter of Credit #__________ effective ___________________, 1986 for a principal amount of U.S. $____________ only, expiring __________________, 1987, in Chicago, Illinois representing support for an "Agreement" dated ______________ between CBI Industries, Inc. and the beneficiary of this Letter of Credit. Whole or partial drawings of the above Letter of Credit are available against presentation of your draft(s) drawn at sight on us mentioning thereon our Letter of Credit number and accompanied by (1) beneficiary's signed and dated statement designating his counsel and (2) a signed and dated statement prepared by his counsel reading to the effect that payments are due and owing under the "Agreement" referred to above and that CBI Industries, Inc. has not performed its obligation to make such payments. We hereby engage that drafts drawn under and in compliance with the terms and conditions of this Letter of Credit will be duly honored upon presentation if presented to us on or before _________________. This credit is subject to the "Uniform Customs and Practices for Documentary Credits" (1983 revision), International Chamber of Commerce publication 400. SIGNATURE 27 ADDENDUM TO AGREEMENT THIS ADDENDUM dated this 12th day of September, 1986, to the AGREEMENT between CBI Industries, Inc., a Delaware Corporation ("CBI") and Charles O. Ziemer ("Executive") of even date herewith (the "Agreement"): WITNESSETH THAT WHEREAS, CBI and the Executive mutually desire to modify in light of the Agreement that certain Supplemental Survivor's Benefit Agreement (the "Survivor's Agreement") dated May 20, 1980 by and between CBI and the Executive; NOW, THEREFORE, in consideration of the mutual execution of the Agreement and the premises thereof, it is further AGREED by and between CBI and the Executive as follows: 1. A Termination of the Executive during the Employment Period shall be deemed a "retirement" under the Survivor's Agreement entitling Executive in the event of his death thereafter to the "post-retirement benefit" thereunder, notwithstanding that Executive may no longer be employed by CBI nor except as may otherwise be provided by the Agreement be retired for purposes of the Pension Plan. 28 CBI INDUSTRIES, INC. /s/ Charles O. Ziemer ------------------------ Executive By: /s/ W.A. Pogue Title: S. VP & General Counsel ------------------------- ------------------------ Title: Chairman of the Board --------------------- ATTEST: /s/ Donald H. Craigmile - --------------------------------- Secretary (SEAL) 29 ADDENDUM TO AGREEMENT THIS ADDENDUM dated this 5th day of June, 1987, to the AGREEMENT between CBI Industries, Inc., a Delaware Corporation ("CBI") and Charles O. Ziemer ("Executive") dated the 12th day of September, 1986 (the "Agreement"): WITNESSETH THAT: WHEREAS, CBI and the Executive mutually desire to modify the Agreement in light of the enactment of the Tax Reform Act of 1986; NOW, THEREFORE, in consideration of the premises, it is hereby AGREED by and between CBI and the Executive that the Agreement shall be modified as follows: 1. Section 3 of the Agreement is amended by adding the following new sentence immediately after the first sentence thereof: CBI shall maintain the position of Executive such that Executive is able to exercise the authorities, powers, functions and duties attached thereto as contemplated by this Section 3. 2. Subsection (b) of Section 5 of the Agreement is amended to read as follows: (b) the resignation of the Executive from his employment upon 30 days written notice to CBI at any time following a significant change in the nature or scope of the Executive's authorities or duties from those described in Section 3, a reduction in total compensation Page 1 30 from that provided in Section 4, or the breach by CBI of any other provision of this Agreement, which change, reduction or breach is not restored or cured by CBI within 30 days after receiving written notice of such change, reduction or breach, reasonable directions for restoration or cure, and an offer to work from the Executive. 3. Section 5 of the Agreement is amended by deleting the words ", whether or not a breach of this Agreement by CBI," from the sentence following subsection (b). 4. Section 6 of the Agreement is amended (i) by deleting from the introductory material preceding subsection (a) the words "equal (without discount to present value) to the sum of" and substituting in lieu thereof the words "equal to the present value (discounted at the greatest rate of interest then payable by the First National Bank of Chicago on any federally insured account into which Executive could deposit such lump sum amount and made withdrawals therefrom without penalty at least as rapidly as compensation under Section 4 would have been payable) of"; (ii) deleting from subsections (a) and (c) the words "An amount equal to the aggregate" and substituting in lieu thereof the word "The"; and (iii) deleting from the sentence following subsection (z) the word "reduction" and substituting in lieu thereof the word "enhancement". 5. The first sentence of subsection (d) of Section 6 is amended to read as follows: In the event any shares of CBI common stock (or other securities into which such shares may have been converted) previously awarded to Executive under any restricted stock award plans of CBI or separate agreements between Executive and CBI are forfeited by reason of such Termination, or in the event any stock option previously granted to Executive under any stock option plan of CBI terminates or ceases to be exercisable by Page 2 31 reason of such Termination, an amount in cash equal to the fair market value of such forfeited common stock (or other securities) as of the date of Termination plus the excess of the fair market value as of the date of Termination of stock subject to any such terminated option over the exercise price of such terminated option. 6. Section 7 of the Agreement is amended to read as follows: 7. Overall Indemnity. The parties intend that the payments in the nature of compensation to be made by CBI to Executive under this Agreement shall be reasonable compensation for personal services to be rendered on or after the date of the Change in Control, including payments to an individual as damages for breach of contract, within the meaning of Section 280G(b)(4)(A) of the Internal Revenue Code of 1986, as amended (the "Code"). In the event that notwithstanding the previous sentence any excise tax under Section 4999 of the Code is imposed on Executive as a direct or indirect result of payments made by CBI or its affiliates, whether or not such payments are made pursuant to this Agreement, CBI shall pay Executive an amount or, from time to time, amounts, equal to (i) the sum of all excise taxes imposed on Executive in respect of such payments, plus (ii) the aggregate amount of any interest, penalties, fines or additions to any tax which are imposed in connection with the imposition of such excise tax, plus (iii) all income and excise taxes imposed on Executive under the laws of any United States Federal, state or local government or taxing authority by reason of the payments required under clause (i) and clause (ii) and this clause (iii). CBI's obligation to pay such amounts to Executive pursuant to this Section 7 shall continue for the period specified in Section 6501 of the Code during Page 3 32 which a tax may be assessed under Section 4999 of the Code (including any extensions of such period provided under Section 6503(a)(1) of the Code or requested by the Internal Revenue Service in connection with an audit of one or more of Executive's tax returns). If the Internal Revenue Service makes a claim against Executive which, if successful, would require CBI to make a payment under this Section 7, Executive agrees to contest the claim on request of CBI subject to the following conditions: (a) Executive shall notify CBI of any such claim within 10 days of becoming aware thereof. In the event CBI desires the claim to be contested, it shall promptly (but in no event more than 30 days after the notice from Executive or such shorter time as the Internal Revenue Service may specify for responding to such claim) request Executive to contest the claim. Executive shall not make any payment of any tax which is the subject of the claim before Executive has given the notice or during the 30-day period thereafter unless Executive receives written instructions from CBI to make such payment together with an advance of funds sufficient to make the requested payment plus any amounts determined pursuant to clause (ii) and clause (iii) above as if such advance were an amount described in clause (i) above, in which case Executive will act promptly in accordance with such instructions. (b) If CBI so requests, Executive will contest the claim by, at the direction of CBI, either paying the tax claimed and suing for a refund in the appropriate court or contesting the claim in the United States Tax Court; provided, however, that any request by CBI for Page 4 33 Executive to pay the tax shall be accompanied by an advance from CBI to Executive of funds sufficient to make the requested payment plus any amounts determined pursuant to clause (ii) and clause (iii) above as if such advance were an amount described in clause (i) above. If directed by CBI in writing Executive will take all action necessary to compromise or settle the claim, but in no event will Executive compromise or settle the claim or cease to contest the claim without the written consent of CBI; provided, however, that Executive may take any such action if Executive waives in writing his right to a payment under this Section 7 for any amounts payable in connection with such claim. Executive agrees to cooperate in good faith with CBI in contesting the claim and to comply with any reasonable request from CBI concerning the contest of the claim, including the pursuit of administrative remedies, the appropriate forum for any judicial proceeding, and the legal basis for contesting the claim. Upon request of CBI, Executive shall take appropriate appeals of any judgment or decision that would require CBI to make a payment under this Section 7. Provided that Executive is in compliance with the provisions of this section, CBI shall be liable for and indemnify Executive against any loss in connection with all costs and expenses, including attorneys' fees, which may be incurred as a result of contesting the claim, and shall provide to Executive within 30 days after each written request therefor by the Executive cash advances or reimbursement for all such costs and expenses actually incurred or reasonably expected to be incurred by the Executive as a result of contesting the claim. (c) If CBI requests that Executive contest a claim and otherwise complies with its obligations under Page 5 34 this Section 7, it shall, except as otherwise stipulated in this Section 7, have no obligation to pay any amounts under Section 7 in respect of the claim until final determination occurs regarding Executive's liability under the claim. CBI's obligation to pay amounts under this Section 7 will be reduced by any refund obtained by Executive and interest paid thereon. 7. Section 9 of the Agreement is amended to read as follows: If during the Employment Period Executive accepts other employment in a position substantially equivalent to or better than the position held by him with CBI, compensation actually received by the Executive during the Employment Period from such other employment shall be applied to reduce Termination payments otherwise due under subsections (a) and (c) of Section 6 of this Agreement; and coverage of the Executive under employee benefit plans described in subsection (x) of Section 6 of this Agreement shall be reduced or eliminated to the extent Executive is covered under similar plans incident to such other employment. In the event of any reduction under this Section 9 of Termination payments already paid by CBI to Executive, Executive shall upon 30 days written request from CBI repay to CBI the amount by which such Termination payment is reduced, without interest, and further reduced by any taxes attributable to such Termination payments to the extent Executive cannot recover such taxes through deductions of equivalent or greater value. Nothing in this Section 9 shall be construed to require Executive in mitigation of damages to accept employment in a position not substantially equivalent to or better than position held by him with CBI or to accept employment more than reasonable daily commuting Page 6 35 distance from the principal residence of the Executive as of the date of Termination. CBI INDUSTRIES, INC. /s/ Charles O. Ziemer ------------------------------ Executive By:/s/ William A. Pogue Title: S. VP & General Counsel ------------------------- ------------------------ Title: Chairman of the Board ---------------------- ATTEST: /s/ David H. Craigmile - ---------------------------- Secretary [SEAL] Page 7 36 ADDENDUM TO AGREEMENT THIS ADDENDUM dated this 5th day of June, 1987, to the AGREEMENT between CBI Industries, Inc., a Delaware Corporation ("CBI") and Charles O. Ziemer ("Executive") dated the 12th day of September, 1986 (the "Agreement"): WITNESSETH THAT: WHEREAS, CBI and the Executive mutually desire to modify the Agreement in light of the enactment of the Tax Reform Act of 1986; NOW, THEREFORE, in consideration of the premises, it is hereby AGREED by and between CBI and the Executive that the Agreement shall be modified as follows: 1. Section 3 of the Agreement is amended by adding the following new sentence immediately after the first sentence thereof: CBI shall maintain the position of Executive such that Executive is able to exercise the authorities, powers, functions and duties attached thereto as contemplated by this Section 3. 2. Subsection (b) of Section 5 of the Agreement is amended to read as follows: (b) the resignation of the Executive from his employment upon 30 days written notice to CBI at any time following a significant change in the nature or scope of the Executive's authorities or duties from those described in Section 3, a reduction in total compensation Page 1 37 from that provided in Section 4, or the breach by CBI of any other provision of this Agreement, which change, reduction or breach is not restored or cured by CBI within 30 days after receiving written notice of such change, reduction or breach, reasonable directions for restoration or cure, and an offer to work from the Executive. 3. Section 5 of the Agreement is amended by deleting the words ", whether or not a breach of this Agreement by CBI," from the sentence following subsection (b). 4. Section 6 of the Agreement is amended (i) by deleting from the introductory material preceding subsection (a) the words "equal (without discount to present value) to the sum of" and substituting in lieu thereof the words "equal to the present value (discounted at the greatest rate of interest then payable by the First National Bank of Chicago on any federally insured account into which Executive could deposit such lump sum amount and made withdrawals therefrom without penalty at least as rapidly as compensation under Section 4 would have been payable) of"; (ii) deleting from subsections (a) and (c) the words "An amount equal to the aggregate" and substituting in lieu thereof the word "The"; and (iii) deleting from the sentence following subsection (z) the word "reduction" and substituting in lieu thereof the word "enhancement". 5. The first sentence of subsection (d) of Section 6 is amended to read as follows: In the event any shares of CBI common stock (or other securities into which such shares may have been converted) previously awarded to Executive under any restricted stock award plans of CBI or separate agreements between Executive and CBI are forfeited by reason of such Termination, or in the event any stock option previously granted to Executive under any stock option plan of CBI terminates or ceases to be exercisable by Page 2 38 reason of such Termination, an amount in cash equal to the fair market value of such forfeited common stock (or other securities) as of the date of Termination plus the excess of the fair market value as of the date of Termination of stock subject to any such terminated option over the exercise price of such terminated option. 6. Section 7 of the Agreement is amended to read as follows: 7. Overall Indemnity. The parties intend that the payments in the nature of compensation to be made by CBI to Executive under this Agreement shall be reasonable compensation for personal services to be rendered on or after the date of the Change in Control, including payments to an individual as damages for breach of contract, within the meaning of Section 280G(b)(4)(A) of the Internal Revenue Code of 1986, as amended (the "Code"). In the event that notwithstanding the previous sentence any excise tax under Section 4999 of the Code is imposed on Executive as a direct or indirect result of payments made by CBI or its affiliates, whether or not such payments are made pursuant to this Agreement, CBI shall pay Executive an amount or, from time to time, amounts, equal to (i) the sum of all excise taxes imposed on Executive in respect of such payments, plus (ii) the aggregate amount of any interest, penalties, fines or additions to any tax which are imposed in connection with the imposition of such excise tax, plus (iii) all income and excise taxes imposed on Executive under the laws of any United States Federal, state or local government or taxing authority by reason of the payments required under clause (i) and clause (ii) and this clause (iii). CBI's obligation to pay such amounts to Executive pursuant to this Section 7 shall continue for the period specified in Section 6501 of the Code during Page 3 39 which a tax may be assessed under Section 4999 of the Code (including any extensions of such period provided under Section 6503(a)(1) of the Code or requested by the Internal Revenue Service in connection with an audit of one or more of Executive's tax returns). If the Internal Revenue Service makes a claim against Executive which, if successful, would require CBI to make a payment under this Section 7, Executive agrees to contest the claim on request of CBI subject to the following conditions: (a) Executive shall notify CBI of any such claim within 10 days of becoming aware thereof. In the event CBI desires the claim to be contested, it shall promptly (but in no event more than 30 days after the notice from Executive or such shorter time as the Internal Revenue Service may specify for responding to such claim) request Executive to contest the claim. Executive shall not make any payment of any tax which is the subject of the claim before Executive has given the notice or during the 30-day period thereafter unless Executive receives written instructions from CBI to make such payment together with an advance of funds sufficient to make the requested payment plus any amounts determined pursuant to clause (ii) and clause (iii) above as if such advance were an amount described in clause (i) above, in which case Executive will act promptly in accordance with such instructions. (b) If CBI so requests, Executive will contest the claim by, at the direction of CBI, either paying the tax claimed and suing for a refund in the appropriate court or contesting the claim in the United States Tax Court; provided, however, that any request by CBI for Page 4 40 Executive to pay the tax shall be accompanied by an advance from CBI to Executive of funds sufficient to make the requested payment plus any amounts determined pursuant to clause (ii) and clause (iii) above as if such advance were an amount described in clause (i) above. If directed by CBI in writing Executive will take all action necessary to compromise or settle the claim, but in no event will Executive compromise or settle the claim or cease to contest the claim without the written consent of CBI; provided, however, that Executive may take any such action if Executive waives in writing his right to a payment under this Section 7 for any amounts payable in connection with such claim. Executive agrees to cooperate in good faith with CBI in contesting the claim and to comply with any reasonable request from CBI concerning the contest of the claim, including the pursuit of administrative remedies, the appropriate forum for any judicial proceeding, and the legal basis for contesting the claim. Upon request of CBI, Executive shall take appropriate appeals of any judgment or decision that would require CBI to make a payment under this Section 7. Provided that Executive is in compliance with the provisions of this section, CBI shall be liable for and indemnify Executive against any loss in connection with all costs and expenses, including attorneys' fees, which may be incurred as a result of contesting the claim, and shall provide to Executive within 30 days after each written request therefor by the Executive cash advances or reimbursement for all such costs and expenses actually incurred or reasonably expected to be incurred by the Executive as a result of contesting the claim. (c) If CBI requests that Executive contest a claim and otherwise complies with its obligations under Page 5 41 this Section 7, it shall, except as otherwise stipulated in this Section 7, have no obligation to pay any amounts under Section 7 in respect of the claim until final determination occurs regarding Executive's liability under the claim. CBI's obligation to pay amounts under this Section 7 will be reduced by any refund obtained by Executive and interest paid thereon. 7. Section 9 of the Agreement is amended to read as follows: If during the Employment Period Executive accepts other employment in a position substantially equivalent to or better than the position held by him with CBI, compensation actually received by the Executive during the Employment Period from such other employment shall be applied to reduce Termination payments otherwise due under subsections (a) and (c) of Section 6 of this Agreement; and coverage of the Executive under employee benefit plans described in subsection (x) of Section 6 of this Agreement shall be reduced or eliminated to the extent Executive is covered under similar plans incident to such other employment. In the event of any reduction under this Section 9 of Termination payments already paid by CBI to Executive, Executive shall upon 30 days written request from CBI repay to CBI the amount by which such Termination payment is reduced, without interest, and further reduced by any taxes attributable to such Termination payments to the extent Executive cannot recover such taxes through deductions of equivalent or greater value. Nothing in this Section 9 shall be construed to require Executive in mitigation of damages to accept employment in a position not substantially equivalent to or better than position held by him with CBI or to accept employment more than reasonable daily commuting Page 6 42 distance from the principal residence of the Executive as of the date of Termination. CBI INDUSTRIES, INC. /s/ Charles O. Ziemer ------------------------------ Executive By: /s/ William A. Pogue Title: S. VP & General Counsel -------------------------- ------------------------ Title: Chairman of the Board ----------------------- ATTEST: /s/ Donald H. Craigmile - ---------------------------- Secretary [SEAL] 43 ADDENDUM TO AGREEMENT THIS ADDENDUM dated this 8th day of September, 1987, to the Agreement between CBI Industries, Inc., a Delaware corporation ("CBI") and C.O. Ziemer ("Executive") of September 12, 1986 (the "Agreement"). WITNESSETH THAT WHEREAS, the Board of Directors of CBI approved an early retirement change in the CBI Pension Plan effective September 8, 1987, and CBI desires to make such change applicable to the Agreement. NOW, THEREFORE, it is hereby agreed by and between the parties to this Addendum as follows: 1. The sentence appearing in Subsection 6(w) of the Agreement commencing in the sixth line from the bottom of page 10 and ending in the third line of page 11 presently reading: "The Enhanced Early Retirement Pension shall only be subject to reduction at the rate of four (4) percentum for each year by which the Executive's age is less than age 65 or the Executive's credited service is less than 40 years, whichever produces the lesser reduction, pursuant to the first sentence of Section 5.2.3 of the Pension Plan (as in effect on the date hereof)." Is hereby amended to read: "The Enhanced Early Retirement Pension shall only be subject to reduction at the rate of four (4) percentum Page 1 44 for each year by which the Executive's age is less than age 62 or the Executive's credited service is less than 35 years, whichever produces the lesser reduction, pursuant to the first sentence of Section 5.2.3 of the Pension Plan (as in effect on the date hereof)." CBI INDUSTRIES, INC. By:/s/ W.A. Pogue /s/ Charles O. Ziemer --------------------------- --------------------------- Title: Chairman of the Board Executive ------------------------ ATTEST: /s/ Donald H. Craigmile - ------------------------------ Secretary Page 2 45 ADDENDUM TO AGREEMENT THIS ADDENDUM dated this 8th day of September, 1987, to the Agreement between CBI Industries, Inc., a Delaware corporation ("CBI") and C.O. Ziemer ("Executive") of September 12, 1986 (the "Agreement"). WITNESSETH THAT WHEREAS, the Board of Directors of CBI approved an early retirement change in the CBI Pension Plan effective September 8, 1987, and CBI desires to make such change applicable to the Agreement. NOW, THEREFORE, it is hereby agreed by and between the parties to this Addendum as follows: 1. The sentence appearing in Subsection 6(w) of the Agreement commencing in the sixth line from the bottom of page 10 and ending in the third line of page 11 presently reading: "The Enhanced Early Retirement Pension shall only be subject to reduction at the rate of four (4) percentum for each year by which the Executive's age is less than age 65 or the Executive's credited service is less than 40 years, whichever produces the lesser reduction, pursuant to the first sentence of Section 5.2.3 of the Pension Plan (as in effect on the date hereof)." Is hereby amended to read: "The Enhanced Early Retirement Pension shall only be subject to reduction at the rate of four (4) percentum Page 1 46 for each year by which the Executive's age is less than age 62 or the Executive's credited service is less than 35 years, whichever produces the lesser reduction, pursuant to the first sentence of Section 5.2.3 of the Pension Plan (as in effect on the date hereof)." CBI INDUSTRIES, INC. By: /s/ W.A. Pogue /s/ Charles O. Ziemer -------------------------- ------------------------ Title: Chairman of the Board Executive ----------------------- ATTEST: /s/ Donald Craigmile - ------------------------------ Secretary Page 2 47 ADDENDUM TO AGREEMENT THIS ADDENDUM effective the 1st day of June, 1993, to the AGREEMENT between CBI Industries, Inc., a Delaware corporation ("CBI") and C.O. Ziemer ("Executive") dated the 12th day of September, 1986, as previously amended (the "Agreement"). WITNESSETH THAT: WHEREAS, CBI and the Executive mutually desire to modify the Agreement to eliminate the requirement for CBI to provide an irrevocable clean letter of credit to secure for the benefit of the Executive the total value of performance of CBI's obligations under the Agreement; NOW, THEREFORE, in consideration of $10 and the premises herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, it is hereby AGREED by and between CBI and the Executive that the Agreement shall be modified as follows: 1. Subsection 10(b) is deleted. 2. Exhibit II is deleted. CBI INDUSTRIES, INC. By: /s/ John E. Jones Executive: /s/ Charles O. Ziemer -------------------------- ---------------------- Title: Chairman of the Board Title: S. VP & General Counsel -------------------------- ATTEST: /s/ CCT - ---------------------------- Secretary [SEAL] 48 ADDENDUM TO AGREEMENT THIS ADDENDUM dated as of and made effective the 27th day of August, 1993 to the Agreement between CBI Industries, Inc., a Delaware corporation ("CBI") and C.O. Ziemer ("Executive") of September 12, 1986 (the "Agreement"). WITNESSETH THAT WHEREAS, CBI and the Executive mutually desire to modify the Agreement to include a requirement that CBI provide an irrevocable clean letter of credit to secure for the benefit of the Executive the payment of up to $100,000 for attorneys fees incurred in enforcing the Agreement following a Change of Control; NOW, THEREFORE, it is hereby agreed by and between the parties to this Addendum that the Agreement shall be modified as follows: 1. Section 10 of the Agreement is amended by adding a new subsection (b) to read as follows: (b) CBI shall at its sole cost and expense obtain a commitment for an irrevocable clean letter of credit, substantially in the form of that attached hereto as Exhibit II and incorporated herein by reference (the "Letter of Credit"), to be issued by a commercial bank selected by CBI having total assets equivalent to at least $6 billion and either incorporated under the laws of, or having an office in, the United States or any State (the "Bank"), to secure for the benefit of Executive the payment of up to $100,000 for attorneys fees incurred in enforcing the Agreement pursuant to Section 10(a) upon presentation by Executive to the Bank of a statement or statements prepared by Executive's counsel that such payments are due and owing and that CBI has not performed its obligations to make such payments. CBI shall at its sole cost and expense obtain the issuance of the Letter of Credit pursuant to such commitment not later than the Effective Date and shall pay all amounts and take all action necessary to maintain such Letter of Credit during the Employment Period and for two years thereafter and if, notwithstanding CBI's complete discharge of such obligations, such Letter of Credit shall be terminated or not renewed, CBI shall obtain a replacement irrevocable clean letter of credit on substantially the same terms and conditions as contained in the Letter of Credit drawn upon a commercial bank having total assets equivalent to at least $6 billion and either incorporated under the laws o, or having an office in, the United States of any State, which 49 assures the Executive the benefits of this Agreement. Nothing in this subsection (b) shall limit in any way CBI's obligations under subsection 10 (a). CBI INDUSTRIES, INC. EXECUTIVE By: /s/ John E. Jones By: /s/ Charles O. Ziemer -------------------------- --------------------------------- Title: Title: S. VP & General Counsel ----------------------- ------------------------------ 50 EXHIBIT II ROYAL BANK OF CANADA, NEW YORK BRANCH IRREVOCABLE STANDBY LETTER OF CREDIT _______________________, 19____ Letter of Credit No. ______________ (Beneficiary's Name and Address) Dear ___________________: At the request and for the account of CBI Industries, Inc., 800 Jorie Boulevard, Oak Brook, Illinois, we hereby establish our Irrevocable Standby Letter of Credit No. _______________ (this "Letter of Credit") in your favor in an aggregate amount of One Hundred Thousand Dollars ($100,000), representing support of the "Agreement") dated ________________, by and between yourself and CBI Industries, Inc., as it may be amended from time to time, available by your draft drawn at sight, presented to this Bank, bearing this Letter of Credit Number and accompanied by this Letter of Credit and both: 1. Your signed certificate dated the date of such draft indicating the name, address and signature of your designated counsel, with both your signature and your designated counsel's signature notarized; and 2. Your designated counsel's signed and notarized statement dated the date of such draft stating: "Payments are due and payable to (Beneficiary) under the Agreement dated _____________ between (Beneficiary) and CBI Industries, Inc., as such Agreement may have been amended from time to time, and CBI Industries, Inc. has not performed its obligation to make such payments. (Beneficiary) through the undersigned counsel is enforcing his/her rights under such Agreement." Only one draft, in the amount of $100,000 may be presented under this Letter of Credit. We hereby agree that all drafts drawn under and in compliance with the terms of this Letter of Credit will be honored upon presentation at Royal Bank of Canada, New York Branch, New York Operations Center, Pierrepont Plaza, 300 Cadman Plaza West, Brooklyn, New York 11201-2701, Attention: Loan Administration Manager, facsimile number (___) ___-____. Presentation is to be 51 made by facsimile transmission of all required documents to this Bank, followed by overnight courier delivery of all originals as provided in this paragraph. Any Draft hereunder must be presented on or before _________________. This Letter of Credit shall automatically expire and be null and void at the close of business on ________________ or, in the event the expiry date hereof is extended by us in writing, at the close of business upon such extended expiry date. This Letter of Credit sets forth in full the terms of our undertaking, and this undertaking shall not in any way be modified, amended, amplified or limited by reference to any document, instrument or agreement referred to herein or in which this Letter of Credit is referred to or to which this Letter of Credit relates, except for the certificates, statements and the sight drafts referred to therein. This Letter of Credit is not transferrable. This irrevocable Letter of Credit is subject to The Uniform Customs and Practices for Documentary Credits (1983 Revision), ICC Publication 400. ROYAL BANK OF CANADA, NEW YORK BRANCH By_______________________________ Its____________________________ By_______________________________ Its____________________________ 52 ADDENDUM TO AGREEMENT THIS ADDENDUM dated this 12th day of January, 1995 to the Agreement between CBI Industries, Inc., a Delaware corporation ("CBI") and Charles O. Ziemer ("Executive") of September 12, 1986 (the "Agreement"). WITNESSETH THAT WHEREAS, the Board of Directors of CBI on January 11, 1995, adopted a resolution amending Section 2 of the Agreement, and CBI and the Executive mutually desire to modify the Agreement by incorporating said amendment into the Agreement. NOW THEREFORE, it is hereby agreed by and between the parties to this Addendum as follows: 1. Section 2 of the Agreement is hereby amended to read as follows: Change in Control. The Term "Change in Control" shall mean the occurrence at any time of any of the following events: (a) An "Acquiring Person" (as defined below) has become such; or (b) "Continuing Directors" (as defined below) cease to comprise a majority of the Board of Directors of CBI. For purposes of this Agreement, the terms "Acquiring Person" and "Continuing Directors" shall have the same meaning as ascribed to such terms in that certain Amendment and Restatement dated as of August 8, 1989, of Rights Agreement dated as of March 4, 1986, 53 between CBI and First Chicago Trust Company of New York, as Rights Agent, as has been or may be amended from time to time. CBI INDUSTRIES, INC. EXECUTIVE By:/s/ John E. Jones By:/s/ Charles O. Ziemer --------------------------- --------------------------------- Title: ------------------------ ATTEST: /s/ CCT - ------------------------------ Secretary [Seal] EX-99.5 6 EMPLOYMENT AGREEMENT AND ADDENDA - L.E. AKIN 1 EXHIBIT 5 AGREEMENT THIS AGREEMENT between CBI INDUSTRIES, INC., a Delaware corporation ("CBI"), and Lewis E. Akin ("Executive"), dated this 12th day of September, 1986. WITNESSETH THAT WHEREAS, CBI wishes to attract and retain well-qualified executives and both CBI and the Executive desire continuity of management in the event of any Change in Control of CBI; NOW, THEREFORE, it is hereby agreed by and between the parties as follows: 1. Effective Date. The "Effective Date of this Agreement shall be the date on which a Change in Control of CBI (as defined in Section 2) occurs. 2. Change in Control. The term "Change in Control" shall mean the occurrence at any time of any of the following events: (a) An Acquiring Person (as defined below), has become such; or (b) Continuing Directors (as defined below) cease to comprise a majority of the board of directors of CBI. 2 For purposes of this Agreement, the terms "Acquiring Person" and "Continuing Directors" shall have the respective meanings ascribed to such terms in that certain Rights Agreement dated March 4, 1986, between CBI and Morgan Guaranty Trust Company of New York as rights agent. the relevant portions of which for convenience of reference are reproduced as Exhibit I to this Agreement. 3. Employment. CBI hereby agrees that if the Executive continues as an employee of CBI from the date of execution hereof until the Effective Date, CBI shall continue the Executive in its employ for the period commencing on the Effective Date and ending on the earlier to occur of the third anniversary of such date or the 65th birthday of the Executive (the "Employment Period"), to exercise such authority and perform such executive duties as are requested of him by CBI, which authority and duties shall be commensurate with the authority being exercised and duties being performed by the Executive immediately prior to the Effective Date. The Executive shall perform such requested services at the location where the Executive was employed immediately prior to the Effective Date, except for required travel on CBI's business to an extent substantially consistent with the Executive's business travel obligations prior to the Effective Date. The Executive agrees that while an employee during the Employment Period he shall, to the extent required, devote substantially -2- 3 all of his business time to his executive duties as described herein and perform such duties faithfully and efficiently. 4. Compensation, Compensation Plans, Benefits. During the Employment Period, the Executive shall be compensated as follows: (a) He shall receive an annual salary (to be paid in equal biweekly installments) which is not less than his rate of annual salary in effect immediately prior to the Effective Date, increased on each January 1 within the remainder of the Employment Period by at least the greater of (i) the average annual percentage salary increase for the Executive during the period of three full calendar years immediately preceding the Effective Date, or (ii) the percentage increase in the Implicit Price Deflator for Gross National Product for the calendar year immediately preceding such January 1, as published by the United States Department of Commerce in its Survey of Current Business in December of each year, over such Implicit Price Deflator for the calendar year next preceding such year. (b) He shall be awarded and receive bonus, restricted stock award, stock option, and other incentive compensation for each calendar year (or other applicable bonus or incentive compensation -3- 4 period) any part of which is included in the Employment Period, which in the aggregate shall not in value be a lesser percentage of his annual salary, as determined in subsection (a) above, for such calendar year (or period), than the aggregate bonus, restricted stock award, stock option, and other incentive compensation during the period of three full calendar years immediately preceding the Effective Date was of the Executive's aggregate base salary for such three year period. (c) He shall be entitled to receive all employee benefits to the extent of the greater of the employee benefits provided by CBI to executives with comparable duties or the employee benefits to which he was entitled immediately prior to the Effective Date. (d) During any period that Executive is unable to perform the services for CBI specified in Section 3, whether as a result of total disability or as a result of a physical or mental disability that is not total or is not permanent and therefore is not a total disability, Executive shall continue to receive base salary at the rate in effect at the commencement of any such period, together with all other compensation and benefits that are payable under this Agreement. -4- 5 (e) He shall be furnished at CBI's expense with an automobile, office, reasonable secretarial help, club memberships, reimbursement for reasonable entertainment expenses, and such other supplies, equipment, facilities, services and emoluments appurtenant to his position to the extent of the greater of such emoluments provided by CBI to executives with comparable duties or the emoluments to which he was entitled immediately prior to the Effective Date. (f) He shall be covered by directors and officers liability and indemnity insurance or equivalent protection arranged and funded by CBI, and by corporate indemnity protection, to the extent of the greatest level of protection afforded to such Executive under any and all policies of directors and officers liability and indemnity insurance, by-law provisions or any other arrangements or agreements, at any time within the period of three full calendar years immediately preceding the Effective Date. 5. Termination. The term "Termination" shall mean the occurrence during the Employment Period of: (a) termination by CBI of the employment of the Executive for any reason other than (i) death, (ii) -5- 6 physical or mental incapacity which would entitle Executive to permanent disability benefits under CBI's appropriate plans, or (iii) a willful and material breach of this Agreement by the Executive which causes a direct and substantial injury to CBI or to its business, which is not cured by Executive within 30 days after receiving written notice of such breach and reasonable directions for cure from CBI; or (b) the resignation of the Executive from his employment upon 30 days written notice to CBI at any time following (i) a significant change in the nature or scope of the Executive's authorities or duties from those described in Section 3, a reduction in total compensation from that provided in Section 4, or the breach by CBI of any other provision of this Agreement, which change, reduction or breach is not restored or cured by CBI within 30 days after receiving written notice of such change, reduction or breach and reasonable directions for restoration or cure from the Executive; or (ii) a reasonable determination by the Executive that, as a result of the Change in Control and a change in circumstances thereafter significantly affecting his position, he is unable to exercise the authorities, powers, functions or duties attached to his position as contemplated by Section 3. -6- 7 A Termination as contemplated by this Section 5, whether or not a breach of this Agreement by CBI, shall entitle the Executive to Termination benefits as provided by this Agreement. Nothing in this Agreement shall prevent the Executive from voluntarily resigning from his Employment upon 90 days written notice to CBI under circumstances which do not constitute Termination as defined in this Section 5, and no such resignation shall be deemed a breach of this Agreement by the Executive. 6. Termination Payment. In the event of Termination of Executive during the Period of Employment, CBI shall pay to the Executive a lump sum amount equal (without discount to present value) to the sum of the amounts determined in accordance with subsections (a), (b), (c) and (d) below, and provide the additional benefits described in subsections (w), (x), (y) and (z) below: (a) An amount equal to the aggregate salary which would have been paid to the Executive during the remainder of the Employment Period if he had received the base salary specified by Section 4(a) above, increased by assuming the salary increase on each January 1 during the remainder of the Employment Period to be the greatest of the average annual percentage salary increase or the percentage increase in the Implicit Price Deflator, whichever is -7- 8 applicable, as of any January 1 within the three calendar years including or preceding the Termination date. (b) Bonus and incentive compensation for any calendar year (or other applicable bonus or incentive compensation period) ending prior to the Termination date but not previously paid. (c) An amount equal to the aggregate bonus and incentive compensation which would have been paid to the Executive during each calendar year (or other applicable bonus or incentive compensation period) any part of which is included in the remainder of the Employment Period if he had received bonus and incentive compensation for any such year (or period) in the minimum amount specified by Section 4(b) based on his increased salary determined under subsection (a) above; provided, however, that in the event any bonus year (or period) extends beyond the end of the Employment Period, bonus or other incentive compensation for such year (or period) shall be pro-rated in proportion to the number of days within and without the Employment Period. (d) In the event any shares of CBI common stock (or other securities into which such shares may have -8- 9 been converted) previously awarded to Executive under any restricted stock award plans of CBI or separate agreements between Executive and CBI are forfeited by reason of such Termination, an amount in cash equal to the fair market value of such forfeited common stock (or other securities) as of the date of Termination. The rights afforded to Executive under this subsection (d) are without prejudice to any other rights Executive has to shares of CBI common stock (or other securities) under such plans or agreements or by reason of the action of the CBI Board of Directors heretofore taken in causing restrictions on such shares to be removed under certain circumstances including Termination of the Executive. CBI shall also provide to the Executive: (w) In addition to the benefits provided under any pension benefit plan, benefit restoration plan, profit sharing plan, or employee stock ownership plan (whether or not funded or qualified under the Internal Revenue Code) maintained by CBI ("Retirement Plans"), the difference (the "Benefit Enhancement") between such benefits and the benefits (the "Enhanced Benefits") that would have been provided under such Retirement Plans if Executive had remained in the employ of CBI throughout the Employment Period at the - 9 - 10 salary determined under subsection (a) above accruing additional age and service credits under such Retirement Plans accordingly. If after giving effect to such additional age and service credit Executive shall not have the necessary age or credited service at the end of the Employment Period to qualify under the CBI Pension Plan (the "Pension Plan") for an early retirement pension, the Enhanced Benefits under this subsection (w) shall nevertheless include an early retirement pension under the Pension Plan beginning upon Executive attaining age 55 or upon the date Executive would have attained 30 years of credited service had Executive remained continuously employed by CBI but for Termination (whichever occurs first) (the "Enhanced Early Retirement Pension"). The Enhanced Early Retirement Pension shall be payable to the Executive or to the spouse of the Executive (if applicable) commencing at the time Executive attains (or would have attained) age 55 or would have otherwise attained 30 years of credited service as provided aforesaid (whichever occurs first). The Enhanced Early Retirement Pension shall only be subject to reduction at the rate of four (4) percentum for each year by which the Executive's age is less than age 65 or the Executive's credited service is less than 40 years, whichever produces the lesser - 10 - 11 reduction, pursuant to the first sentence of Section 5.2.3 of the Pension Plan (as in effect on the date hereof). If Executive shall die after the end of the Employment Period but before the date the Enhanced Early Retirement Pension is payable, the spouse of Executive shall be entitled to an enhanced survivor's pension under the Pension Plan as if Executive had died as an employee of CBI, giving effect to service through the date of Executive's death and Executive's earnings through the end of the Employment Period. Such Benefit Enhancement will be paid beginning on the date the Enhanced Benefits would have commenced and thereafter concurrently with the benefits actually provided under such Retirement Plans; except that if the Executive receives a distribution from any profit sharing or employee stock ownership plan before the Benefit Enhancement required by this subsection in respect of such Retirement Plan become determinable, the Benefit Enhancement in respect of such plan shall be paid as soon thereafter as such benefits become determinable. Nothing in this subsection (w) shall prevent the actual commencement of benefits under any Retirement Plan, and the Benefit Enhancements required by this subsection (w), before the end of the Employment Period to the extent required or permitted under the terms of the applicable Retirement Plan, - 11 - 12 giving effect to the additional age and service credit required by this subsection (w). (x) Participation in or coverage by all other employee benefits, including, but not limited to, coverage under any health or medical benefit insurance, plans, or arrangements, supplemental survivors' benefit plans, or life insurance arrangements or programs, to the same extent to which he would have been entitled under all employee benefit plans, programs, arrangements or practices maintained by CBI if he had remained in the employ of CBI through the Employment Period at the salary determined under subsection (a) above. (y) Continuation of disability income benefits pursuant to Section 4(d) for so long as any disability may continue and continuation of directors and officers liability and indemnity insurance and corporate indemnity protection pursuant to Section 4(f) for so long as any liability may arise; in either case without regard to the Termination of the Employment Period. (z) Within 30 days after each written request therefor by the Executive, cash advances or reimbursement for any fees or expenses actually incurred or reasonably expected to be incurred by the Executive in seeking other - 12 - 13 employment, including without limitation all travel and relocation expenses and all fees charged by any executive recruitment firm or firms or employment consulting or counseling firm or firms selected by the Executive in his sole discretion. The amount of Termination payments described in subsections (a), (b), (c) and (d) of this Section 6 shall be determined and paid in a lump sum within 30 days of the Termination date by cashier's check or certified check of CBI or any of its affiliated corporations delivered to Executive together with such calculations, worksheets, or other information as may be necessary or appropriate to ascertain the correctness of the computation of such amount and, if applicable, of any reduction pursuant to Section 7. Any Termination payment (or the value thereof) not paid on or before the date provided therefor by this Section 6 shall bear interest after such date until paid at a rate per annum during each month such amount remains unpaid of five percentage points in excess of the prime rate as publicly announced by the First National Bank of Chicago or its successor from time to time as in effect on the first day of each such month. 7. Overall Limitations. Solely for the purposes of the computation of benefits under this Agreement and notwithstanding any other provisions hereof, payments to any Executive under this Agreement shall be reduced (but not below - 13 - 14 zero) so that the present value, as determined in accordance with Section 280G(d)(4) of the Code, of such payments plus any other payments that must be taken into account for purposes of any computation relating to Executive under Section 280G(b)(2)(A)(ii) of the Code, shall not, in the aggregate, exceed 2.99 times Executive's "base amount," as that term is defined in Section 280G(b)(3) of the Code. Notwithstanding any other provision hereof, no reduction in payments under the limitation contained in the immediately preceding sentence shall be applied to payments hereunder which do not constitute "excess parachute payments" within the meaning the Code. Any payments in excess of the limitation of this Section 7 or otherwise determined to be "excess parachute payments" made to Executive hereunder are deemed to be overpayments which shall constitute an amount owing from the Executive receiving them to CBI with interest from the date of receipt by the Executive to the date of repayment (or offset) at the applicable federal rate under Section 1274(d) of the Code, compounded semi-annually, which shall be payable to CBI upon demand; provided, however, that no repayment shall be required under this sentence if in the written opinion of tax counsel satisfactory to the Executive and delivered to the Executive and CBI such repayment does not allow such overpayment to be excluded for federal income and excise tax purposes from the Executive's income for the year of receipt or afford the - 14 - 15 Executive a compensating federal income tax deduction for the year of repayment. 8. Non-Competition. Whether or not a Termination occurs, the Executive agrees to continue all non-competition and confidentiality provisions, as specified in any other agreement in effect on the Effective Date between the Executive and CBI relating to confidential information, during (and to the extent specified in such agreement, after) the Employment Period. 9. Mitigation. The Executive shall not be required to mitigate the amount of any payment provided for under this Agreement by seeking other employment or otherwise; provided, however, that if during the Employment Period Executive accepts other employment in a position Substantially equivalent to or better than the position held by him with CBI, current cash compensation actually received by the Executive during the Employment Period from such other employment shall be applied to reduce Termination payments otherwise due under subsections (a) and (c) of Section 6 of this Agreement. 10. Legal Fees and Expenses: (a) it is the intent of CBI that no Executive be required to incur the expenses associated with the enforcement of his rights under this Agreement by - 15 - 16 litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Executive hereunder. Accordingly, if it should appear to the Executive that CBI has failed to comply with any of its obligations under this Agreement, or in the event that CBI or any other person takes any action to declare this Agreement void or unenforceable, or institutes any litigation designed to deny, or to recover from, the Executive the benefits intended to be provided to Executive hereunder, CBI irrevocably authorizes Executive from time to time to retain counsel of his choice, at the expense of CBI as hereafter provided, to represent Executive in connection with the initiation or defense of any litigation, arbitration or other legal action, whether by or against CBI or any director, officer, stockholder or other person affiliated with CBI, in any jurisdiction. CBI shall advance to the Executive within 30 days after each written request therefor any and all attorneys' and related fees and expenses actually incurred or reasonably expected to be incurred by the Executive in any such proceeding or otherwise as a result of CBI's failure to perform this Agreement or any provision hereof or as a result of CBI or any person contesting the validity or - 16 - 17 enforceability of this Agreement or any provision hereof; provided, however, that to the extent the Executive does not prevail in any such litigation, arbitration, or other legal action, the Executive shall repay to CBI the amount (without interest) of such attorney's fees and related fees and expenses previously advanced. (b) CBI shall at its sole cost and expense obtain a commitment for an irrevocable clean letter of credit, substantially in the form of that attached hereto as Exhibit II and incorporated herein by reference (the "Letter of Credit"), to be issued by a commercial bank selected by CBI having total assets equivalent to at least $6 billion and either incorporated under the laws of, or having an office in, the United States or any State (the "Bank"), to secure for the benefit of Executive the total value of performance of CBI's obligations under this Agreement by providing that the total amount of all payments due to be paid by CBI to Executive under this Agreement shall be paid on a regular, periodic basis upon presentation by Executive to the Bank of a statement or statements prepared by Executive's counsel that such payments are due and owing, and that CBI has not performed its obligation to make such payments. CBI - 17 - 18 shall at its sole cost and expense obtain the issuance of the Letter of Credit pursuant to such commitment not later than the Effective Date and shall pay all amounts and take all action necessary to maintain such Letter of Credit during the Employment Period and for two years thereafter and if, notwithstanding CBI's complete discharge of such obligations, such Letter of Credit shall be terminated or not renewed, CBI shall obtain a replacement irrevocable clean letter of credit on substantially the same terms and conditions as contained in the Letter of Credit drawn upon a commercial bank having total assets equivalent to at least $6 billion and either incorporated under the laws of, or having an office in, the United States or any State, which assures the Executive the benefits of this Agreement. 11. Notices. Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and if sent by registered or certified mail to the Executive at the last address he has filed in writing with CBI or, in the case of CBI, at its principal executive offices. 12. Non-Alienation. The Executive shall not have any right to pledge, hypothecate, anticipate or in any way create a - 18 - 19 lien upon any amounts provided under this Agreement; and no benefits payable hereunder shall be assignable in anticipation of payment either by voluntary or involuntary acts, or by operation of law. 13. Governing Law. The provisions of this Agreement shall be construed in accordance with the laws of the State of Illinois. 14. Amendment. This Agreement may be amended or cancelled by mutual agreement of the parties in writing without the consent of any other person and, so long as the Executive lives, no person, other than the parties hereto, shall have any rights under or interest in this Agreement or the subject matter hereof. 15. Successors to the Company. Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of CBI and any successor of CBI. 16. Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions of this - 19 - 20 Agreement shall be unaffected thereby and shall remain in full force and effect. CBI INDUSTRIES, INC. /s/ Lewis E. Akin ------------------------------- Executive By: /s/ W. A. Pogue Title: Vice President ---------------------------- ------------------------- Title: Chairman of the Board ------------------------ ATTEST: /s/ Donald H. Craigmile - ------------------------------- Secretary (SEAL) - 20 - 21 Section 1. Certain Definitions. For purposes of this Agreement, the following terms have the meanings indicated: 1.1 "Acquiring Person" shall mean any Person (as such term is hereinafter defined) who or which, together with all Affiliates (as such term is hereinafter defined) and Associates (as such term is hereinafter defined) of such Person, shall be the Beneficial Owner (as such term is hereinafter defined) of 20% or more of the shares of Common Stock then outstanding, but shall not include the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, or any entity organized, appointed or established by the Company for or pursuant to the terms of any such plan. 1.3 "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act 22 of 1934, as amended (the "Exchange Act"), as in effect on the date of this Agreement. 1.4 A Person shall be deemed the "Beneficial Owner" of, and shall be deemed to "beneficially own," any securities: (a) which such Person or any of such Person's Affiliates or Associates beneficially owns, directly or indirectly; (b) which such Person or any of such Person's Affiliates or Associates has (i) the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights (other than the Rights), warrants or options, or otherwise; provided, however, that a Person shall not be deemed the 23 "Beneficial Owner" of, or to "beneficially own," securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for purchase or exchange; or (ii) the right to vote pursuant to any agreement, arrangement or understanding (whether or not in writing); provided, however, that a Person shall not be deemed the "Beneficial Owner" of, or to "beneficially own, any security under this clause (ii) if the agreement, arrangement or understanding to vote such security: (A) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations of the Exchange Act, and (B) is not also then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or (c) which are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with 24 which such Person or any of such Person's Affiliates or Associates has any agreement, arrangement or understanding (whether or not in writing), for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in clause (ii) of paragraph (b) of this subsection 1.4) or disposing of any voting securities of the Company. 1.7 "Common Stock" shall mean the common stock, $2.50 par value per share, of the Company, except that "Common Stock" when used with reference to any Person other than the Company shall mean the capital stock of such Person with the greatest voting power, or the equity securities or other equity interest having power to control or direct the management, of such Person. 25 1.8 "Continuing Director" shall mean any member of the Board, while such person is a member of the Board, who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, and was a member of the Board prior to the date of this Agreement. A "Continuing Director" shall also mean any person who subsequently becomes a member of the Board, while such person is a member of the Board, who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, if (a) such person's nomination for election or election to the Board is recommended or approved by resolution of a majority of the Continuing Directors or (b) such person is included as a nominee in a proxy statement of the Company distributed when a majority of the Board consists of Continuing Directors. 1.9 "Person" shall mean any individual, firm, corporation, partnership or other entity. 26 Exhibit II From: ____________________________ Date:__________________________ To:________________________ By order of: CBI Industries, Inc. 800 Jorie Boulevard Oak Brook, Illinois 60521 We hereby issue our irrevocable Letter of Credit #__________ effective __________________, 1986 for a principal amount of U.S. $____________ only, expiring __________________, 1987, in Chicago, Illinois representing support for an "Agreement" dated ______________ between CBI Industries, Inc. and the beneficiary of this Letter of Credit. Whole or partial drawings of the above Letter of Credit are available against presentation of your draft(s) drawn at sight on us mentioning thereon our Letter of Credit number and accompanied by (1) beneficiary's signed and dated statement designating his counsel and (2) a signed and dated statement prepared by his counsel reading to the effect that payments are due and owing under the "Agreement" referred to above and that CBI Industries, Inc. has not performed its obligation to make such payments. We hereby engage that drafts drawn under and in compliance with the terms and conditions of this Letter of Credit will be duly honored upon presentation if presented to us on or before __________________. This credit is subject to the "Uniform Customs and Practices for Documentary Credits" (1983 revision), International Chamber of Commerce publication 400. SIGNATURE 27 ADDENDUM TO AGREEMENT THIS ADDENDUM dated this 12th day of September, 1986, to the AGREEMENT between CBI Industries, Inc., a Delaware Corporation ("CBI") and Lewis E. Akin ("Executive") of even date herewith (the "Agreement"): WITNESSETH THAT WHEREAS, CBI and the Executive mutually desire to modify in light of the Agreement that certain Supplemental Survivor's Benefit Agreement (the "Survivor's Agreement") dated January 31, 1984 by and between CBI and the Executive; NOW, THEREFORE, in consideration of the mutual execution of the Agreement and the premises thereof, it is further AGREED by and between CBI and the Executive as follows: 1. A Termination of the Executive during the Employment Period shall be deemed a "retirement" under the Survivor's Agreement entitling Executive in the event of his death thereafter to the "post-retirement benefit" thereunder, notwithstanding that Executive may no longer be employed by CBI nor except as may otherwise be provided by the Agreement be retired for purposes of the Pension Plan. 28 CBI INDUSTRIES, INC. /s/ Lewis E. Akin --------------------------------- Executive By: /s/ W.A. Pogue Title: Vice President -------------------------- -------------------------- Title: Chairman of the Board ---------------------- ATTEST: /s/ Donald H. Craigmile - ----------------------------- Secretary (SEAL) 29 ADDENDUM TO AGREEMENT THIS ADDENDUM dated as of and made effective the 1st day of June, 1995 to the Agreement between CBI industries, Inc., a Delaware Corporation ("CBI") and Lewis E. Akin ("Executive") of September 12, 1986 (the "Agreement"). WITNESSETH THAT WHEREAS, Chicago Bridge & Iron Company ("Bridge"), a wholly owned subsidiary of CBI, wishes to attract and retain well qualified executives and both Bridge and the Executive desire continuity of management in the event of any Change in Ownership of Bridge, and, accordingly Bridge is willing to undertake the obligations hereinafter stated; WHEREAS, Executive has been offered an executive position in the employment of Bridge, and in order to induce Executive to accept such position, CBI has assured Executive that he may at his election retain the benefits of the Agreement in the event of a change of control of CBI notwithstanding that Executive may at such time be an employee of Bridge. WHEREAS, because of the similarity of the obligations undertaken by CBI under the Agreement and the obligations to be undertaken by Bridge under this Addendum, and for the general convenience of the parties, CBI and the Executive mutually agree to permit Bridge, a Delaware corporation, to become a party to this Addendum and for Bridge to assume the obligations hereinafter undertaken; NOW, THEREFORE, it is hereby agreed by and between the parties to this Addendum as follows: 1. For purposes of this Addendum the term "Change in Ownership" shall mean the occurrence of an event pursuant to which the ultimate right to elect directors of Bridge is not exercisable by CBI or another entity which directly or indirectly acquires stock of Bridge in a leveraged buy-out in which the senior management of CBI participates. 2. In the event of a Change in Ownership of Bridge, Bridge and Executive agree to be bound by the terms of the Agreement as if the Agreement were an agreement between Bridge and Executive, subject to the following changes: (a) "CBI Industries, Inc." and "CBI" shall be replaced by "Chicago Bridge & Iron Company" and "Bridge," respectively, wherever those terms appear in the Agreement, except in subsection 6(d). (b) "Change in Control of CBI" and Change in Control" shall be replaced by "Change in Ownership of Bridge" and "Change in Ownership," respectively, wherever those terms appear in the Agreement. (c) Section 2 of the Agreement is deleted and replaced by a new Section 2 for purposes of the obligations undertaken hereunder, which contains the definition of "Change in Ownership" as set forth in Section 1 of this Addendum. (d) In Section 3 "date of execution hereof shall mean date of execution of this Addendum. (e) In subsection 4(b) the words "restricted stock award, stock option" are deleted from the second and, ninth and tenth lines, respectively. (f) CBI's obligations under this Section 2 of this Addendum shall be to provide continuing directors and officers liability and indemnity insurance and corporate indemnity protection under subsections 4(f) and 6(y) covering the time Executive was an officer or director of CBI. (g) In subsection 6(w): 30 i. the second and third lines are deleted and replaced with the following words: "any pension benefit plan or benefit restoration plan." ii. the words "; except that if... determinable" are deleted from the fourteenth through twenty-first lines on page 11 of the Agreement (h) Subsection 10(b) is deleted. (i) Exhibits I and II are deleted. 3. It is understood and agreed by all parties to this Addendum that Executive shall only be entitled to receive the benefits from either the Agreement (between CBI and Executive only) or the Agreement as modified by this Addendum (among and between Bridge, CBI and the Executive) and not from both. Upon the first to occur of either a Change in Control of CBI or a Change in Ownership of Bridge, Executive shall be required within thirty (30) days to give to both CBI and Bridge notice in writing as to which contractual arrangement provided for herein Executive desires to apply to his employment with Bridge, after which notice the other contractual arrangement shall be null and void. In the event Executive elects to receive the benefits of the Agreement between CBI and Executive only without application of Section 2 of this Addendum, Bridge shall be responsible for continuing Executive's employment and compensation within the meaning of Sections 3 and 4 of the Agreement commencing on the date of the event giving rise to Executive's notice hereunder, and CBI shall be responsible for termination payments under Section 6 of the Agreement in the event the employment of Executive with Bridge is terminated within the meaning of Section 5 of the Agreement CBI INDUSTRIES, INC. EXECUTIVE By: /s/ John E. Jones By: /s/ Lewis E. Akin --------------------------- ------------------------ Title: Chairman ------------------------ CHICAGO BRIDGE & IRON COMPANY By: /s/ S. A. Kropf --------------------------- Title: VP & Treasurer ----------------------- 31 ADDENDUM TO AGREEMENT THIS ADDENDUM dated this 5th day of June , 1987, to the AGREEMENT between CBI Industries, Inc., a Delaware Corporation ("CBI") and Lewis E. Akin ("Executive") dated the 12th day of September 1986 (the "Agreement"): WITNESSETH THAT: WHEREAS, CBI and the Executive mutually desire to modify the Agreement in light of the enactment of the Tax Reform Act of 1986; NOW, THEREFORE, in consideration of the premises, it is hereby AGREED by and between CBI and the Executive that the Agreement shall be modified as follows: 1. Section 3 of the Agreement is amended by adding the following new sentence immediately after the first sentence thereof: CBI shall maintain the position of Executive such that Executive is able to exercise the authorities, powers, functions and duties attached thereto as contemplated by this Section 3. 2. Subsection (b) of Section 5 of the Agreement is amended to read as follows: (b) the resignation of the Executive from his employment upon 30 days written notice to CBI at any time following a significant change in the nature or scope of the Executive's authorities or duties from those described in Section 3, a reduction in total compensation Page 1 32 from that provided in Section 4, or the breach by CBI of any other provision of this Agreement, which change, reduction or breach is not restored or cured by CBI within 30 days after receiving written notice of such change, reduction or breach, reasonable directions for restoration or cure, and an offer to work from the Executive. 3. Section 5 of the Agreement is amended by deleting the words ", whether or not a breach of this Agreement by CBI," from the sentence following subsection (b). 4. Section 6 of the Agreement is amended (i) by deleting from the introductory material preceding subsection (a) the words "equal (without discount to present value) to the sum of" and substituting in lieu thereof the words "equal to the present value (discounted at the greatest rate of interest then payable by the First National Bank of Chicago on any federally insured account into which Executive could deposit such lump sum amount and made withdrawals therefrom without penalty at least as rapidly as compensation under Section 4 would have been payable) of"; (ii) deleting from subsections (a) and (c) the words "An amount equal to the aggregate" and substituting in lieu thereof the word "The"; and (iii) deleting from the sentence following subsection (z) the word "reduction" and substituting in lieu thereof the word "enhancement". 5. The first sentence of subsection (d) of Section 6 is amended to read as follows: In the event any shares of CBI common stock (or other securities into which such shares may have been converted) previously awarded to Executive under any restricted stock award plans of CBI or separate agreements between Executive and CBI are forfeited by reason of such Termination, or in the event any stock option previously granted to Executive under any stock option plan of CBI terminates or ceases to be exercisable by Page 2 33 reason of such Termination, an amount in cash equal to the fair market value of such forfeited common stock (or other securities) as of the date of Termination plus the excess of the fair market value as of the date of Termination of stock subject to any such terminated option over the exercise price of such terminated option. 6. Section 7 of the Agreement is amended to read as follows: 7. Overall Indemnity. The parties intend that the payments in the nature of compensation to be made by CBI to Executive under this Agreement shall be reasonable compensation for personal services to be rendered on or after the date of the Change in Control, including payments to an individual as damages for breach of contract, within the meaning of Section 280G(b)(4)(A) of the Internal Revenue Code of 1986, as amended (the "Code"). In the event that notwithstanding the previous sentence any excise tax under Section 4999 of the Code is imposed on Executive as a direct or indirect result of payments made by CBI or its affiliates, whether or not such payments are made pursuant to this Agreement, CBI shall pay Executive an amount or, from time to time, amounts, equal to (i) the sum of all excise taxes imposed on Executive in respect of such payments, plus (ii) the aggregate amount of any interest, penalties, fines or additions to any tax which are imposed in connection with the imposition of such excise tax, plus (iii) all income and excise taxes imposed on Executive under the laws of any United States Federal, state or local government or taxing authority by reason of the payments required under clause (i) and clause (ii) and this clause (iii). CBI's obligation to pay such amounts to Executive pursuant to this Section 7 shall continue for the period specified in Section 6501 of the Code during Page 3 34 which a tax may be assessed under Section 4999 of the Code (including any extensions of such period provided under Section 6503(a)(1) of the Code or requested by the Internal Revenue Service in connection with an audit of one or more of Executive's tax returns). If the Internal Revenue Service makes a claim against Executive which, if successful, would require CBI to make a payment under this Section 7, Executive agrees to contest the claim on request of CBI subject to the following conditions: (a) Executive shall notify CBI of any such claim within 10 days of becoming aware thereof. In the event CBI desires the claim to be contested, it shall promptly (but in no event more than 30 days after the notice from Executive or such shorter time as the Internal Revenue Service may specify for responding to such claim) request Executive to contest the claim. Executive shall not make any payment of any tax which is the subject of the claim before Executive has given the notice or during the 30-day period thereafter unless Executive receives written instructions from CBI to make such payment together with an advance of funds sufficient to make the requested payment plus any amounts determined pursuant to clause (il) and clause (iii) above as if such advance were an amount described in clause (i) above, in which case Executive will act promptly in accordance with such instructions. (b) If CBI so requests, Executive will contest the claim by, at the direction of CBI, either paying the tax claimed and suing for a refund in the appropriate court or contesting the claim in the United States Tax Court; provided, however, that any request by CBI for Page 4 35 Executive to pay the tax shall be accompanied by an advance from CBI to Executive of funds sufficient to make the requested payment plus any amounts determined pursuant to clause (ii) and clause (iii) above as if such advance were an amount described in clause (i) above. If directed by CBI in writing Executive will take all action necessary to compromise or settle the claim, but in no event will Executive compromise or settle the claim, or cease to contest the claim without the written consent of CBI; provided, however, that Executive may take any such action if Executive waives in writing his right to a payment under this Section 7 for any amounts payable in connection with such claim. Executive agrees to cooperate in good faith with CBI in contesting the claim and to comply with any reasonable request from CBI concerning the contest of the claim, including the pursuit of administrative remedies, the appropriate forum for any judicial proceeding, and the legal basis for contesting the claim. Upon request of CBI, Executive shall take appropriate appeals of any judgment or decision that would require CBI to make a payment under this Section 7. Provided that Executive is in compliance with the provisions of this section, CBI shall be liable for and indemnify Executive against any loss in connection with all costs and expenses, including attorneys' fees, which may be incurred as a result of contesting the claim, and shall provide to Executive within 30 days after each written request therefor by the Executive cash advances or reimbursement for all such costs and expenses actually incurred or reasonably expected to be incurred by the Executive as a result of contesting the claim. (c) If CBI requests that Executive contest a claim and otherwise complies with its obligations under Page 5 36 this Section 7, it shall, except as otherwise stipulated in this Section 7, have no obligation to pay any amounts under Section 7 in respect of the claim until final determination occurs regarding Executive's liability under the claim. CBI's obligation to pay amounts under this Section 7 will be reduced by any refund obtained by Executive and interest paid thereon. 7. Section 9 of the Agreement is amended to read as follows: If during the Employment Period Executive accepts other employment in a position substantially equivalent to or better than the position held by him with CBI, compensation actually received by the Executive during the Employment Period from such other employment shall be applied to reduce Termination payments otherwise due under subsections (a) and (c) of Section 6 of this Agreement; and coverage of the Executive under employee benefit plans described in subsection (x) of Section 6 of this Agreement shall be reduced or eliminated to the extent Executive is covered under similar plans incident to such other employment. In the event of any reduction under this Section 9 of Termination payments already paid by CBI to Executive, Executive shall upon 30 days written request from CBI repay to CBI the amount by which such Termination payment is reduced, without interest, and further reduced by any taxes attributable to such Termination payments to the extent Executive cannot recover such taxes through deductions of equivalent or greater value. Nothing in this Section 9 shall be construed to require Executive in mitigation of damages to accept employment in a position not substantially equivalent to or better than position held by him with CBI or to accept employment more than reasonable daily commuting Page 6 37 distance from the principal residence of the Executive as of the date of Termination. CBI INDUSTRIES, INC. /s/ Lewis E. Akin ------------------------------ Executive By: /s/ William A. Pogue Title: Pres CBI Services --------------------------- ----------------------- Title: Chairman of the Board ------------------------ ATTEST: /s/ D.H. Craigmile - ------------------------------ Secretary [SEAL] Page 7 38 ADDENDUM TO AGREEMENT THIS ADDENDUM dated this 8th day of September, 1987, to the Agreement between CBI Industries, Inc., a Delaware corporation ("CBI") and L.E. Akin ("Executive") of September 12, 1986 (the "Agreement"). WITNESSETH THAT WHEREAS, the Board of Directors of CBI approved an early retirement change in the CBI Pension Plan effective September 8, 1987, and CBI desires to make such change applicable to the Agreement. NOW, THEREFORE, it is hereby agreed by and between the parties to this Addendum as follows: 1. The sentence appearing in Subsection 6(w) of the Agreement commencing in the sixth line from the bottom of page 10 and ending in the third line of page 11 presently reading: "The Enhanced Early Retirement Pension shall only be subject to reduction at the rate of four (4) percentum for each year by which the Executive's age is less than age 65 or the Executive's credited service is less than 40 years, whichever produces the lesser reduction, pursuant to the first sentence of Section 5.2.3 of the Pension Plan (as in effect on the date hereof)." Is hereby amended to read: "The Enhanced Early Retirement Pension shall only be subject to reduction at the rate of four (4) percentum Page 1 39 for each year by which the Executive's age is less than age 62 or the Executive's credited service is less than 35 years, whichever produces the lesser reduction, pursuant to the first sentence of SectIon 5. 2.3 of the Pension Plan (as in effect on the date hereof)." CBI INDUSTRIES, INC. By: /s/ W.A. Pogue /s/ Lewis E. Akin --------------------------- ------------------------------- Title: Chairman of the Board Executive ----------------------- ATTEST: /s/ D.H. Craigmile - ------------------------------ Secretary Page 2 40 ADDENDUM TO AGREEMENT THIS ADDENDUM effective the 1st day of June, 1993, to the AGREEMENT between CBI Industries, Inc., a Delaware corporation ("CBI") and L.E. Akin ("Executive") dated the 12th day of September, 1986, as previously amended (the "Agreement"). WITNESSETH THAT: WHEREAS, CBI and the Executive mutually desire to modify the Agreement to eliminate the requirement for CBI to provide an irrevocable clean letter of credit to secure for the benefit of the Executive the total value of performance of CBI's obligations under the Agreement; NOW, THEREFORE, in consideration of $10 and the premises herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, it is hereby AGREED by and between CBI and the Executive that the Agreement shall be modified as follows: 1. Subsection 10(b) is deleted. 2. Exhibit II is deleted. CBI INDUSTRIES, INC. By: /s/ John E. Jones Executive: /s/ Lewis E. Akin ---------------------------- ------------------------ Title: Chairman of the Board Title: --------------------------- ATTEST: /s/ CCT - ------------------------------- Secretary [SEAL] 41 ADDENDUM TO AGREEMENT THIS ADDENDUM dated as of and made effective the 27th day of August, 1993 to the Agreement between CBI Industries, Inc., a Delaware corporation ("CBI") and L.E. Akin ("Executive") of September 12, 1986 (the "Agreement"). WITNESSETH THAT WHEREAS, CBI and the Executive mutually desire to modify the Agreement to include a requirement that CBI provide an irrevocable clean letter of credit to secure for the benefit of the Executive the payment of up to $100,000 for attorneys fees incurred in enforcing the Agreement following a Change of Control; NOW, THEREFORE, it is hereby agreed by and between the parties to this Addendum that the Agreement shall be modified as follows: 1. Section 10 of the Agreement is amended by adding a new subsection (b) to read as follows: (b) CBI shall at its sole cost and expense obtain a commitment for an irrevocable clean letter of credit, substantially in the form of that attached hereto as Exhibit II and incorporated herein by reference (the "Letter of Credit"), to be issued by a commercial bank selected by CBI having total assets equivalent to at least $6 billion and either incorporated under the laws of, or having an office in, the United States or any State (the "Bank"), to secure for the benefit of Executive the payment of up to $100,000 for attorneys fees incurred in enforcing the Agreement pursuant to Section 10(a) upon presentation by Executive to the Bank of a statement or statements prepared by Executive's counsel that such payments are due and owing and that CBI has not performed its obligations to make such payments. CBI shall at its sole cost and expense obtain the issuance of the Letter of Credit pursuant to such commitment not later than the Effective Date and shall pay all amounts and take all action necessary to maintain such Letter of Credit during the Employment Period and for two years thereafter and if, notwithstanding CBI's complete discharge of such obligations, such Letter of Credit shall be terminated or not renewed, CBI shall obtain a replacement irrevocable clean letter of credit on substantially the same terms and conditions as contained in the Letter of Credit drawn upon a commercial bank having total assets equivalent to at least $6 billion and either incorporated under the laws of, or having an office in, the United States of any State, which 42 assures the Executive the benefits of this Agreement. Nothing in this subsection (b) shall limit in any way CBI's obligations under subsection 10 (a). CBI INDUSTRIES, INC. EXECUTIVE By: /s/ John E. Jones By: /s/ Lewis E. Akin --------------------------- ----------------------------- Title: Title: ------------------------ -------------------------- 43 EXHIBIT II ROYAL BANK OF CANADA, NEW YORK BRANCH IRREVOCABLE STANDBY LETTER OF CREDIT ______________________ , 19__ Letter of Credit No. ______________ (Beneficiary's Name and Address) Dear ___________________: At the request and for the account of CBI Industries, Inc., 800 Jorie Boulevard, Oak Brook, Illinois, we hereby establish our Irrevocable Standby Letter of Credit No. _______________ (this "Letter of Credit") in your favor in an aggregate amount of One Hundred Thousand Dollars ($100,000), representing support of the "Agreement") dated _______________, by and between yourself and CBI Industries, Inc., as it may be amended from time to time, available by your draft drawn at sight, presented to this Bank, bearing this Letter of Credit Number and accompanied by this Letter of Credit and both: 1. Your signed certificate dated the date of such draft indicating the name, address and signature of your designated counsel, with both your signature and your designated counsel's signature notarized; and 2. Your designated counsel's signed and notarized statement dated the date of such draft stating: "Payments are due and payable to (Beneficiary) under the Agreement dated _______________ between (Beneficiary) and CBI Industries, Inc., as such Agreement may have been amended from time to time, and CBI Industries, Inc. has not performed its obligation to make such payments. (Beneficiary) through the undersigned counsel is enforcing his/her rights under such Agreement." Only one draft, in the amount of $100,000 may be presented under this Letter of Credit. We hereby agree that all drafts drawn under and in compliance with the terms of this Letter of Credit will be honored upon presentation at Royal Bank of Canada, New York Branch, New York Operations Center, Pierrepont Plaza, 300 Cadman Plaza West, Brooklyn, New York 11201-2701, Attention: Loan Administration Manager, facsimile number (___) ___-____ Presentation is to be 44 made by facsimile transmission of all required documents to this Bank, followed by overnight courier delivery of all originals as provided in this paragraph. Any Draft hereunder must be presented on or before _________________. This Letter of Credit shall automatically expire and be null and void at the close of business on _________________ or, in the event the expiry date hereof is extended by us in writing, at the close of business upon such extended expiry date. This Letter of Credit sets forth in full the terms of our undertaking, and this undertaking shall not in any way be modified, amended, amplified or limited by reference to any document, instrument or agreement referred to herein or in which this Letter of Credit is referred to or to which this Letter of Credit relates, except for the certificates, statements and the sight drafts referred to therein. This Letter of Credit is not transferrable. This irrevocable Letter of Credit is subject to The Uniform Customs and Practices for Documentary Credits (1983 Revision), ICC Publication 400. ROYAL BANK OF CANADA, NEW YORK BRANCH By_______________________________ Its____________________________ By______________________________ Its____________________________ 45 ADDENDUM TO AGREEMENT THIS ADDENDUM dated this 12th day of January, 1995 to the Agreement between CBI Industries, Inc., a Delaware corporation ("CBI") and Lewis E. Akin ("Executive") of September 12, 1986 (the "Agreement"). WITNESSETH THAT WHEREAS, the Board of Directors of CBI on January 11, 1995, adopted a resolution amending Section 2 of the Agreement, and CBI and the Executive mutually desire to modify the Agreement by incorporating said amendment into the Agreement. NOW THEREFORE, it is hereby agreed by and between the parties to this Addendum as follows: 1. Section 2 of the Agreement is hereby amended to read as follows: Change in Control. The Term "Change in Control" shall mean the occurrence at any time of any of the following events: (a) An "Acquiring Person" (as defined below) has become such; or (b) "Continuing Directors" (as defined below) cease to comprise a majority of the Board of Directors of CBI. For purposes of this Agreement, the terms "Acquiring Person" and "Continuing Directors" shall have the same meaning as ascribed to such terms in that certain Amendment and Restatement dated as of August 8, 1989, of Rights Agreement dated as of March 4, 1986, 46 between CBI and First Chicago Trust Company of New York, as Rights Agent, as has been or may be amended from time to time. CBI INDUSTRIES, INC. EXECUTIVE By: /s/ John E. Jones By: /s/ Lewis E. Akin ------------------------ -------------------------- Title: --------------------- ATTEST: /s/ CCT - --------------------------- Secretary [Seal] EX-99.6 7 EMPLOYMENT AGREEMENT AND ADDENDA - C.E. WILLOUGHBY 1 EXHIBIT 6 AGREEMENT THIS AGREEMENT between CBI INDUSTRIES, INC., a Delaware corporation ("CBI"), and Calvin E. Willoughby, Jr. ("Executive"), dated this 3rd day of October, 1989. WITNESSETH THAT WHEREAS, CBI wishes to attract and retain well-qualified executives and both CBI and the Executive desire continuity of management in the event of any Change in Control of CBI; NOW, THEREFORE, it is hereby agreed by and between the parties as follows: 1. Effective Date. The "Effective Date" of this Agreement shall be the date on which a Change in Control of CBI (as defined in Section 2) occurs. 2. Change in Control. The term "Change in Control" shall mean the occurrence at any time of any of the following events: (a) An Acquiring Person (as defined below), has become such; or (b) Continuing Directors (as defined below) cease to comprise a majority of the board of directors of CBI. 2 For purposes of this Agreement, the terms "Acquiring Person" and "Continuing Directors" shall have the respective meanings ascribed to such terms in that certain Rights Agreement dated March 4, 1986, between CBI and Morgan Guaranty Trust Company of New York as rights agent, the relevant portions of which for convenience of reference are reproduced as Exhibit I to this Agreement. 3. Employment. CBI hereby agrees that if the Executive continues as an employee of CBI from the date of execution hereof until the Effective Date, CBI shall continue the Executive in its employ for the period commencing on the Effective Date and ending on the earlier to occur of the third anniversary of such date or the 65th birthday of the Executive (the "Employment Period"), to exercise such authority and perform such executive duties as are requested of him by CBI, which authority and duties shall be commensurate with the authority being exercised and duties being performed by the Executive immediately prior to the Effective Date. The Executive shall perform such requested services at the location where the Executive was employed immediately prior to the Effective Date, except for required travel on CBI's business to an extent substantially consistent with the Executive's business travel obligations prior to the Effective Date. The Executive agrees that while an employee during the Employment Period he shall, to the extent required, devote substantially -2- 3 all of his business time to his executive duties as described herein and perform such duties faithfully and efficiently. 4. Compensation, Compensation Plans, Benefits. During the Employment Period, the Executive shall be compensated as follows: (a) He shall receive an annual salary (to be paid in equal biweekly installments) which is not less than his rate of annual salary in effect immediately prior to the Effective Date, increased on each January 1 within the remainder of the Employment Period by at least the greater of (i) the average annual percentage salary increase for the Executive during the period of three full calendar years immediately preceding the Effective Date, or (ii) the percentage increase in the Implicit Price Deflator for Gross National Product for the calendar year immediately preceding such January 1, as published by the United States Department of Commerce in its Survey of Current Business in December of each year, over such Implicit Price Deflator for the calendar year next preceding such year. (b) He shall be awarded and receive bonus, restricted stock award, stock option, and other incentive compensation for each calendar year (or other applicable bonus or incentive compensation -3- 4 period) any part of which is included in the Employment Period, which in the aggregate shall not in value be a lesser percentage of his annual salary, as determined in subsection (a) above, for such calendar year (or period), than the aggregate bonus, restricted stock award, stock option, and other incentive compensation during the period of three full calendar years immediately preceding the Effective Date was of the Executive's aggregate base salary for such three year period. (c) He shall be entitled to receive all employee benefits to the extent of the greater of the employee benefits provided by CBI to executives with comparable duties or the employee benefits to which he was entitled immediately prior to the Effective Date. (d) During any period that Executive is unable to perform the services for CBI specified in Section 3, whether as a result of total disability or as a result of a physical or mental disability that is not total or is not permanent and therefore is not a total disability, Executive shall continue to receive base salary at the rate in effect at the commencement of any such period, together with all other compensation and benefits that are payable under this Agreement. - 4 - 5 (e) He shall be furnished at CBI's expense with an automobile, office, reasonable secretarial help, club memberships, reimbursement for reasonable entertainment expenses, and such other supplies, equipment, facilities, services and emoluments appertinent to his position to the extent of the greater of such emoluments provided by CBI to executives with comparable duties or the emoluments to which he was entitled immediately prior to the Effective Date. (f) He shall be covered by directors and officers liability and indemnity insurance or equivalent protection arranged and funded by CBI, and by corporate indemnity protection, to the extent of the greatest level of protection afforded to such Executive under any and all policies of directors and officers liability and indemnity insurance, by-law provisions or any other arrangements or agreements, at any time within the period of three full calendar years immediately preceding the Effective Date. 5. Termination. The term "Termination" shall mean the occurrence during the Employment Period of: (a) termination by CBI of the employment of the Executive for any reason other than (i) death, (ii) - 5 - 6 physical or mental incapacity which would entitle Executive to permanent disability benefits under CBI's appropriate plans, or (iii) a willful and material breach of this Agreement by the Executive which causes a direct and substantial injury to CBI or to its business, which is not cured by Executive within 30 days after receiving written notice of such breach and reasonable directions for cure from CBI; or (b) the resignation of the Executive from his employment upon 30 days written notice to CBI at any time following (i) a significant change in the nature or scope of the Executive's authorities or duties from those described in Section 3, a reduction in total compensation from that provided in Section 4, or the breach by CBI of any other provision of this Agreement, which change, reduction or breach is not restored or cured by CBI within 30 days after receiving written notice of such change, reduction or breach and reasonable directions for restoration or cure from the Executive; or (ii) a reasonable determination by the Executive that, as a result of the Change in Control and a change in circumstances thereafter significantly affecting his position, he is unable to exercise the authorities, powers, functions or duties attached to his position as contemplated by Section 3. - 6 - 7 A Termination as contemplated by this Section 5, whether or not a breach of this Agreement by CBI, shall entitle the Executive to Termination benefits as provided by this Agreement. Nothing in this Agreement shall prevent the Executive from voluntarily resigning from his Employment upon 90 days written notice to CBI under circumstances which do not constitute Termination as defined in this Section 5, and no such resignation shall be deemed a breach of this Agreement by the Executive. 6. Termination Payment. In the event of Termination of Executive during the Period of Employment, CBI shall pay to the Executive a lump sum amount equal (without discount to present value) to the sum of the amounts determined in accordance with subsections (a), (b), (c) and (d) below, and provide the additional benefits described in subsections (w), (x), (y) and (z) below: (a) An amount equal to the aggregate salary which would have been paid to the Executive during the remainder of the Employment Period if he had received the base salary specified by Section 4(a) above, increased by assuming the salary increase on each January 1 during the remainder of the Employment Period to be the greatest of the average annual percentage salary increase or the percentage increase in the Implicit Price Deflator, whichever is -7- 8 applicable, as of any January 1 within three calendar years including or preceding the Termination date. (b) Bonus and incentive compensation for any calendar year (or other applicable bonus or incentive compensation period) ending prior to the Termination date but not previously paid. (c) An amount equal to the aggregate bonus and incentive compensation which would have been paid to the Executive during each calendar year (or other applicable bonus or incentive compensation period) any part of which is included in the remainder of the Employment Period if he had received bonus and incentive compensation for any such year (or period) in the minimum amount specified by Section 4(b) based on his increased salary determined under subsection (a) above; provided, however, that in the event any bonus year (or period) extends beyond the end of the Employment Period, bonus or other incentive compensation for such year (or period) shall be pro-rated in proportion to the number of days within and without the Employment Period. (d) In the event any shares of CBI common stock (or other securities into which such shares may have - 8 - 9 been converted) previously awarded to Executive under any restricted stock award Plans of CBI or separate agreements between Executive and CBI are forfeited by reason of such Termination, an amount in cash equal to the fair market value of such forfeited common stock (or other securities) as of the date of Termination. The rights afforded to Executive under this subsection (d) are without prejudice to any other rights Executive has to shares of CBI common stock (or other securities) under such plans or agreements or by reason of the action of the CBI Board of Directors heretofore taken in causing restrictions on such shares to be removed under certain circumstances including Termination of the Executive. CBI shall also provide to the Executive: (w) In addition to the benefits provided under any pension benefit plan, benefit restoration plan, profit sharing plan, or employee stock ownership plan (whether or not funded or qualified under the Internal Revenue Code) maintained by CBI ("Retirement Plans"), the difference (the "Benefit Enhancement") between such benefits and the benefits (the "Enhanced Benefits") that would have been provided under such Retirement Plans if Executive had remained in the employ of CBI throughout the Employment Period at the -9- 10 salary determined under subsection (a) above accruing additional age and service credits under such Retirement Plans accordingly. If after giving effect to such additional age and service credit Executive shall not have the necessary age or credited service at the end of the Employment Period to qualify under the CBI Pension Plan (the "Pension Plan") for an early retirement pension, the Enhanced Benefits under this subsection (w) shall nevertheless include an early retirement pension under the Pension Plan beginning upon Executive attaining age 55 or upon the date Executive would have attained 30 years of credited service had Executive remained continuously employed by CBI but for Termination (whichever occurs first) (the "Enhanced Early Retirement Pension"). The Enhanced Early Retirement Pension shall be payable to the Executive or to the spouse of the Executive (if applicable) commencing at the time Executive attains (or would have attained) age 55 or would have otherwise attained 30 years of credited service as provided aforesaid (whichever occurs first). The Enhanced Early Retirement Pension shall only be subject to reduction at the rate of four (4) percentum for each year by which the Executive's age is less than age 65 or the Executive's credited service is less than 40 years, whichever produces the lesser -10- 11 reduction, pursuant to the first sentence of Section 5.2.3 of the Pension Plan (as in effect on the date hereof). If Executive shall die after the end of the Employment Period but before the date the Enhanced Early Retirement Pension is payable, the spouse of Executive shall be entitled to an enhanced survivor's pension under the Pension Plan as if Executive had died as an employee of CBI, giving effect to service through the date of Executive's death and Executive's earnings through the end of the Employment Period. Such Benefit Enhancement will be paid beginning on the date the Enhanced Benefits would have commenced and thereafter concurrently with the benefits actually provided under such Retirement Plans; except that if the Executive receives a distribution from any profit sharing or employee stock ownership plan before the Benefit Enhancement required by this subsection in respect of such Retirement Plan become determinable, the Benefit Enhancement in respect of such plan shall be paid as soon thereafter as such benefits become determinable. Nothing in this subsection (w) shall prevent the actual commencement of benefits under any Retirement Plan, and the Benefit Enhancements required by this subsection (w), before the end of the Employment Period to the extent required or permitted under the terms of the applicable Retirement Plan, -11- 12 giving effect to the additional age and service credit required by this subsection (w). (x) Participation in or coverage by all other employee benefits, including, but not limited to, coverage under any health or medical benefit insurance, plans, or arrangements, supplemental survivors' benefit plans, or life insurance arrangements or programs, to the same extent to which he would have been entitled under all employee benefit plans, programs, arrangements or practices maintained by CBI if he had remained in the employ of CBI through the Employment Period at the salary determined under subsection (a) above. (y) Continuation of disability income benefits pursuant to Section 4(d) for so long as any disability may continue and continuation of directors and officers liability and indemnity insurance and corporate indemnity protection pursuant to Section 4(f) for so long as any liability may arise; in either case without regard to the Termination of the Employment Period. (z) Within 30 days after each written request therefor by the Executive, cash advances or reimbursement for any fees or expenses actually incurred or reasonably expected to be incurred by the Executive in seeking other -12- 13 employment, including without limitation all travel and relocation expenses and all fees charged by any executive recruitment firm or firms or employment consulting or counseling firm or firms selected by the Executive in his sole discretion. The amount of Termination payments described in subsections (a), (b), (c) and (d) of this Section 6 shall be determined and paid in a lump sum within 30 days of the Termination date by cashier's check or certified check of CBI or any of its affiliated corporations delivered to Executive together with such calculations, worksheets, or other information as may be necessary or appropriate to ascertain the correctness of the computation of such amount and, if applicable, of any reduction pursuant to Section 7. Any Termination payment (or the value thereof) not paid on or before the date provided therefor by this Section 6 shall bear interest after such date until paid at a rate per annum during each month such amount remains unpaid of five percentage points in excess of the prime rate as publicly announced by the First National Bank of Chicago or its successor from time to time as in effect on the first day of each such month. 7. Overall Limitations. Solely for the purposes of the computation of benefits under this Agreement and notwithstanding any other provisions hereof, payments to any Executive under this Agreement shall be reduced (but not below -13- 14 zero) so that the present value, as determined in accordance with Section 280G(d)(4) of the Code, of such payments plus any other payments that must be taken into account for purposes of any computation relating to Executive under Section 280G(b)(2)(A)(ii) of the Code, shall not, in the aggregate, exceed 2.99 times Executive's "base amount," as that term is defined in Section 280G(b)(3) of the Code. Notwithstanding any other provision hereof, no reduction in payments under the limitation contained in the immediately preceding sentence shall be applied to payments hereunder which do not constitute "excess parachute payments" within the meaning the Code. Any payments in excess of the limitation of this Section 7 or otherwise determined to be "excess parachute payments" made to Executive hereunder are deemed to be overpayments which shall constitute an amount owing from the Executive receiving them to CBI with interest from the date of receipt by the Executive to the date of repayment (or offset) at the applicable federal rate under Section 1274(d) of the Code, compounded semi-annually, which shall be payable to CBI upon demand; provided, however, that no repayment shall be required under this sentence if in the written opinion of tax counsel satisfactory to the Executive and delivered to the Executive and CBI such repayment does not allow such overpayment to be excluded for federal income and excise tax purposes from the Executive's income for the year of receipt or afford the -14- 15 Executive a compensating federal income tax deduction for the year of repayment. 8. Non-Competition. Whether or not a Termination occurs, the Executive agrees to continue all non-competition and confidentiality provisions, as specified in any other agreement in effect on the Effective Date between the Executive and CBI relating to confidential information, during (and to the extent specified in such agreement, after) the Employment Period. 9. Mitigation. The Executive shall not be required to mitigate the amount of any payment provided for under this Agreement by seeking other employment or otherwise; provided, however, that if during the Employment Period Executive accepts other employment in a position substantially equivalent to or better than the position held by him with CBI, current cash compensation actually received by the Executive during the Employment Period from such other employment shall be applied to reduce Termination payments otherwise due under subsections (a) and (c) of Section 6 of this Agreement. 10. Legal Fees and Expenses: (a) It is the intent of CBI that no Executive be required to incur the expenses associated with the enforcement of his rights under this Agreement by -15- 16 litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Executive hereunder. Accordingly, if it should appear to the Executive that CBI has failed to comply with any of its obligations under this Agreement, or in the event that CBI or any other person takes any action to declare this Agreement void or unenforceable, or institutes any litigation designed to deny, or to recover from, the Executive the benefits intended to be provided to Executive hereunder, CBI irrevocably authorizes Executive from time to time to retain counsel of his choice, at the expense of CBI as hereafter provided, to represent Executive in connection with the initiation or defense of any litigation, arbitration or other legal action, whether by or against CBI or any director, officer, stockholder or other person affiliated with CBI, in any jurisdiction. CBI shall advance to the Executive within 30 days after each written request therefor any and all attorneys' and related fees and expenses actually incurred or reasonably expected to be incurred by the Executive in any such proceeding or otherwise as a result of CBI's failure to perform this Agreement or any provision hereof or as a result of CBI or any person contesting the validity or -16- 17 enforceability of this Agreement or any provision hereof; provided, however, that to the extent the Executive does not prevail in any such litigation, arbitration, or other legal action, the Executive shall repay to CBI the amount (without interest) of such attorney's fees and related fees and expenses previously advanced. (b) CBI shall at its sole cost and expense obtain a commitment for an irrevocable clean letter of credit, substantially in the form of that attached hereto as Exhibit II and incorporated herein by reference (the "Letter of Credit"), to be issued by a commercial bank selected by CBI having total assets equivalent to at least $6 billion and either incorporated under the laws of, or having an office in, the United States or any State (the "Bank"), to secure for the benefit of Executive the total value of performance of CBI's obligations under this Agreement by providing that the total amount of all payments due to be paid by CBI to Executive under this Agreement shall be paid on a regular, periodic basis upon presentation by Executive to the Bank of a statement or statements prepared by Executive's counsel that such payments are due and owing, and that CBI has not performed its obligation to make such payments. CBI -17- 18 shall at its sole cost and expense obtain the issuance of the Letter of Credit pursuant to such committment not later than the Effective Date and shall pay all amounts and take all action necessary to maintain such Letter of Credit during the Employment Period and for two years thereafter and if, notwithstanding CBI's complete discharge of such obligations, such Letter of Credit shall be terminated or not renewed, CBI shall obtain a replacement irrevocable clean letter of credit on substantially the same terms and conditions as contained in the Letter of Credit drawn upon a commercial bank having total assets equivalent to at least $6 billion and either incorporated under the laws of, or having an office in, the United States or any State, which assures the Executive the benefits of this Agreement. 11. Notices. Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and if sent by registered or certified mail to the Executive at the last address he has filed in writing with CBI or, in the case of CBI, at its principal executive offices. 12. Non-Alienation. The Executive shall not have any right to pledge, hypothecate, anticipate or in any way create a -18- 19 lien upon any amounts provided under this Agreement; and no benefits payable hereunder shall be assignable in anticipation of payment either by voluntary or involuntary acts, or by operation of law. 13. Governing Law. The provisions of this Agreement shall be construed in accordance with the laws of the State of Illinois. 14. Amendment. This Agreement may be amended or cancelled by mutual agreement of the parties in writing without the consent of any other person and, so long as the Executive lives, no person, other than the parties hereto, shall have any rights under or interest in this Agreement or the subject matter hereof. 15. Successors to the Company. Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of CBI and any successor of CBI. 16. Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions of this -19- 20 Agreement shall be unaffected thereby and shall remain in full force and effect. CBI INDUSTRIES, INC. /s/ C.E. Willoughby, Jr. ------------------------------- Executive By: /s/ John E. Jones Title: Senior Vice President --------------------------- Title: Chairman of the Board ATTEST: /s/ Donald H. Craigmile - ------------------------------ Secretary (SEAL) -20- 21 EXHIBIT I Section 1. Certain Definitions. For purposes of this Agreement, the following terms have the meanings indicated: 1.1 "Acquiring Person" shall mean any Person (as such term is hereinafter defined) who or which, together with all Affiliates (as such term is hereinafter defined) and Associates (as such term is hereinafter defined) of such Person, shall be the Beneficial Owner (as such term is hereinafter defined) of 20% or more of the shares of Common Stock then outstanding, but shall not include the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, or any entity organized, appointed or established by the Company for or Pursuant to the terms of any such plan. 1.3 "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act 22 of 1934, as amended (the "Exchange Act"), as in effect on the date of this Agreement. 1.4 A Person shall be deemed the "Beneficial Owner" of, and shall be deemed to "beneficially own," any securities: (a) which such Person or any of such Person's Affiliates or Associates beneficially owns, directly or indirectly; (b) which such Person or any of such Person's Affiliates or Associates has (i) the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights (other than the Rights), warrants or options, or otherwise; provided, however, that a Person shall not be deemed the 23 "Beneficial Owner" of, or to "beneficially own," securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for purchase or exchange; or (ii) the right to vote pursuant to any agreement, arrangement to understanding (whether or not in writing); provided, however, that a Person shall not be deemed the "Beneficial Owner" of, or to "beneficially own," any security under this clause (ii) if the agreement, arrangement or understanding to vote such security: (A) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations of the Exchange Act, and (B) is not also then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or (c) which are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with 24 which such Person or any of such Person's Affiliates or Associates has any agreement, arrangement or understanding (whether or not in writing), for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in clause (ii) of paragraph (b) of this subsection 1.4) or disposing of any voting securities of the Company. 1.7 "Common Stock" shall mean the common stock, $2.50 par value per share, of the Company, except that "Common Stock" when used with reference to any Person other than the Company shall mean the capital stock of such Person with the greatest voting power, or the equity securities or other equity interest having power to control or direct the management, of such Person. 25 1.8 "Continuing Director" shall mean any member of the Board, while such person is a member of the Board, who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, and was a member of the Board prior to the date of this Agreement. A "Continuing Director" shall also mean any person who subsequently becomes a member of the Board, while such person is a member of the Board, who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, if (a) such person's nomination for election or election to the Board is recommended or approved by resolution of a majority of the Continuing Directors or (b) such person is included as a nominee in a proxy statement of the Company distributed when a majority of the Board consists of Continuing Directors. 1.9 "Person" shall mean any individual, firm, corporation, partnership or other entity. 26 EXHIBIT II From: __________________________ Date: __________________________ To: ____________________________ By order of: CBI Industries, Inc. 800 Jorie Boulevard Oak Brook, Illinois 60521 We hereby issue our irrevocable Letter of Credit #__________ effective __________________, for a principal amount of U.S. $____________ only, expiring __________________, , in Chicago, Illinois representing support for an "Agreement" dated ______________ between CBI Industries, Inc. and the beneficiary of this Letter of Credit. Whole or partial drawings of the above Letter of Credit are available against presentation of your draft(s) drawn at sight on us mentioning thereon our Letter of Credit number and accompanied by (1) beneficiary's signed and dated statement designating his counsel and (2) a signed and dated statement prepared by his counsel reading to the effect that payments are due and owing under the "Agreement" referred to above and that CBI Industries, Inc. has not performed its obligation to make such payments. We hereby engage that drafts drawn under and in compliance with the terms and conditions of this Letter of Credit will be duly honored upon presentation if presented to us on or before _________________. This credit is subject to the "Uniform Customs and Practices for Documentary Credits" (1983 revision), International Chamber of Commerce publication 400. SIGNATURE 27 ADDENDUM TO AGREEMENT THIS ADDENDUM dated this 3rd day of October, 1989, to the AGREEMENT between CBI Industries, Inc., a Delaware Corporation ("CBI") and Calvin E. Willoughby, Jr. ("Executive") dated the 3rd day of October, 1989 (the "Agreement"): WITNESSETH THAT: WHEREAS, CBI and the Executive mutually desire to modify the Agreement in light of the enactment of the Tax Reform Act of 1986; NOW, THEREFORE, in consideration of the premises, it is hereby AGREED by and between CBI and the Executive that the Agreement shall be modified as follows: 1. Section 3 of the Agreement is amended by adding the following new sentence immediately after the first sentence thereof: CBI shall maintain the position of Executive such that Executive is able to exercise the authorities, powers, functions and duties attached thereto as contemplated by this Section 3. 2. Subsection (b) of Section 5 of the Agreement is amended to read as follows: (b) the resignation of the Executive from his employment upon 30 days written notice to CBI at any time following a significant change in the nature or scope of the Executive's authorities or duties from those described in Section 3, a reduction in total compensation Page 1 28 from that provided in Section 4, or the breach by CBI of any other provision of this Agreement, which change, reduction or breach is not restored or cured by CBI within 30 days after receiving written notice of such change, reduction or breach, reasonable directions for restoration or cure, and an offer to work from the Executive. 3. Section 5 of the Agreement is amended by deleting the words ", whether or not a breach of this Agreement by CBI," from the sentence following subsection (b). 4. Section 6 of the Agreement is amended (i) by deleting from the introductory material preceding subsection (a) the words "equal (without discount to present value) to the sum of" and substituting in lieu thereof the words "equal to the present value (discounted at the greatest rate of interest then payable by the First National Bank of Chicago on any federally insured account into which Executive could deposit such lump sum amount and made withdrawals therefrom without penalty at least as rapidly as compensation under Section 4 would have been payable) of"; (ii) deleting from subsections (a) and (c) the words "An amount equal to the aggregate" and substituting in lieu thereof the word "The"; and (iii) deleting from the sentence following subsection (z) the word "reduction" and substituting in lieu thereof the word "enhancement". 5. The first sentence of subsection (d) of Section 6 is amended to read as follows: In the event any shares of CBI common stock (or other securities into which such shares may have been converted) previously awarded to Executive under any restricted stock award plans of CBI or separate agreements between Executive and CBI are forfeited by reason of such Termination, or in the event any stock option previously granted to Executive under any stock option plan of CBI terminates or ceases to be exercisable by Page 2 29 reason of such Termination, an amount in cash equal to the fair market value of such forfeited common stock (or other securities) as of the date of Termination plus the excess of the fair market value as of the date of Termination of stock subject to any such terminated option over the exercise price of such terminated option. 6. Section 7 of the Agreement is amended to read as follows: 7. Overall Indemnity. The parties intend that the payments in the nature of compensation to be made by CBI to Executive under this Agreement shall be reasonable compensation for personal services to be rendered on or after the date of the Change in Control, including payments to an individual as damages for breach of contract, within the meaning of Section 280G(b)(4)(A) of the Internal Revenue Code of 1986, as amended (the "Code"). In the event that notwithstanding the previous sentence any excise tax under Section 4999 of the Code is imposed on Executive as a direct or indirect result of payments made by CBI or its affiliates, whether or not such payments are made pursuant to this Agreement, CBI shall pay Executive an amount or, from time to time, amounts, equal to (i) the sum of all excise taxes imposed on Executive in respect of such payments, plus (ii) the aggregate amount of any interest, penalties, fines or additions to any tax which are imposed in connection with the imposition of such excise tax, plus (iii) all income and excise taxes imposed on Executive under the laws of any United States Federal, state or local government or taxing authority by reason of the payments required under clause (i) and clause (ii) and this clause (iii). CBI's obligation to pay such amounts to Executive pursuant to this Section 7 shall continue for the period specified in Section 6501 of the Code during Page 3 30 which a tax may be assessed under Section 4999 of the Code (including any extensions of such period provided under Section 6503(a)(1) of the Code or requested by the Internal Revenue Service in connection with an audit of one or more of Executive's tax returns). If the Internal Revenue Service makes a claim against Executive which, if successful, would require CBI to make a payment under this Section 7, Executive agrees to contest the claim on request of CBI subject to the following conditions: (a) Executive shall notify CBI of any such claim within 10 days of becoming aware thereof. In the event CBI desires the claim to be contested, it shall promptly (but in no event more than 30 days after the notice from Executive or such shorter time as the Internal Revenue Service may specify for responding to such claim) request Executive to contest the claim. Executive shall not make any payment of any tax which is the subject of the claim before Executive has given the notice or during the 30-day period thereafter unless Executive receives written instructions from CBI to make such payment together with an advance of funds sufficient to make the requested payment plus any amounts determined pursuant to clause (ii) and clause (iii) above as if such advance were an amount described in clause (i) above, in which case Executive will act promptly in accordance with such instructions. (b) If CBI so requests, Executive will contest the claim by, at the direction of CBI, either paying the tax claimed and suing for a refund in the appropriate court or contesting the claim in the United States Tax Court; provided, however, that any request by CBI for Page 4 31 Executive to pay the tax shall be accompanied by an advance from CBI to Executive of funds sufficient to make the requested payment plus any amounts determined pursuant to clause (ii) and clause (iii) above as if such advance were an amount described in clause (i) above. If directed by CBI in writing Executive will take all action necessary to compromise or settle the claim, but in no event will Executive compromise or settle the claim or cease to contest the claim without the written consent of CBI; provided, however, that Executive may take any such action if Executive waives in writing his right to a payment under this Section 7 for any amounts payable in connection with such claim. Executive agrees to cooperate in good faith with CBI in contesting the claim and to comply with any reasonable request from CBI concerning the contest of the claim, including the pursuit of administrative remedies, the appropriate forum for any judicial proceeding, and the legal basis for contesting the claim. Upon request of CBI, Executive shall take appropriate appeals of any judgment or decision that would require CBI to make a payment under this Section 7. Provided that Executive is in compliance with the provisions of this section, CBI shall be liable for and indemnify Executive against any loss in connection with all costs and expenses, including attorneys' fees, which may be incurred as a result of contesting the claim, and shall provide to Executive within 30 days after each written request therefor by the Executive cash advances or reimbursement for all such costs and expenses actually incurred or reasonably expected to be incurred by the Executive as a result of contesting the claim. (c) If CBI requests that Executive contest a claim and otherwise complies with its obligations under Page 5 32 this Section 7, it shall, except as otherwise stipulated in this Section 7, have no obligation to pay any amounts under Section 7 in respect of the claim until final determination occurs regarding Executive's liability under the claim. CBI's obligation to pay amounts under this Section 7 will be reduced by any refund obtained by Executive and interest paid thereon. 7. Section 9 of the Agreement is amended to read as follows: If during the Employment Period Executive accepts other employment in a position substantially equivalent to or better than the position held by him with CBI, compensation actually received by the Executive during the Employment Period from such other employment shall be applied to reduce Termination payments otherwise due under subsections (a) and (c) of Section 6 of this Agreement; and coverage of the Executive under employee benefit plans described in subsection (x) of Section 6 of this Agreement shall be reduced or eliminated to the extent Executive is covered under similar plans incident to such other employment. In the event of any reduction under this Section 9 of Termination payments already paid by CBI to Executive, Executive shall upon 30 days written request from CBI repay to CBI the amount by which such Termination payment is reduced, without interest, and further reduced by any taxes attributable to such Termination payments to the extent Executive cannot recover such taxes through deductions of equivalent or greater value. Nothing in this Section 9 shall be construed to require Executive in mitigation of damages to accept employment in a position not substantially equivalent to or better than position held by him with CBI or to accept employment more than reasonable daily commuting Page 6 33 distance from the principal residence of the Executive as of the date of Termination. CBI INDUSTRIES, INC. /s/ C.E. Willoughby, Jr. ------------------------------------ Executive By:/s/ John E. Jones Title: Senior Vice President ------------------------------- Title: Chairman of the Board ATTEST: /s/ Donald H. Craigmile - ---------------------------------- Secretary (SEAL) Page 7 34 C.O. ZIEMER 14 35 ADDENDUM TO AGREEMENT THIS ADDENDUM dated as of and made effective the 1st day of June, 1995 to the Agreement between CBI Industries, Inc., a Delaware corporation ("CBI") and Calvin E. Willoughby ("Executive") of October 3, 1989 (the "Agreement"). WITNESSETH THAT WHEREAS, Executive has been offered an executive position in the employment of Liquid Carbonic Industries Corporation ("LCC"), a wholly owned subsidiary of CBI, subject to his resignation as an executive of Liquid Carbonic, Inc. ("LCI"), a wholly owned subsidiary of CBI, and in order to induce Executive to accept such position, CBI has assured Executive that he may at his election retain the benefits of the Agreement in the event of a change of control of CBI notwithstanding that Executive may at such time be an employee of LCC; WHEREAS, because of the similarity of the obligations undertaken by CBI under the Agreement and the obligations of LCI under an Addendum to the Agreement dated as of August 18, 1993, and the obligations to be undertaken by LCC under this Addendum, and for the general convenience of the parties, CBI and the Executive mutually agree to permit LCC, a Delaware corporation, to become a party to this Addendum, to relieve LCI of its obligations under the Addendum dated as of August 18, 1993, and for LCC to assume the obligations hereinafter undertaken; and WHEREAS, LCC also wishes to attract and retain well qualified executives and both LCC and the Executive desire continuity of management in the event of any Change of Ownership of LCC, and, accordingly LCC is willing to undertake the obligations hereinafter stated. NOW, THEREFORE, it is hereby agreed by and between the parties to this Addendum as follows: 1. LCI is relieved of all its obligations under the Addendum dated as of August 18, 1993. 2. For the purposes of this Addendum the term "Change in Ownership" shall mean the occurrence of an event pursuant to which the ultimate right to elect directors of LCC is not exercisable by CBI or another entity which directly or indirectly acquires stock of LCC in a leveraged buy-out in which the senior management of CBI participates. 3. In the event of a Change in Ownership of LCC, LCC and Executive agree to be bound by the terms of the Agreement as if the Agreement were an agreement between LCC and Executive, subject to the following changes: A. "CBI Industries, Inc." and "CBI" shall be replaced by Liquid Carbonic Industries Corporation" and "LCC," respectively, wherever those terms appear in the Agreement, except in subsection 6(d). B. "Change in Control of CBI" and "Change in Control" shall be replaced by "Change in Ownership of LCC" and "Change in Ownership," respectively, wherever those terms appear in the Agreement. C. Section 2 of the Agreement is deleted and replaced by a new Section 2 for purposes of the obligations undertaken hereunder, which contains the definition of "Change in Ownership" as set forth in Section 2 of this Addendum. 36 D. In Section 3 "date of execution hereof" shall mean date of execution of this Addendum. E. In subsection 4(b) the words "restricted stock award, stock option" are deleted from the second and ninth and tenth lines, respectively. F. CBI's obligation under this Section 3 of this Addendum shall be to provide continuing directors and officers liability and indemnity insurance and corporate indemnity protection under subsection 4(f) and 6(y) covering the time Executive was an officer or director of CBI. G. In subsection 6(w): (i) the second and third lines are deleted and replaced with the following words: "any pension benefit plan or benefit restoration plan." (ii) the words ";except that if ... determinable" are deleted from the 14th through 21st lines on page 11 of the Agreement. H. Subsection 10(b) is deleted. I. Exhibits I and II are deleted. 4. It is understood and agreed by all parties to this Addendum that Executive shall only be entitled to receive the benefits from either the Agreement (between CBI and Executive only) or the Agreement as modified by this Addendum (among and between LCC, CBI and the Executive) and not from both. Upon the first to occur of either a Change in Control of CBI or a Change in Ownership of LCC, Executive shall be required within thirty (30) days to give to both CBI and LCC notice in writing as to which contractual arrangement provided for herein Executive desires to apply to his employment with LCC, after which notice the other contractual arrangement shall be null and void. In the event Executive elects to receive the benefits of the Agreement between CBI and Executive only without application of Section 3 of this Addendum, LCC shall be responsible for continuing Executive's employment and compensation within the meaning of Sections 3 and 4 of the Agreement commencing on the date of the event giving rise to Executive's notice hereunder, and CBI shall be responsible for termination payments under Section 6 of the Agreement in the event the employment of Executive with LCC is terminated within the meaning of Section 5 of the Agreement. CBI INDUSTRIES, INC. EXECUTIVE By: /s/ John E. Jones By: /s/ C.E. Willoughby -------------------------- -------------------------- Title: Chairman LIQUID CARBONIC, INC. LIQUID CARBONIC INDUSTRIES CORPORATION By: /s/ John E. Jones By: /s/ Otavio Cinto -------------------------- -------------------------- Title: ______________________ Title: Senior Vice President 37 - ------------------------------------------------------------------------------- May 13, 1993 PERSONAL & CONFIDENTIAL TO: C.E. WILLOUGHBY LIQUID CARBONIC - CANADA Relative to your Executive Termination Agreement, the Board of Directors of CBI Industries has determined that it is economically not feasible to provide an irrevocable letter of credit issued by a commercial bank as outlined in Subsection 10(b) and Exhibit II of the Agreement. Accordingly, we have enclosed an Addendum to Agreement effective June 1, 1993 deleting Subsection 10(b) and Exhibit II along with a $10 check in consideration of this modification. (For your easy reference we have also enclosed copies of your original Agreement with subsequent addendum.) Please review this Agreement modification and should you concur with it, sign the Addendum and return it to me. Sincerely, /s/ John E. Jones John E. Jones ls encs. - ------------------------------------------------------------------------------- INTEROFFICE CORRESPONDENCE CBI Industries, Inc. 38 ADDENDUM TO AGREEMENT THIS ADDENDUM dated this 12th day of January, 1995 to the Agreement between CBI Industries, Inc., a Delaware corporation ("CBI") and Calvin Willoughby, Jr. ("Executive") of October 3, 1989 (the "Agreement"). WITNESSETH THAT WHEREAS, the Board of Directors of CBI on January 11, 1995, adopted a resolution amending Section 2 of the Agreement, and CBI and the Executive mutually desire to modify the Agreement by incorporating said amendment into the Agreement. NOW THEREFORE, it is hereby agreed by and between the parties to this Addendum as follows: 1. Section 2 of the Agreement is hereby amended to read as follows: Change in Control. The Term "Change in Control" shall mean the occurrence at any time of any of the following events: (a) An "Acquiring Person" (as defined below) has become such; or (b) "Continuing Directors" (as defined below) cease to comprise a majority of the Board of Directors of CBI. For purposes of this Agreement, the terms "Acquiring Person" and "Continuing Directors" shall have the same meaning as ascribed to such terms in that certain Amendment and Restatement dated as of August 8, 1989, of Rights Agreement dated as of March 4, 1986, 39 between CBI and First Chicago Trust Company of New York, as Rights Agent, as has been or may be amended from time to time. CBI INDUSTRIES, INC. EXECUTIVE By: /s/ John E. Jones By: /s/ C.E. Willoughby ----------------------------- ------------------------------- Title:__________________________ ATTEST: /s/ Charlotte C. Toerber - -------------------------------- Secretary [Seal] 40 ADDENDUM TO AGREEMENT THIS ADDENDUM dated as of and made effective the 27th day of August, 1993 to the Agreement between CBI Industries, Inc., a Delaware corporation ("CBI") and C.E. Willoughby ("Executive") of October 3, 1989 (the "Agreement"). WITNESSETH THAT WHEREAS, CBI and the Executive mutually desire to modify the Agreement to include a requirement that CBI provide an irrevocable clean letter of credit to secure for the benefit of the Executive the payment of up to $100,000 for attorneys fees incurred in enforcing the Agreement following a Change of Control; NOW, THEREFORE, it is hereby agreed by and between the parties to this Addendum that the Agreement shall be modified as follows: 1. Section 10 of the Agreement is amended by adding a new subsection (b) to read as follows: (b) CBI shall at its sole cost and expense obtain a commitment for an irrevocable clean letter of credit, substantially in the form of that attached hereto as Exhibit II and incorporated herein by reference (the "Letter of Credit"), to be issued by a commercial bank selected by CBI having total assets equivalent to at least $6 billion and either incorporated under the laws of, or having an office in, the United States or any State (the "Bank"), to secure for the benefit of Executive the payment of up to $100,000 for attorneys fees incurred in enforcing the Agreement pursuant to Section 10(a) upon presentation by Executive to the Bank of a statement or statements prepared by Executive's counsel that such payments are due and owing and that CBI has not performed its obligations to make such payments. CBI shall at its sole cost and expense obtain the issuance of the Letter of Credit pursuant to such commitment not later than the Effective Date and shall pay all amounts and take all action necessary to maintain such Letter of Credit during the Employment Period and for two years thereafter and if, notwithstanding CBI's complete discharge of such obligations, such Letter of Credit shall be terminated or not renewed, CBI shall obtain a replacement irrevocable clean letter of credit on substantially the same terms and conditions as contained in the Letter of Credit drawn upon a commercial bank having total assets equivalent to at least $6 billion and either incorporated under the laws o, or having an office in, the United States of any State, which 41 assures the Executive the benefits of this Agreement. Nothing in this subsection(b) shall limit in any way CBI's obligations under subsection 10(a). CBI INDUSTRIES, INC. EXECUTIVE By: /s/ John E. Jones By: /s/ C.E. Willoughby ----------------------------- ------------------------------- Title:__________________________ Title: President, Liquid Carbonic, Inc. 42 EXHIBIT II ROYAL BANK OF CANADA, NEW YORK BRANCH IRREVOCABLE STANDBY LETTER OF CREDIT ____________________, 19__ Letter of Credit No.______________ (Beneficiary's Name and Address) Dear_____________________: At the request and for the account of CBI Industries, Inc., 800 Jorie Boulevard, Oak Brook, Illinois, we hereby establish our Irrevocable Standby Letter of Credit No. _______________ (this "Letter of Credit") in your favor in an aggregate amount of One Hundred Thousand Dollars ($100,000), representing support of the "Agreement") dated _______________, by and between yourself and CBI Industries, Inc., as it may be amended from time to time, available by your draft drawn at sight, presented to this Bank, bearing this Letter of Credit Number and accompanied by this Letter of Credit and both: 1. Your signed certificate dated the date of such draft indicating the name, address and signature of your designated counsel, with both your signature and your designated counsel's signature notarized; and 2. Your designated counsel's signed and notarized statement dated the date of such draft stating: "Payments are due and payable to (Beneficiary) under the Agreement dated ____________ between (Beneficiary) and CBI Industries, Inc., as such Agreement may have been amended from time to time, and CBI Industries, Inc. has not performed its obligation to make such payments. (Beneficiary) through the undersigned counsel is enforcing his/her rights under such Agreement." Only one draft, in the amount of $100,000 may be presented under this Letter of Credit. We hereby agree that all drafts drawn under and in compliance with the terms of this Letter of Credit will be honored upon presentation at Royal Bank of Canada, New York Branch, New York Operations Center, Pierrepont Plaza, 300 Cadman Plaza West, Brooklyn, New York 11201-2701, Attention: Loan Administration Manager, facsimile number (___)___-____. Presentation is to be 43 made by facsimile transmission of all required documents to this Bank, followed by overnight courier delivery of all originals as provided in this paragraph. Any Draft hereunder must be presented on or before _______________. This Letter of Credit shall automatically expire and be null and void at the close of business on _______________ or, in the event the expiry date hereof is extended by us in writing, at the close of business upon such extended expiry date. This Letter of Credit sets forth in full the terms of our undertaking, and this undertaking shall not in any way be modified, amended, amplified or limited by reference to any document, instrument or agreement referred to herein or in which this Letter of Credit is referred to or to which this Letter of Credit relates, except for the certificates, statements and the sight drafts referred to therein. This Letter of Credit is not transferrable. This irrevocable Letter of Credit is subject to The Uniform Customs and Practices for Documentary Credits (1983 Revision), ICC Publication 400. ROYAL BANK OF CANADA, NEW YORK BRANCH By_________________________________ Its______________________________ By__________________________________ Its_______________________________ 44 ADDENDUM TO AGREEMENT THIS ADDENDUM dated this 3rd day of October, 1989 to the Agreement between CBI Industries, Inc., a Delaware corporation ("CBI") and Calvin E. Willoughby, Jr. ("Executive") of October 3, 1989 (the "Agreement"). WITNESSETH THAT WHEREAS, the Board of Directors of CBI approved an early retirement change in the CBI Pension Plan effective October 3, 1989, and CBI desires to make such change applicable to the Agreement. NOW, THEREFORE, it is hereby agreed by and between the parties to this Addendum as follows: 1. The sentence appearing in Subsection 6(w) of the Agreement commencing in the sixth line from the bottom of page 10 and ending in the third line of page 11 presently reading: "The Enhanced Early Retirement Pension shall only be subject to reduction at the rate of four (4) percentum for each year by which the Executive's age is less than age 65 or the Executive's credited service is less than 40 years, whichever produces the lesser reduction, pursuant to the first sentence of Section 5.2.3 of the Pension Plan (as in effect on the date hereof)." Is hereby amended to read: "The Enhanced Early Retirement Pension shall only be subject to reduction at the rate of four (4) percentum Page 1 45 for each year by which the Executive's age is less than age 62 or the Executive's credited service is less than 35 years, whichever produces the lesser reduction, pursuant to the first sentence of Section 5.2.3 of the Pension Plan (as in effect on the date hereof)." CBI INDUSTRIES, INC. By: /s/ John E. Jones C.E. Willoughby, Jr. ----------------------------- ------------------------------------- Title: Chairman of the Board Executive Senior Vice President ATTEST: /s/ Donald H. Craigmile - -------------------------------- Secretary Page 2 46 ADDENDUM TO AGREEMENT THIS ADDENDUM dated this 3rd day of October, 1989, to the AGREEMENT between CBI Industries, Inc., a Delaware Corporation ("CBI") and Calvin E. Willoughby, Jr. ("Executive") of even date herewith (the "Agreement"): WITNESSETH THAT WHEREAS, CBI and the Executive mutually desire to modify in light of the Agreement that certain Supplemental Survivor's Benefit Agreement (the "Survivor's Agreement") dated October 3, 1989 by and between CBI and the Executive; NOW, THEREFORE, in consideration of the mutual execution of the Agreement and the premises thereof; it is further AGREED by and between CBI and the Executive as follows: 1. A Termination of the Executive during the Employment Period shall be deemed a "retirement" under the Survivor's Agreement entitling Executive in the event of his death thereafter to the "post-retirement benefit" thereunder, notwithstanding that Executive may no longer be employed by CBI nor except as may otherwise be provided by the Agreement be retired for purposes of the Pension Plan. 47 CBI INDUSTRIES, INC. /s/ C.E. Willoughby, Jr. ----------------------------------- Executive By: /s/ John E. Jones Title: Senior Vice President ----------------------------- Title: Chairman of the Board ATTEST: /s/ Donald H. Craigmile - -------------------------------- Secretary (SEAL) 48 ADDENDUM TO AGREEMENT THIS ADDENDUM effective the 1st day of June, 1993, to the AGREEMENT between CBI Industries, Inc., a Delaware corporation ("CBI") and C.E. Willoughby ("Executive") dated the 3rd day of October, 1989, as previously amended (the "Agreement"). WITNESSETH THAT: WHEREAS, CBI and the Executive mutually desire to modify the Agreement to eliminate the requirement for CBI to provide an irrevocable clean letter of credit to secure for the benefit of the Executive the total value of performance of CBI's obligations under the Agreement; NOW, THEREFORE, in consideration of $10 and the premises herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, it is hereby AGREED by and between CBI and the Executive that the Agreement shall be modified as follows: 1. Subsection 10(b) is deleted. 2. Exhibit II is deleted. CBI INDUSTRIES, INC. By: /s/ John E. Jones Executive: /s/ C.E. Willoughby ----------------------------- ------------------------- Title: Chairman of the Board Title: Executive Vice President Liquid Carbonic, Inc. ATTEST: /s/ Charlotte C. Toerber - -------------------------------- Secretary [SEAL] 49 ADDENDUM TO AGREEMENT THIS ADDENDUM dated as of and made effective the 18th day of August, 1993 to the Agreement between CBI Industries, Inc., a Delaware corporation ("CBI") and Calvin E. Willoughby ("Executive") of October 3, 1989 (the "Agreement"). WITNESSETH THAT WHEREAS, Executive has been offered an executive position in the employment of Liquid Carbonic, Inc. ("LCI"), a wholly owned subsidiary of CBI, and in order to induce Executive to accept such position, CBI has assured Executive that he may at his election retain the benefits of the Agreement in the event of a change of control of CBI notwithstanding that Executive may at such time be an employee of LCI; WHEREAS, because of the similarity of the obligations undertaken by CBI under the Agreement and the obligations to be undertaken by LCI under this Addendum, and for the general convenience of the parties, CBI and the Executive mutually agree to permit LCI, a Canadian corporation, to become a party to this Addendum and for LCI to assume the obligations hereinafter undertaken; and WHEREAS, LCI also wishes to attract and retain well qualified executives and both LCI and the Executive desire continuity of management in the event of any Change in Ownership of LCI, and, accordingly LCI is willing to undertake the obligations hereinafter stated. NOW, THEREFORE, it is hereby agreed by and between the parties to this Addendum as follows: 1. For the purposes of this Addendum the term "Change in Ownership" shall mean the occurrence of an event pursuant to which the ultimate right to elect directors of LCI is not exercisable by CBI or another entity which directly or indirectly acquires stock of LCI in a leveraged buy-out in which the senior management of CBI participates. 2. In the event of a Change in Ownership of LCI, LCI and Executive agree to be bound by the terms of the Agreement as if the Agreement were an agreement between LCI and Executive, subject to the following changes: A. "CBI Industries, Inc." and "CBI" shall be replaced by "Liquid Carbonic, Inc." and "LCI," respectively, wherever those terms appear in the Agreement, except in subsection 6(d). B. "Change in Control of CBI" and "Change in Control" shall be replaced by "Change in Ownership of LCI" and "Change in Ownership," respectively, wherever those terms appear in the Agreement. -1- 50 C. Section 2 of the Agreement is deleted and replaced by a new Section 2 for purposes of the obligations undertaken hereunder, which contains the definition of "Change in Ownership" as set forth in Section 1 of this Addendum. D. In Section 3 "date of execution hereof" shall mean date of execution of this Addendum. E. In subsection 4(b) the words "restricted stock award, stock option" are deleted from the second and ninth and tenth lines, respectively. F. CBI's obligation under Section 2 of this Addendum shall be to (i) provide continuing directors and officers liability and indemnity insurance and corporate indemnity protection under subsections 4(f) and 6(y) covering the time Executive was an officer or director of CBI, and (ii) provide post-retirement benefits under the Survivor's Agreement as provided in the Addendum to the Agreement dated September 12, 1986, between CBI and Executive. G. In subsection 6(w): (i) the second and third lines are deleted and replaced with the following words: "any pension benefit plan or benefit restoration plan." (ii) the words "; except that if ... determinable" are deleted from the 14th through 21st lines on page 11 of the Agreement. H. Subsection 10(b) is deleted. I. Exhibits I and II are deleted. 3. It is understood and agreed by all parties to this Addendum that Executive shall only be entitled to receive the benefits from either the Agreement (between CBI and Executive only) or the Agreement as modified by this Addendum (among and between LCI, CBI and the Executive) and not from both. Upon the first to occur of either a Change in Control of CBI or a Change in Ownership of LCI, Executive shall be required within thirty (30) days to give to both CBI and LCI notice in writing as to which contractual arrangement provided for herein Executive desires to apply to his employment with LCI, after which notice the other contractual arrangement shall be null and void. In the event Executive elects to receive the benefits of the Agreement between CBI and Executive only without application of Section 2 of this Addendum, LCI shall be responsible for continuing Executive's employment and compensation within the meaning of Sections 3 and 4 of the Agreement commencing on the date of the event giving rise to Executive's notice hereunder, and CBI shall be responsible for termination payments under Section 6 of the Agreement -2- 51 in the event the employment of Executive with LCI is terminated within the meaning of Section 5 of the Agreement. CBI INDUSTRIES, INC. EXECUTIVE By: /s/ John E. Jones By: /s/ C.E. Willoughby ----------------------------- -------------------------------- Title: Title: President, -------------------------- Liquid Carbonic, Inc. LIQUID CARBONIC, INC. By: /s/ Robert J. Daniels ----------------------------- Title: -------------------------- -3- EX-99.7 8 FORMS OF LCI CORP. EMPLOYMENT AGREEMENT & ADDENDA 1 EXHIBIT 7 FORM OF AGREEMENT THIS AGREEMENT between LIQUID CARBONIC INDUSTRIES CORPORATION and Subsidiaries, a Delaware corporation ("LCI"), and ___________________ ("Executive"), dated this ___ day of ___________, 198_. WITNESSETH THAT WHEREAS, LCI wishes to attract and retain well-qualified executives and both LCI and the Executive desire continuity of management in the event of any Change in Ownership of LCI; NOW, THEREFORE, it is hereby agreed by and between the parties as follows: 1. Effective Date. The "Effective Date" of this Agreement shall be the date on which a Change in Ownership of LCI (as defined in Section 2) occurs. 2. Change in Ownership. The term "Change in Ownership" shall mean the occurrence of an event pursuant to which (a) the ultimate right to elect directors of LCI is not exercisable by CBI Industries, Inc. ("CBI") or another entity which directly or indirectly acquires stock of LCI in a leveraged buy-out in which the senior management of CBI participates, or (b) Continuing Directors, as defined in that certain Rights Agreement dated March 4, 1986, between CBI and Morgan Guaranty Trust Company of New York as rights agent, cease to comprise a majority of the board of directors of CBI at a time when LCI, directly or indirectly, is a subsidiary or CBI. Page 1 2 3. Employment. LCI hereby agrees that if the Executive continues as an employee of LCI from the date of execution hereof until the Effective Date, LCI shall continue the Executive in its employ for the period commencing on the Effective Date and ending on the earlier to occur of the second anniversary of such date or the 65th birthday of the Executive (the "Employment Period"), to exercise such authority and perform such executive duties as are requested of him by LCI, which authority and duties shall be commensurate with the authority being exercised and duties being performed by the Executive immediately prior to the Effective Date. The Executive shall perform such requested services at the location where the Executive was employed immediately prior to the Effective Date, except for required travel on LCI's business to an extent substantially consistent with the Executive's business travel obligations prior to the Effective Date. The Executive agrees that while an employee during the Employment Period he shall, to the extent required, devote substantially all of his business time to his executive duties as described herein and perform such duties faithfully and efficiently. 4. Compensation, Compensation Plans, Benefits. During the Employment Period, the Executive shall be compensated as follows: (a) He shall receive an annual salary (to be paid in installments in the manner customary prior to the Effective Date) which is not less than his rate of annual salary in effect immediately prior to the Effective Date, increased on each January 1 within the remainder of the Employment Period by at least the greater of (i) the average annual percentage salary increase for the Executive during the period of three full calendar years immediately preceding the Effective Date, or (ii) the percentage increase in the Implicit Price Deflator for Gross National Product for the calendar year immediately preceding such January 1, as published by the United States Department of Commerce in its Survey of Current Business in December of each year, over such Implicit Price Deflator for the calendar year next preceding such year. (b) He shall be awarded and receive bonus and other incentive compensation for each calendar year (or other applicable bonus or incentive Page 2 3 compensation period) any part of which is included in the Employment Period, which in the aggregate shall not in value be a lesser percentage of his annual salary, as determined in subsection (a) above, for such calendar year (or period), than the aggregate bonus and other incentive compensation during the period of three full calendar years immediately preceding the Effective Date was of the Executive's aggregate base salary for such three year period. (c) He shall be entitled to receive all employee benefits to the extent of the greater of the employee benefits provided by LCI to executives with comparable duties or the employee benefits to which he was entitled immediately prior to the Effective Date. (d) During any period that Executive is unable to perform the services for LCI specified in Section 3, whether as a result of total disability or as a result of a physical or mental disability that is not total or is not permanent and therefore is not a total disability, Executive shall continue to receive base salary at the rate in effect at the commencement of any such period, together with all other compensation and benefits that are payable under this Agreement. 5. Termination. The term "Termination" shall mean the occurrence during the Employment Period of: (a) termination by LCI of the employment of the Executive for any reason other than (i) death, (ii) physical or mental incapacity which would entitle Executive to permanent disability benefits under LCI's appropriate plans, or (iii) a willful and material breach of this Agreement by the Executive which causes a direct and substantial injury to LCI or to its business, which is not cured by Executive within 30 days after receiving written notice of such breach and reasonable directions for cure from LCI; or (b) the resignation of the Executive from his employment upon 30 days written notice to LCI at any time following (i) a significant change in page 3 4 the nature or scope of the Executive's authorities or duties from those described in Section 3, a reduction in total compensation from that provided in Section 4, or the breach by LCI of any other provision of this Agreement, which change, reduction or breach is not restored or cured by LCI within 30 days after receiving written notice of such change, reduction or breach and reasonable directions for restoration or cure from the Executive; or (ii) a reasonable determination by the Executive that, as a result of the Change in Ownership and a change in circumstances thereafter significantly affecting his position, he is unable to exercise the authorities, powers, functions or duties attached to his position as contemplated by Section 3. A Termination as contemplated by this Section 5, whether or not a breach of this Agreement by LCI, shall entitle the Executive to Termination benefits as provided by this Agreement. Nothing in this Agreement shall prevent the Executive from voluntarily resigning from his Employment upon 90 days written notice to LCI under circumstances which do not constitute Termination as defined in this Section 5, and no such resignation shall be deemed a breach of this Agreement by the Executive. 6. Termination Payment. In the event of Termination of Executive during the Period of Employment, LCI shall pay to the Executive a lump sum amount equal (without discount to present value) to the sum of the amounts determined in accordance with subsections (a), (b), (c) and (d) below, and provide the additional benefits described in subsections (w), (x), (y) and (z) below: (a) An amount equal to the aggregate salary which would have been paid to the Executive during the remainder of the Employment Period if he had received the base salary specified by Section 4(a) above, increased by assuming the salary increase on each January 1 during the remainder of the Employment Period to be the greatest of the average annual percentage salary increase or the percentage increase in the Implicit Price Deflator, whichever is applicable, as of any January 1 within the three calendar years including or preceding the Termination date. Page 4 5 (b) Bonus and incentive compensation for any calendar year (or other applicable bonus or incentive compensation period) ending prior to the Termination date but not previously paid. (c) An amount equal to the aggregate bonus and incentive compensation which would have been paid to the Executive during each calendar year (or other applicable bonus or incentive compensation period) any part of which is included in the remainder of the Employment Period if he had received bonus and incentive compensation for any such year (or period) in the minimum amount specified by Section 4(b) based on his increased salary determined under subsection (a) above; provided, however, that in the event any bonus year (or period) extends beyond the end of the Employment Period, bonus or other incentive compensation for such year (or period) shall be pro-rated in proportion to the number of days within and without the Employment Period. (d) In the event any shares of CBI common stock (or other securities into which such shares may have been converted) previously awarded to Executive under any restricted stock award plans of CBI or separate agreements between Executive and CBI are forfeited by reason of such Termination, an amount in cash equal to the fair market value of such forfeited common stock (or other securities) as of the date of Termination. The rights afforded to Executive under this subsection (d) are without prejudice to any other rights Executive has to shares of CBI common stock (or other securities) under such plans or agreements or by reason of the action of the CBI Board of Directors heretofore taken in causing restrictions on such shares to be removed under certain circumstances including Termination of the Executive. LCI shall also provide to the Executive: (w) In addition to the benefits provided under any pension beneift plan or benefit restoration plan (whether or not funded or qualified under the Internal Revenue Code) maintained by LCI ("Retirement Plans"), the difference (the "Benefit Enhancement") between such benefits and the Page 5 6 benefits (the "Enhanced Benefits") that would have been provided under such Retirement Plans if Executive had remained in the employ of LCI throughout the Employment Period at the salary determined under subsection (a) above accruing additional age and service credits under such Retirement Plans accordingly. If after giving effect to such additional age and service credit Executive shall not have the necessary age or credited service at the end of the Employement Period to qualify under the LCI Pension Plan (the "Pension Plan") for an early retirement pension, the Enhanced Benefits under this subsection (w) shall nevertheless include an early retirement pension under the Pension Plan beginning upon Executive attaining age 55 or upon the date Executive would have attained 30 years of credited service had Executive remained continuously employed by LCI but for Termination (whichever occurs first) (the "Enhanced Early Retirement Pension"). The Enhanced Early Retirement Pension shall be payable to the Executive or to the spouse of the Executive (if applicable) commencing at the time Executive attains (or would have attained) age 55 or would have otherwise attained 30 years of credited service as provided aforesaid (whichever occurs first). The Enhanced Early Retirement Pension shall only be subject to reduction at the rate of four (4) percentum for year year by which the Executive's age is less than age 65 or the Executive's credited service is less than 40 years, whichever produces the lesser reduction, pursuant to the first sentence of Section 4.1.3 of the Pension Plan (as in effect on the date hereof). If Executive shall die after the end of the Employment Period but before the date the Enhanced Early Retirement Pension is payable, the spouse of Executive shall be entitled to an enhanced survivor's pension under the Pension Plan as if Executive had died as an employee of LCI, giving effect to service through the date of Executive's death and Executive's earnings through the end of the Employment Period. Such Benefit Enhancement will be paid beginning on the date the Enhanced Benefits would have commenced and thereafter concurrently with the benefits actually provided under such Retirement Plans. Nothing in this subsection (w) shall prevent the actual commencement of benefits under any Retirement Plan, and the Benefit Enhancements required by this subsection (w), before the end of the Employment Period to the extent required or permitted under the terms of the applicable Retirement Plan, giving effect to the additional age and service credit required by this subsection (w). Page 6 7 (x) Participation in or coverage by all other employee benefits, including, but not limited to, coverage under any health or medical benefit insurance, plans, or arrangements, supplemental survivors' benefit plans, or life insurance arrangements or programs, to the same extent to which he would have been entitled under all employee benefit plans, programs, arrangements or practices maintained by LCI if he had remained in the employ of LCI through the Employment Period at the salary determined under subsection (a) above. (y) Continuation of disability income benefits pursuant to Section 4(d) for so long as any disability may continue without regard to the Termination of the Employment Period. (z) Within 30 days after each written request therefor by the Executive, cash advances or reimbursement for any fees or expenses actually incurred or reasonably expected to be incurred by the Executive in seeking other employment, including without limitation all travel and relocation expenses and all fees charged by any executive recruitment firm or firms or employment consulting or counseling firm or firms selected by the Executive in his sole discretion. The amount of Termination payments described in subsections (a), (b), (c) and (d) of this Section 6 shall be determined and paid in a lump sum within 30 days of the Termination date by cashier's check or certified check of LCI or any of its affiliated corporations delivered to Executive together with such calculations, worksheets, or other information as may be necessary or appropriate to ascertain the currectness of the computation of such amount and, if applicable, of any reduction pursuant to Section 7. Any Termination payment (or the value thereof) not paid on or before the date provided therefor by this Section 6 shall bear interest after such date until paid at a rate per annum during each month such amount remains unpaid of five percentage points in excess of the prime rate as publicly announced by the First National Bank of Chicago or its successor from time to time as in effect on the first day of each such month. Page 7 8 7. Overall Limitations. Solely for the purposes of the computation of benefits under this Agreement and notwithstanding any other provisions hereof, payments to any Executive under this Agreement shall be reduced (but not below zero) so that the present value, as determined in accordance with Section 280G(d)(4) of the Code, of such payments plus any other payments that must be taken into account for purposes of any computation relating to Executive under Section 280G(b)(2)(A)(ii) of the Code, shall not, in the aggregate, exceed 2.99 times Executive's "base amount," as that term is defined in Section 280G(b)(3) of the Code. Notwithstanding any other provision hereof, no reduction in payments under the limitation contained in the immediately preceding sentence shall be applied to payments hereunder which do not constitute "excess parachute payments" within the meaning of the Code. Any payments in excess of the limitation of this Section 7 or otherwise determined to be "excess parachute payments" made to Executive hereunder are deemed to be overpayments which shall constitute an amount owing from the Executive receiving them to LCI with interest from the date of receipt by the Executive to the date of repayment (or offset) at the applicable federal rate under Section 1274(d) of the Code, compounded semi-annually, which shall be payable to LCI upon demand; provided, however, that no repayment shall be required under this sentence if in the written opinion of tax counsel satisfactory to the Executive and delivered to the Executive and LCI such repayment does not allow such overpayment to be excluded for federal income and excise tax purposes from the Executive's income for the year of receipt or afford the Executive a compensating federal income tax deduction for the year of repayment. 8. Non-Competition. Whether or not a Termination occurs, the Executive agrees to continue all non-competition and confidentiality provisions, as specified in any other agreement in effect on the Effective Date between the Executive and LCI relating to confidential information, during (and to the extent specified in such agreement, after) the Employment Period. 9. Mitigation. The Executive shall not be required to mitigate the amount of any payment provided for under this Agreement by seeking other employment or otherwise; provided, however, that if during the Employment Period Executive accepts other employment in a position substantially equivalent to or Page 8 9 better than the position held by him with LCI, current cash compensation actually received by the Executive during the Employment Period from such other employment shall be applied to reduce Termination payments otherwise due under subsections (a) and (c) of Section 6 of this Agreement. 10. Legal Fees and Expenses. It is the intent of LCI that no Executive be required to incur the expenses associated with the enforcement of his rights under this Agreement by litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Executive hereunder. Accordingly, if it should appear to the Executive that LCI has failed to comply with any of its obligations under this Agreement, or in the event that LCI or any other person takes any action to declare this Agreement void or unenforceable, or institutes any litigation designed to deny, or to recover from, the Executive the benefits intended to be provided to Executive hereunder, LCI irrevocably authorizes Executive from time to time to retain counsel of his choice, at the expense of LCI as hereafter provided, to represent Executive in connection with the initiation or defense of any litigation, arbitration or other legal action, whether by or against LCI or any director, officer, stockholder or other person affiliated with LCI, in any jurisdiction. LCI shall advance to the Executive within 30 days after each written request therefor any and all attorneys' and related fees and expenses actually incurred or reasonably expected to be incurred by the Executive in any such proceeding or otherwise as a result of LCI's failure to perform this Agreement or any provision hereof or as a result of LCI or any person contesting the validity or enforceability of this Agreement or any provision hereof; provided, however, that to the extent the Executive does not prevail in any such litigation, arbitration, or other legal action, the Executive shall repay to LCI the amount (without interest) of such attorney's fees and related fees and expenses previously advanced. 11. Notices. Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and if sent by registered or certified mail to the Executive at the last address he has filed in writing with LCI or, in the case of LCI, at its principal executive offices. Page 9 10 12. Non-Alienation. The Executive shall not have any right to pledge, hypothecate, anticipate or in any way create a lien upon any amounts provided under this Agreement; and no benefits payable hereunder shall be assignable in anticipation of payment either by voluntary or involuntary acts, or by operation of law. 13. Governing Law. The provisions of this Agreement shall be construed in accordance with the laws of the State of Illinois. 14. Amendment. This Agreement may be amended or cancelled by mutual agreement of the parties in writing without the consent of any other person and, so long as the Executive lives, no person, other than the parties hereto, shall have any rights under or interest in this Agreement or the subject matter hereof. 15. Successors to the Company. Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of LCI and any successor of LCI. 16. Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect. LIQUID CARBONIC INDUSTRIES CORPORATION -------------------------------------- Executive Title: -------------------------------- By: ----------------------------------- Title: -------------------------------- ATTEST: ------------------------------- - -------------------------------------- [SEAL] Page 10 11 FORM OF ADDENDUM TO AGREEMENT AND ASSIGNMENT OF SUPPLEMENTAL SURVIVOR'S BENEFIT AGREEMENT THIS ADDENDUM dated this __ day of _________, 198_, to the Agreement between Liquid Carbonic Industries Corporation, a Delaware corporation ("Liquid") and ____________________________ ("Executive") of even date herewith (the "Agreement"): WITNESSETH THAT WHEREAS, the Executive and CBI Industries, Inc., a Delaware corporation ("CBI") previously have executed that certain Supplemental Survivor's Benefit Agreement (the "Survivor's Agreement") dated _________, 198_; and WHEREAS, the Executive is willing to consent to an assignment of the Survivor's Agreement from CBI to Liquid, and, further, the Executive and Liquid, upon such assignment, mutually desire to modify the Survivor's Agreement; NOW THEREFORE, in consideration of the mutual execution of the Agreement and the premises thereof, it is agreed by and between CBI, Liquid and the Executive as follows: 1. CBI hereby assigns to Liquid, and Liquid hereby accepts, all of CBI's rights, duties and obligations under the Survivor's Agreement, and the Executive hereby consents to such assignment and releases CBI from any further duties or obligations under the Survivor's Agreement. 2. As between Liquid and the Executive: (a) For all purposes of the Survivor's Agreement, "the Company" shall henceforth be Liquid. (b) Reference in the Survivor's Agreement to the "CBI Pension Plan" in the description of "Integrated Benefit" shall henceforth be a reference to the "Liquid Carbonic Pension Plan." (c) For purposes of the Agreement, a Termination of the Executive during the Employment Period shall be deemed a "Retirement" under the Survivor's Agreement entitling the Executive in the event of his death thereafter to the "Post-Retirement Benefit" thereunder, notwithstanding that Executive may no longer be employed by Liquid nor except as may otherwise be provided by the Agreement be retired for purposes of the Liquid Carbonic Pension Plan. Page 1 12 Addendum and Assignment IN WITNESS WHEREOF, the parties have caused this document to be executed on the date first above written. Executive: ------------------------------------ Title: ---------------------------------------- CBI INDUSTRIES, INC. By: ------------------------------------------- Title: ---------------------------------------- ATTEST: - -------------------------- Secretary LIQUID CARBONIC INDUSTRIES CORPORATION By: ------------------------------------------- Title: ---------------------------------------- ATTEST: - -------------------------- Page 2 EX-99.8 9 LETTER AGREEMENT AND ADDENDA - JOHN E. JONES 1 EXHIBIT 8 [CBI INDUSTRIES, INC. LETTERHEAD] July 16, 1987 Mr. John E. Jones 840 N. Washington Street Hinsdale, Illinois 60521 Dear John: In order to confirm the meaning and intent of my letter of January 4, 1982, which set forth the agreement between CBI Industries, Inc. ("CBI") and yourself as to the pension benefits payable to you by either or both of CBI and the CBI Pension Plan, this letter shall be a further amendment to the letter of January 4, 1982 and my letter of December 19, 1986. We agree that on and after May 3, 1987, the date on which the sum of your actual CBI service and your Continental Service ("total service") equaled the 30 years of service required under the provisions of the CBI Pension Plan ("the Plan") to qualify you for immediate early retirement, any termination of your employment from CBI or its affiliates for any reason shall constitute retirement for purposes of the Plan and for payment of a pension benefit from CBI based on such total service. Please indicate your agreement to the above by signing the two copies of this letter signed by me, and returning one copy to me. Sincerely, /s/ W. A. Pogue W. A. Pogue, Chairman and Chief Executive Officer /s/ John E. Jones - ------------------------------ J. E. Jones 7-28-87 - ------------------------------ Date 2 [CBI LETTERHEAD] December 19, 1986 Mr. John E. Jones 840 N. Washington Street Hinsdale, Illinois 60521 Dear John: In order to clarify the meaning and intent of my letter of January 4, 1982, which set forth the agreement between CBI Industries, Inc. ("CBI") and yourself as to the pension benefits payable to you by either or both of CBI and the CBI Pension Plan, this letter shall be an amendment to the letter of January 4, 1982. We agree that: 1. Paragraph 4 of the letter of January 4, 1982 is deleted and shall be considered as of no effect and never to have been part of our agreement. 2. The list of pension examples attached to the letter of January 4, 1982 were then and are now intended and constitute examples provided for your personal benefit and financial planning only, and are in no way substantive provisions of, nor in any way modify, amend or add to, the agreement expressed in the letter of January 4, 1982. Please indicate your assent to the above by signing the two copies of this letter signed by me, and returning one copy to me. Very truly yours, /s/ W.A. Pogue W.A. Pogue, Chairman and Chief Executive Officer /s/ John E. Jones - ------------------------- J.E. Jones Date: December 23, 1986 ------------------- 3 [CBI INDUSTRIES, INC. LETTERHEAD] January 4, 1982 Mr. John E. Jones 840 N. Washington Hinsdale, IL 60521 Dear John: The purpose of this letter is to memorialize previous discussions that took place at the time of your employment as a full-time employee of CBI Industries, Inc., relating to retirement benefits. Immediately prior to such employment, you were an employee of Continental Illinois National Bank and Trust Company of Chicago and as such you were a participant in the Continental Illinois Employees' Pension Plan (hereinafter called "Continental Plan") and had accumulated under that Plan 22.83 years of service (hereinafter called "Continental Service"). At the time of terminating employment with the Continental Bank, you had vested rights in the Continental Plan which would entitle you to an annual pension in the form of a single life annuity of $37,844.45 upon your attaining age 65. However, the Continental Plan makes available certain retirement options, including an actuarially reduced benefit as early as age 55, and the alternative election of either (i) a joint and survivor annuity where payments continue until the death of the surviving spouse (or another approved dependent), or (ii) a ten year certain annuity where payments would be made for your life but not less than 120 guaranteed monthly payments to you or your named beneficiary. At the time of your employment by CBI Industries, Inc., it was our desire that your pension benefits upon retirement as a CBI employee, after taking into account benefits that you will receive under the Continental Plan, would not be less than benefits that you might have enjoyed had you been a CBI employee during the combined periods of your CBI Service and your Continental Service. You will recognize, of course, that the CBI Pension Plan does not contain provisions for recognition of service with unrelated employers, and for that reason the retirement benefits that you will receive will come from the CBI Pension Trust to the extent that benefits are payable under the provisions of the CBI Pension Plan, applicable law and ERISA regulations, and the balance from the general assets of CBI Industries, Inc. Accordingly, the following has been agreed: 1. Your participation and accrual of vested benefits under the CBI Pension Plan will begin on the date of your employment, namely March 3, 1980. 2. Your pension benefits will be calculated as including your Continental Service for both "Years of Service" and "Credited Service" in the event of your retirement under the Plan or your death while in service with CBI. 4 [CBI Industries, Inc. Letterhead] J.E. Jones 1/4/82 Page 2 - ---------- 3. In calculating your total CBI pension benefits as described above, there shall be offset the value of your benefits under the Continental Plan, which value shall be the amount of a monthly single life annuity payable at the same time as you first begin receiving a pension under this agreement whether or not you begin receiving that annuity at that time, but that offset will not be applied with respect to the calculation of the benefit that will be paid to your eligible surviving spouse in the event of your death following your retirement. The benefit payable to your surviving spouse, should you die while still in CBI service, will be offset by the amount payable to her under the Continental Plan. 4. Your retirement benefits as a CBI employee may be reviewed in the event that either the Continental Plan or the CBI Pension Plan is terminated prior to your retirement. This letter, when accepted by you as evidenced by your signature on the acceptance copy thereof, will constitute a binding obligation of CBI Industries, Inc. with respect to your retirement benefits. Nevertheless, this letter shall not be deemed as a contract of employment or as an obligation of CBI Industries, Inc. to continue to employ you. Nor shall this letter be deemed as affecting or affected by other benefits that may be provided by the Company to its employees, such as but not limited to the CBI Profit Sharing Plan, the CBI Restricted Stock Award Plan and the CBI Employee Stock Purchase Plan. In order to provide guidance for the future, we have prepared a sheet of examples of calculations or results flowing from the agreement contained in this letter, and a copy of that sheet is attached for your reference. If this letter properly sets forth the understanding that was reached at the time of your employment, please so indicate by signing the acceptance endorsement appearing on both signed copies of this letter, and returning one fully-executed copy to us for our records. Sincerely yours, Chairman & President /s/ W.A. Pogue lkr attachment ACCEPTED THIS 6 day of January, 1982 /s/ John E. Jones - -------------------- J.E. Jones 5 Sheet attached to Letter from CBI Industries, Inc. to J.E. Jones dated January 4, 1982. 1. J. E. Jones has a deferred vested pension under the Continental Plan, based upon 22.83 years of service, equal to $37,844.45 annually payable at a normal retirement age of 65. 2. J. E. Jones will have 30 years of Credited Service required to become eligible for an unreduced Inability pension upon accumulation of 7.17 years of CBI service. 3. J. E. Jones will have 35 years of Credited Service required to be eligible for an Early Retirement pension after 12.17 years of CBI service. 4. In the event J. E. Jones dies while employed by CBI, his eligible spouse's pension will be 50% of the amount of the pension Mr. Jones would have then been entitled to receive from the CBI Plan, under calculations using Credited Service equal to the sum of his Continental service and CBI service, offset by the actual amount paid to his eligible spouse from the Continental Plan. 5. If J. E. Jones dies after he has begun to receive a CBI pension, leaving an eligible surviving spouse, she will receive 50% of the pension Mr. Jones was receiving from the CBI Plan plus 50% of the Continental Plan offset being applied to his pension under this agreement at the time of his death. 6. If J. E. Jones terminates his CBI employment by retirement as provided in the CBI Pension Plan (because of age, Inability, Disability or qualifying years of Credited Service), his pension will be calculated using as Credited Service his CBI service plus his Continental service, but the pension will be offset by the amount of a single life annuity payable from the Continental Plan at the time of his retirement, regardless of the date he actually begins to receive a pension from the Continental Plan. 7. If J. E. Jones terminates his CBI employment otherwise than by death or retirement, then he will have a nonforfeitable right at age 65 to any pension he has accrued, based only on his CBI Credited Service, under the CBI Pension Plan to date of termination of employment, whether or not such accrued pension is then vested under the provisions of the CBI Pension Plan. EX-99.9 10 STOCK OPTION PLAN 1 EXHIBIT 9 TABLE OF CONTENTS CBI INDUSTRIES, INC. STOCK OPTION PLAN (As of 8/11/93) 1. PURPOSE OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 3. ADMINISTRATION OF PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 4. GRANTING OF OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 5. TERMS OF OPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 6. GRANTING OF RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 7. EXERCISE OF OPTIONS AND RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 8. LIMITATIONS AND CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 9. TRANSFERS AND LEAVES OF ABSENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 10. STOCK ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 11. AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 12. EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2 (AS OF 8/11/93) CBI INDUSTRIES, INC. STOCK OPTION PLAN 1. PURPOSE OF PLAN The purpose of this Stock Option Plan (the "Plan") is to aid CBI Industries, Inc., and its Subsidiaries (collectively the "Company") in securing and retaining Key Employees of outstanding ability by making it possible to offer them an increased incentive, in the form of a proprietary interest in the Company, to join or continue in the service of the Company and to increase their efforts for its welfare. 2. DEFINITIONS As used in this Plan, the following words shall have the following meanings: (a) "CBI" means CBI Industries, Inc.; (b) "Board of Directors" means the Board of Directors of CBI; (c) "Common Stock" means common stock of CBI; (d) "Holder" means either a Participant, or a person other than a Participant to whom an Option or a Right has been transferred in accordance with Section 8(d) herein; (e) "Incentive Stock Option" means an option to purchase shares of Common Stock which is intended to qualify as an "incentive stock option" as defined in Section 422A of the Internal Revenue Code; (f) "Key Employee" means any person, including officers, in the regular full-time employment of the Company who, in the opinion of the Committee referred to in Section 3, is or is expected to be primarily responsible for the management, growth or protection of some part or all of the business of the Company; (g) "Limited Right" means a right to receive cash in lieu of the exercise of an Option, if granted pursuant to Section 5(e); (h) "Officers Exercise Period" means any period beginning on the third business day following the date of public release of a summary statement of CBI's quarterly or annual sales and earnings and ending on the twelfth business day following such date. 1 3 (i) "Non-Qualified Stock Option" means an option to purchase shares of Common Stock which is intended not to qualify as an incentive stock option as defined in Section 422A of the Internal Revenue Code; (j) "Option" means an Incentive Stock Option or a Non-Qualified Stock Option; (k) "Participant" means a person to whom an Option is granted that has not terminated and ceased to be exercisable under the Plan; (l) "Right" means a stock appreciation right to elect to receive shares of Common Stock with a fair market value, at the time of any exercise of such stock appreciation right, equal to the amount by which the fair market value of all shares subject to the Option (or part thereof) in respect of which such stock appreciation right was granted exceeds the exercise price of said Option (or part thereof), or to receive from CBI, in lieu of such shares, the fair market value thereof in cash, as provided in Section 7; and (m) "Subsidiary" means any corporation other than CBI in an unbroken chain of corporations beginning with CBI if each of the corporations other than the last corporation in the unbroken chain owns 50% or more of the voting stock in one of the other corporations in such chain. 3. ADMINISTRATION OF PLAN The Plan shall be administered by the Compensation Committee of the Board of Directors (the "Committee"). None of the members of the Committee shall be eligible to be selected for the grant of an Option, Right, Limited Right, or any other option, stock appreciation right or shares under the Plan or any other stock option plan maintained by the Company during such membership or have been so eligible for selection within one year prior thereto or thereafter. The Committee may adopt its own rules of procedure, and the action of a majority of the Committee, taken at a meeting or taken without a meeting by a writing signed by such majority, shall constitute action by the Committee. The Committee shall have the power and authority to administer, construe and interpret the Plan, to make rules for carrying it out and to make changes in such rules. 4. GRANTING OF OPTIONS The Committee may from time to time grant Options under the Plan to such Key Employees and for such numbers of shares as the Committee may determine. The Committee may grant Options in such amounts and may impose such conditions on the grant of an Option as it deems advisable. 2 4 5. TERMS OF OPTIONS The terms of each Option granted under the Plan shall be as determined from time to time by the Committee and shall be set forth in an Incentive Stock Option Agreement or a Non-Qualified Stock Option Agreement, as shall be appropriate, in a form approved by the Committee, consistent, however, with the following: (a) The Option price per share shall not be less than fair market value at the time the Option is granted. (b) The Option shall be exercisable in whole or in part from time to time during the period beginning at the completion of the required holding period stated in the Option, if any, and ending at the expiration of ten years from the date of grant of the Option, unless an earlier expiration date shall be stated in the Option or the Option shall cease to be exercisable pursuant to paragraph (d) of this Section 5. (c) Payment in full of the Option price shall be made upon exercise of each Option and may be made in cash, by the delivery of shares of Common Stock with a fair market value equal to the Option price, or by a combination of cash and such shares whose fair market value together with such cash shall equal the Option price. (d) If a Participant's employment with the Company terminates other than by reason of the Participant's death, retirement for disability or retirement under a retirement plan of the Company, the Participant's Option shall terminate and cease to be exercisable. If a Participant's employment with the Company terminates by reason of death or retirement due to disability, an Incentive Stock Option shall terminate and cease to be exercisable at the earlier of ten years from the date of grant or one year from the date of death or such retirement; if by reason of retirement under a plan, then at the earlier of ten years from the date of grant or three months from the date of such retirement. The Committee may, upon written request of a Holder, convert an Incentive Stock Option into a Non-Qualified Stock Option, and if such request is granted, the provisions concerning termination of Non-Qualified Stock Options shall apply to the Option in question which has been converted. A Non-Qualified Stock Option shall terminate at the earlier of ten years from the date of grant or one year from the date of termination of employment if such termination is due to death. Following any retirement of a Participant, a Non-Qualified Stock Option shall terminate on the expiration date of the Option. If the terms of an Option provide for its expiration prior to ten years from the date of grant, the Committee may at any time extend the expiration date of the Option but not beyond ten years from its date of grant. In the event any date specified herein falls on a day that is not a business day, then such date shall be deemed to be the next following business day. 3 5 (e) An Option may contain a Limited Right to receive cash in lieu of shares under conditions to be set forth in the Option, in the discretion of and as determined by the Committee, in addition to Rights. 6. GRANTING OF RIGHTS The Committee, at the time of grant of an Option or at any time prior to the expiration of the term of an Option may also grant, subject to the terms and conditions of the Plan, Rights in respect of all or part of such Option to a Holder, provided that, if granted to a Participant, the Participant at such time is a Key Employee. 7. EXERCISE OF OPTIONS AND RIGHTS (a) A Holder who decides to exercise an Option or Right in whole or in part shall give notice in writing to the Secretary of CBI of such exercise on a form approved by the Committee. A notice exercising a Right shall also specify the extent, if any, to which the Holder elects to receive shares of Common Stock and the extent, if any, to which the Holder elects to receive cash, but shall in any event be subject to the determination by the Committee as provided in paragraph (d) of this Section 7. Any exercise shall be effective as of the date specified in the notice of exercise, but not earlier than the date the notice of exercise is actually received by the Secretary of CBI, and in the case of exercise of an Option, when payment in full of the Option price is actually received by the Secretary of CBI. (b) To the extent an Option is exercised in whole or in part, any Right granted in respect of such Option (or part thereof) shall terminate and cease to be exercisable. To the extent a Right is exercised in whole or in part, the Option (or part thereof) in respect of which such Right was granted shall terminate and cease to be exercisable. (c) Subject to Section 6, a Right shall be exercisable only during the period in which the Option (or part thereof) in respect of which such Right was granted is exercisable and, in addition, if the Holder of such Right is an officer of CBI and elects to receive cash for all or part of the payments upon exercise, or who exercises for such cash, such Holder may so elect or exercise such Right only during an Officer's Exercise Period. For this purpose only, the fair market value of shares of CBI stock shall be deemed to be the average of the closing prices for public trading on the largest national securities exchange on which such shares trade for all of the business days within such Officer's Exercise Period. (d) The Committee shall have sole discretion to determine the form in which payment will be made following exercise of a Right. All or any part of the obligation arising out of an exercise of a Right may be settled: 4 6 (i) by payment in shares of Common Stock with a fair market value equal to the cash that would otherwise be paid, (ii) by payment in cash, or (iii) by payment in a combination of such shares and cash. (e) To the extent that any Right shall not have been exercised or cancelled or become non-exercisable, it shall be deemed to have been exercised automatically, without any notice of exercise, on the last day on which the Right's related Option is exercisable, or, in the case of officers of CBI, on the last day of the Officer's Exercise Period before the last day on which the Right's related Option is exercisable, provided that any other conditions or limitations on the Right's exercise other than notice of exercise are satisfied and the Right shall then have value. Such exercise shall be deemed to specify that, subject to determination by the Committee as provided in paragraph (d) of this Section 7, the Holder elects to receive cash and that such exercise of a Right shall be effective as of the time of the exercise. (f) The aggregate fair market value of the shares for which any Key Employee may exercise Incentive Stock Options in any calendar year under all plans of CBI shall not exceed the sum of $100,000 plus the amount which may be carried forward to that year. For purposes of the preceding sentence, the aggregate fair market value shall be determined as of the time an Incentive Stock Option is granted, and the amount which may be carried forward from each previous calendar year is $100,000 minus the amount of Incentive Options first exercisable and actually exercised in that previous calendar year. This provision shall be applied by taking options into account in the order in which they were granted. (g) To the extent the receipt of shares of Common Stock pursuant to the exercise of any Option or Right is subject to the withholding of any income or employment taxes by CBI for which CBI requires reimbursement from the recipient, the recipient may elect to reimburse CBI with shares of Common Stock withheld from the shares to be received, or cash, or a combination of such shares and cash, of sufficient value to make such reimbursement. Any such withholding or reimbursement shall comply with all applicable governing laws and regulations. 8. LIMITATIONS AND CONDITIONS (a) The total number of shares of Common Stock that may be optioned or issued or transferred upon exercise of Rights under the Plan is 1,200,000 shares. Such total number of shares may consist, in whole or in part, of unissued shares or reacquired shares. The foregoing number of shares may be increased or decreased by the events set forth in of Section 10. 5 7 (b) Any shares that have been optioned that cease to be subject to an Option (other than by reason of exercise of the Option) shall again be available for option and shall not be considered as having been theretofore optioned. Any shares subject to an Option (or part thereof) that is cancelled upon exercise of a Right shall be treated as if the Option itself were exercised and such shares shall no longer be available for grant. (c) No Option or Right shall be granted under the Plan after May 10, 1995, but Options and Rights theretofore granted may extend beyond that date. At the time an Option or Right is granted or amended or the terms or conditions of an Option or Right are changed, the Committee may provide for limitations or conditions on the exercisability of the Option or Right. (d) (i) A Non-Qualified Stock Option shall be non-transferrable unless the Committee designates otherwise. An Incentive Stock Option or a Right associated therewith shall not be transferable by the Participant otherwise than by will or by the laws of descent and distribution or by the provisions for the designation of a beneficiary in accordance with (ii) below. A Right shall never be transferred except to the transferee of the related Option. During the lifetime of the Participant, an Incentive Stock Option or a Right associated therewith shall only be exercisable by the Participant. (ii) Upon the death of a Participant, any outstanding and unexercised Options or Rights held by such Participant on the date of death shall be transferred to such beneficiary or beneficiaries as have been effectively designated by the Participant or, if none, then to the deceased Participant's surviving spouse or, if none, then to the Participant's lawful descendants, per stirpes as defined by common law, or, if none, then to the deceased Participant's estate. Any such transfer shall be effective as of the date of death of the Participant. To be effective, the designation of such beneficiary must be filed with the Committee or its designate in such written form as it requires and may include secondary, successive or contingent beneficiaries. Any Participant may change a beneficiary designation at any time by filing with the Committee a new beneficiary designation meeting the above requirements. The determination of the Committee as to the identity of a beneficiary, or whether a beneficiary is living or dead, pursuant to any determinations of rights under this Plan shall be conclusive and binding on all concerned. (e) No person shall have any rights of a stockholder (i) as to shares under option until, after proper exercise of the Option, such shares shall have been recorded on CBI's official stockholder records as having been issued or transferred or (ii) as to shares to be delivered following exercise of a Right until, after proper exercise of the Right and determination by the Committee to make payment therefor in shares, such shares shall have been recorded on CBI's official stockholder records as having been issued or transferred. 6 8 (f) CBI shall not be obligated to deliver any shares until they have been listed (or authorized for listing upon official notice of issuance) upon each stock exchange upon which outstanding shares of such class at the time are listed nor until there has been compliance with such laws or regulations as CBI may deem applicable. CBI shall use its best efforts to effect such listing and compliance. No fractional shares shall be delivered. 9. TRANSFERS AND LEAVES OF ABSENCE For the purposes of the Plan: (a) a transfer of a Participant's employment without an intervening period from CBI to a Subsidiary or vice versa, or from one Subsidiary to another, shall not be deemed a termination of employment, and (b) a Participant who is granted in writing a leave of absence shall be deemed to have remained in the employ of the Company during such leave of absence. 10. STOCK ADJUSTMENTS In the event of any merger, consolidation, stock dividend, split-up, combination or exchange of shares or recapitalization or change in capitalization, the total number of shares set forth in paragraph (a) of Section 8 shall be proportionately and appropriately adjusted. In any such case, (i) the number and kind of shares that are subject to any Option (including any Option outstanding after termination of employment), the Option price per share and the number of Rights granted in connection therewith, if any, shall be proportionately and appropriately adjusted by the Committee without any change in the aggregate Option price to be paid therefor upon exercise of the Option. 11. AMENDMENT AND TERMINATION (a) The Board of Directors shall have the power to amend the Plan, including the power to change the amount of the aggregate fair market value of the shares for which any Key Employee may exercise Incentive Stock Options under Section 4 to the extent provided in Section 422A, or any successor provision, of the Internal Revenue Code. It shall not, however, except as otherwise provided in the Plan, increase the maximum number of shares authorized for the Plan, nor reduce the basis upon which the minimum Option price is determined, nor extend the period within which Options or Rights under the Plan may be granted, nor change the basis upon which shares or cash may be distributed upon exercise of a Right, nor provide for an Option or Right that is exercisable more than ten years from the date of grant. It shall have no power (without the consent of the person or persons at the time entitled to exercise the Option) to change the terms and conditions of any Option in a manner that would adversely affect the rights of such person or persons except to the extent, if any, provided in the Option. 7 9 (b) The Board of Directors may suspend or terminate the Plan at any time. No such suspension or termination shall affect Options or Rights then in effect. 12. EFFECTIVE DATE The Plan shall be effective as of January 1, 1987, subject to its approval by the stockholders of CBI and subject to any modification that may be made herein prior to such stockholder approval that may be deemed required or appropriate by the Board of Directors to meet legal requirements. All Options, together with related Rights or Limited Rights, if any, which have been or may be granted under the Plan prior to stockholder approval, shall be conditioned upon, and may not be exercised until after, such stockholder approval. 8 EX-99.10 11 1995 STOCK OPTION PLAN 1 EXHIBIT 10 CBI INDUSTRIES, INC. 1995 STOCK OPTION PLAN 1. Purpose of Plan The purpose of the CBI Industries, Inc., 1995 Stock Option Plan (the "Plan") is to aid CBI Industries, Inc. and its Subsidiaries (collectively the "Company") in securing and retaining Key Employees of outstanding ability by making it possible to offer them an increased incentive in the form of a proprietary interest in the Company, to join or continue in the service of the Company and to increase their efforts for its welfare. 2. Definitions As used in this Plan, the following words shall have the following meanings: (a) "CBI" means CBI Industries, Inc.; (b) "Board of Directors" means the Board of Directors of CBI; (c) "Common Stock" means common stock of CBI; (d) "Holder" means either a Participant or a person other than a Participant to whom an Option or a Right has been transferred in accordance with Section 8(d) herein; (e) "Incentive Stock Option" means an option to purchase shares of Common Stock which is intended to qualify as an "incentive stock option" as defined in Section 422A of the Internal Revenue Code; (f) "Key Employee" means any person, including officers, in the regular full-time employment of the Company who, in the opinion of the Committee referred to in Section 3, is or is expected to be primarily responsible for the management, growth or protection of some part or all of the business of the Company; (g) "Limited Right" means a right to receive cash in lieu of the exercise of an Option, if granted pursuant to Section 5(e); (h) "Officers Exercise Period" means any period beginning on the third business day following the date of public release of a summary statement of CBI's quarterly or annual sales and earnings and ending on the twelfth business day following such date; (i) "Non-Qualified Stock Option" means an option to purchase shares of Common Stock which is intended not to qualify as an incentive stock option as defined in Section 422A of the Internal Revenue Code; (j) "Option" means an Incentive Stock Option or a Non-Qualified Stock Option; (k) "Participant" means a person to whom an Option is granted that has not terminated and ceased to be exercisable under the Plan; 2 (l) "Right" means a stock appreciation right to elect to receive shares of Common Stock with a fair market value, at the time of any exercise of such stock appreciation right, equal to the amount by which the fair market value of all shares subject to the Option (or part thereof) in respect of which such stock appreciation right was granted exceeds the exercise price of said Option (or part thereof), or to receive from CBI, in lieu of such shares, the fair market value thereof in cash, as provided in Section 7; and (m) "Subsidiary" means any corporation other than CBI in an unbroken chain of corporations beginning with CBI if each of the corporations other than the last corporation in the unbroken chain owns 50% or more of the voting stock in one of the other corporations in such chain. 3. Administration of Plan The Plan shall be administered by the Compensation Committee of the Board of Directors (the "Committee"). None of the members of the Committee shall be eligible to be selected for the grant of an Option, Right, Limited Right, or any other option, stock appreciation right or shares under the Plan or the grant of any stock or option under any other plan maintained by the Company during such membership or have been so eligible for selection within one year prior thereto or thereafter. The Committee may adopt its own rules of procedure, and the action of a majority of the Committee, taken at a meeting or taken without a meeting by a writing signed by such majority, shall constitute action by the Committee. The Committee shall have the power and authority to administer, construe and interpret the Plan, to make rules for carrying it out and to make changes in such rules. 4. Granting of Options The Committee may from time to time grant Options under the Plan to such Key Employees and for such numbers of shares as the Committee may determine. The Committee may grant Options in such amounts and may impose such conditions on the grant of an Option as it deems advisable. 5. Terms of Options The terms of each Option granted under the Plan shall be as determined from time to time by the Committee and shall be set forth in an Incentive Stock Option Agreement or a Non-Qualified Stock Option Agreement, as shall be appropriate, in a form approved by the Committee, consistent, however, with the following: (a) The Option price per share shall not be less than fair market value at the time the Option is granted. (b) The Option shall be exercisable in whole or in part from time to time during the period beginning at the completion of the required holding period stated in the Option, if any, and ending at the expiration of ten years from the date of grant of the Option, unless an earlier expiration date shall be stated in the Option or the Option shall cease to be exercisable pursuant to paragraph (d) of this Section 5. (c) Payment in full of the Option price shall be made upon exercise of each Option and may be made in cash, by the delivery of shares of Common Stock with a fair market value equal to the Option price, or by a combination of cash and such shares whose fair market value together with such cash shall equal the Option price. -26- 3 (d) If a Participant's employment with the Company terminates other than by reason of the Participant's death, retirement for disability or retirement under a retirement plan of the Company, the Participant's Option shall terminate and cease to be exercisable. If a Participant's employment with the Company terminates by reason of death or retirement due to disability, an Incentive Stock Option shall terminate and cease to be exercisable at the earlier of ten years from the date of grant or one year from the date of death or such retirement; if by reason of retirement under a plan, then at the earlier of ten years from the date of grant or three months from the date of such retirement. The Committee may, upon written request of a Holder, convert an Incentive Stock Option into a Non-Qualified Stock Option, and if such request is granted, the provisions concerning termination of Non-Qualified Stock Options shall apply to the Option in question which has been converted. A Non-Qualified Stock Option shall terminate at the earlier of ten years from the date of grant or one year from the date of termination of employment if such termination is due to death. Following any retirement of a Participant, a Non-Qualified Stock Option shall terminate on the expiration date of the Option. If the terms of an Option provide for its expiration prior to ten years from the date of grant, the Committee may at any time extend the expiration date of the Option but not beyond ten years from its date of grant In the event any date specified herein falls on a day that is not a business day, then such date shall be deemed to be the next following business day. (e) An Option may contain a Limited Right to receive cash in lieu of shares under conditions to be set forth in the Option, in the discretion of and as determined by the Committee, in addition to Rights. 6. Granting of Rights The Committee, at the time of grant of an Option or at any time prior to the expiration of the term of an Option may also grant, subject to the terms and conditions of the Plan, Rights in respect of all or part of such Option to a Holder, provided that, if granted to a Participant, the Participant at such time is a Key Employee. 7. Exercise of Options and Rights (a) A Holder who decides to exercise an Option or Right in whole or in part shall give notice in writing to the Secretary of CBI of such exercise on a form approved by the Committee. A notice exercising a Right shall also specify the extent, if any, to which the Holder elects to receive shares of Common Stock and the extent, if any, to which the Holder elects to receive cash, but shall in any event be subject to the determination by the Committee as provided in paragraph (d) of this Section 7. Any exercise shall be effective as of the date specified in the notice of exercise, but not earlier than the date the notice of exercise is actually received by the Secretary of CBI, and in the case of exercise of an Option, when payment in full of the Option price is actually received by the Secretary of CBI. (b) To the extent an Option is exercised in whole or in part, any Right granted in respect of such Option (or part thereof) shall terminate and cease to be exercisable. To the extent a Right is exercised in whole or in part, the Option (or part thereof) in respect of which such Right was granted shall terminate and cease to be exercisable. (c) Subject to Section 6, a Right shall be exercisable only during the period in which the Option (or part thereof) in respect of which such Right was granted is exercisable and, in addition, if the Holder of such Right is an officer of CBI and elects to receive cash for all or part of the payments upon exercise, or who exercises for such cash, such Holder may so elect or exercise -27- 4 such Right only during an Officer's Exercise Period. For this purpose only, the fair market value of shares of CBI stock shall be deemed to be the average of the closing prices for public trading on the largest national securities exchange on which such shares trade for all of the business days within such Officer's Exercise Period. (d) The Committee shall have sole discretion to determine the form in which payment will be made following exercise of a Right. All or any part of the obligation arising out of an exercise of a Right may be settled: (i) by payment in shares of Common Stock with a fair market value equal to the cash that would otherwise be paid, (ii) by payment in cash, or (iii) by payment in a combination of such shares and cash. (e) To the extent that any Right shall not have been exercised or cancelled or become non-exercisable, it shall be deemed to have been exercised automatically, without any notice of exercise, on the last day on which the Right's related Option is exercisable, or, in the case of officers of CBI, on the last day of the Officer's Exercise Period before the last day on which the Right's related Option is exercisable, provided that any other conditions or limitations on the Right's exercise other than notice of exercise are satisfied and the Right shall then have value. Such exercise shall be deemed to specify that, subject to determination by the Committee as provided in paragraph (d) of this Section 7, the Holder elects to receive cash and that such exercise of a Right shall be effective as of the time of the exercise. (f) The aggregate fair market value of the shares for which any Key Employee may exercise Incentive Stock Options in any calendar year under all plans of CBI shall not exceed the sum of $100,000 plus the amount which may be carried forward to that year. For purposes of the preceding sentence, the aggregate fair market value shall be determined as of the time an Incentive Stock Option is granted, and the amount which may be carried forward from each previous calendar year is $100,000 minus the amount of Incentive Options first exercisable and actually exercised in that previous calendar year. This provision shall be applied by taking options into account in the order in which they were granted. (g) To the extent the receipt of shares of Common Stock pursuant to the exercise of any Option or Right is subject to the withholding of any income or employment taxes by CBI for which CBI requires reimbursement from the recipient, the recipient may elect to reimburse CBI with shares of Common Stock withheld from the shares to be received, or cash, or a combination of such shares and cash, of sufficient value to make such reimbursement. Any such withholding or reimbursement shall comply with all applicable governing laws and regulations. 8. Limitations and Conditions (a) The total number of shares of Common Stock that may be optioned or issued or transferred upon exercise of Rights under the Plan is 1,700,000 shares. Such total number of shares may consist, in whole or in part, of unissued shares or reacquired shares. The foregoing number of shares may be increased or decreased by the events set forth in of Section 10. -28- 5 (b) Any shares that have been optioned that cease to be subject to an Option (other than by reason of exercise of the Option) shall again be available for option and shall not be considered as having been theretofore optioned. Any shares subject to an Option (or part thereof) that is cancelled upon exercise of a Right shall be treated as if the Option itself were exercised and such shares shall no longer be available for grant. (c) No Option or Right shall be granted under the Plan after January 1, 2005 but Options and Rights theretofore granted may extend beyond that date. At the time an Option or Right is granted or amended or the terms or conditions of an Option or Right are changed, the Committee may provide for limitations or conditions on the exercisability of the Option or Right. (d) (i) A Non-Qualified Stock Option shall be non-transferrable unless the Committee designates otherwise. An Incentive Stock Option or a Right associated therewith shall not be transferable by the Participant otherwise than by will or by the laws of descent and distribution or by the provisions for the designation of a beneficiary in accordance with (ii) below. A Right shall never be transferred except to the transferee of the related Option. During the lifetime of the Participant, an Incentive Stock Option or a Right associated therewith shall only be exercisable by the Participant. (ii) Upon the death of a Participant, any outstanding and unexercised Options or Rights held by such Participant on the date of death shall be transferred to such beneficiary or beneficiaries as have been effectively designated by the Participant or, if none, then to the deceased Participant's surviving spouse or, if none, then to the Participant's lawful descendants, per stirpes as defined by common law, or, if none, then to the deceased Participant's estate. Any such transfer shall be effective as of the date of death of the Participant. To be effective, the designation of such beneficiary must be filed with the Committee or its designate in such written form as it requires and may include secondary, successive or contingent beneficiaries. Any Participant may change a beneficiary designation at any time by filing with the Committee a new beneficiary designation meeting the above requirements. The determination of the Committee as to the identity of a beneficiary, or whether a beneficiary is living or dead, pursuant to any determinations of rights under this Plan shall be conclusive and binding on all concerned. (e) No person shall have any rights of a stockholder (i) as to shares under option until, after proper exercise of the Option, such shares shall have been recorded on CBI's official stockholder records as having been issued or transferred or (ii) as to shares to be delivered following exercise of a Right until, after proper exercise of the Right and determination by the Committee to make payment therefor in shares, such shares shall have been recorded on CBI's official stockholder records as having been issued or transferred. (f) CBI shall not be obligated to deliver any shares until they have been listed (or authorized for listing upon official notice of issuance) upon each stock exchange upon which outstanding shares of such class at the time are listed nor until there has been compliance with such laws or regulations as CBI may deem applicable. CBI shall use its best efforts to effect such listing and compliance. No fractional shares shall be delivered. (g) The total number of shares of Common Stock that may be optioned to a Participant in any year shall not exceed 100,000 shares. -29- 6 9. Transfers and Leaves of Absence For the purposes of the Plan: (a) a transfer of a Participant's employment without an intervening period from CBI to a Subsidiary or vice versa, or from one Subsidiary to another, shall not be deemed a termination of employment, and (b) a Participant who is granted in writing a leave of absence shall be deemed to have remained in the employ of the Company during such leave of absence. 10. Stock Adjustments In the event of any merger, consolidation, stock dividend, split-up, combination or exchange of shares or recapitalization or change in capitalization, the total number of shares set forth in paragraph (a) of Section 8 shall be proportionately and appropriately adjusted. In any such case, the number and kind of shares that are subject to any Option (including any Option outstanding after termination of employment), the Option price per share and the number of Rights granted in connection therewith, if any, shall be proportionately and appropriately adjusted by the Committee without any change in the aggregate Option price to be paid therefor upon exercise of the Option. 11. Amendment and Termination (a) The Board of Directors shall have the power to amend the Plan, including the power to change the amount of the aggregate fair market value of the shares for which any Key Employee may exercise Incentive Stock Options under Section 4 to the extent provided in Section 422A, or any successor provision, of the Internal Revenue Code. It shall not, however, except as otherwise provided in the Plan, increase the maximum number of shares authorized for the Plan, nor reduce the basis upon which the minimum Option price is determined, nor extend the period within which Options or Rights under the Plan may be granted, nor change the basis upon which shares or cash may be distributed upon exercise of a Right, nor provide for an Option or Right that is exercisable more than ten years from the date of grant. It shall have no power (without the consent of the person or persons at the time entitled to exercise the Option) to change the terms and conditions of any Option in a manner that would adversely affect the rights of such person or persons except to the extent, if any, provided in the Option. (b) The Board of Directors may suspend or terminate the Plan at any time. No such suspension or termination shall affect Options or Rights then in effect. 12. Effective Date The Plan shall be effective as of January 1, 1995, subject to its approval by the stockholders of CBI and subject to any modification that may be made herein prior to such stockholder approval that may be deemed required or appropriate by the Board of Directors to meet legal requirements. All Options, together with related Rights or Limited Rights, if any, which have been or may be granted under the Plan prior to stockholder approval, shall be conditioned upon, and may not be exercised until after, such stockholder approval. -30- EX-99.11 12 RESTRICTED STOCK AWARD PLAN (1978) 1 EXHIBIT 11 CBI RESTRICTED STOCK AWARD PLAN (as amended October 6, 1981) 1. Purpose. The purpose of this CBI Restricted Stock Award Plan (the "Plan") is to provide an incentive for Participants to contribute to the continued growth and profitability of the Company by encouraging stock ownership. The Plan is intended to further the interest of the Company by enabling it to attract and retain the services of highly qualified and motivated persons to serve the Company and its subsidiaries. 2. Definitions. As used in the Plan, the following terms shall have the following meanings: Award--The grant of Common Stock subject to the restrictions and pursuant to the terms of the Plan. Award Date--The date on which an Award is approved by the Board as provided by paragraph 4.3 below. Board--The Board of Directors of the Company, as from time to time constituted. Committee--The Compensation Committee of the Board, no member of which shall be eligible to participate in the Plan while serving as such member. Common Stock--Common shares of the Company, par value $2.50 per share. Company--CBI Industries, Inc., a Delaware corporation. Disability--That condition of a Participant, including but not limited to a physical or mental condition, which makes a Participant unable to perform the regular duties of his employment, as determined by the Committee, provided, however, that Disability shall not consist of a condition resulting from a cause which the Committee, in its rules, has excluded. Effective Date--April 11, 1978. Participant--An employee or former employee who has received an Award under the Plan. Retirement--The termination of employment of a Participant with the Company and all subsidiaries on or after attaining age 62, or such earlier termination with the Company's consent and as may be determined by the Committee to constitute early retirement, provided, however, that no termination of such employment by reason of dishonesty, fraud or breach of trust against the Company or any of its subsidiaries, as determined by the Committee, shall constitute Retirement. -1- 2 Supplemental Award--An Award made pursuant to paragraph 4.4 below and designated as a "Supplemental Award" by the Committee at the time it is made. 3. Common Stock Subject to Plan. There will be reserved for issue upon the granting of Awards during the term of the Plan an aggregate of 500,000 shares of Common Stock, as adjusted by the Committee as required to reflect any stock dividend, stock split, reclassification or similar change in capitalization. If any such adjustment shall result in a fractional share such fraction shall be disregarded. Upon the granting of an Award, the number of shares reserved for Award shall be reduced by the number of shares so awarded, and upon the forfeiture to the Company of any shares awarded hereunder the number of shares reserved for Award shall be increased by such number of shares, and such forfeited shares may again be the subject of an Award. Awards may be made from authorized but unissued shares or from treasury shares. All authorized but unissued shares awarded hereunder shall be fully paid and nonassessable shares. 4. Eligibility and Awards. 4.1 Eligibility. The Chairman and President of the Company shall not be eligible to become a Participant. All other management employees (including officers but not directors unless also employees) of the Company and of its present and future subsidiaries are eligible to be selected by the Committee and approved by the Board as Participants. 4.2 Making of Awards. Subject to the express provisions of the Plan, the Committee shall in its discretion determine the employees to whom, and the time or times at which, Awards shall be made pursuant to the Plan and the number of shares to be awarded. In making such determinations, the Committee shall take into account the recommendations of the Management Committee of the Company and the nature of the services rendered by the respective employees, their present and potential contributions to the Company's success and such other factors as the Committee in its discretion shall deem relevant. Except as provided in paragraph 4.4 below, Awards to any employee will not be made more frequently than once in each calendar year. 4.3 Form of Award. As soon as reasonably practicable after making a determination as provided in paragraph 4.2 above, the Committee shall submit such determination to the Board which shall approve or disapprove the Award. Promptly upon the approval of an Award by the Board, the Committee shall advise the Participant in writing of the making of such Award, the number of shares awarded, the restrictions thereon and incidents of forfeiture thereof, and any other terms and conditions relating thereto. 4.4 Supplemental Awards. During the first year following the Effective Date of this Plan, a Supplemental Award may be made to any employee who is otherwise eligible under this Plan and who (i) is the holder -2- 3 of one or more valid outstanding stock options under Chicago Bridge & Iron Company's 1975 Stock Option Plan for Selected Key Employees as of May 1, 1978, and (ii) has on or before June 1, 1978 surrendered all options. The number of shares of common Stock awarded as a Supplemental Award to any Participant shall be twenty percent (20%) of the number of shares subject to such surrendered options but not less than 100 shares to any employee surrendering such options. Supplemental Awards shall be made in the same manner as Awards under paragraphs 4.2 and 4.3 above, except that a Supplemental Award may be made in the same year as another Award to such Participant. 5. Restrictions on Awarded Stock. 5.1 Rights of Participants as Shareholders. Shares awarded hereunder shall forthwith be duly issued or transferred and a certificate or certificates for such shares shall be issued in the Participant's name. The Participant shall thereupon be a shareholder with respect to all the shares represented by such certificate or certificates and shall have all the rights of a shareholder with respect to all such shares, including the right to vote such shares and to receive all dividends and other distributions (subject to the provisions of paragraph 5.2 below) paid with respect to such shares, provided, however, that such shares shall be subject to the restrictions hereinafter described, and to such additional or more severe restrictions (including more severe provisions relating the the lapsing of restrictions) as may be imposed by the Committee in making any individual award. In aid of such restrictions, certificates for shares awarded hereunder, together with suitable executed stock powers signed by each Participant, shall be held by the Company in its control for the account of such Participant until such restrictions lapse as provided in paragraph 5.4 below or such shares are theretofore forfeited to the Company as provided by paragraph 5.3 below. 5.2 Changes in Capitalization. In the event that, as the result of a stock dividend, stock split, reclassification or similar change in capitalization, the Participant shall, as the owner of shares subject to restrictions hereunder, be entitled to new or additional or different shares of stock or securities, the certificate or certificates for, or other evidences of, such new or additional or different shares of securities, shall also be held by the Company in its control for the account of such Participant as provided in paragraph 5.1 above, and all provisions of the Plan relating to restrictions and lapse or restrictions herein set forth shall thereupon be applicable to such new or additional or different shares or securities to the extent they were distributed; provided, however, that if the Participant shall receive rights, warrants or fractional interests in respect of any of such shares, such rights or warrants may be held, exercised, sold or otherwise disposed of, and such fractional interests may be settled, by the Participant free and clear of the restrictions hereafter set forth. 5.3 Imposition of Restrictions. Each share awarded under the Plan shall be subject to the following restrictions except to the extent that such restrictions have lapsed pursuant to paragraph 5.4 below: -3- 4 5.3.1 Transfer Restrictions. None of such shares shall be sold, exchanged, transferred, pledged, hypothecated, or otherwise disposed of in any manner, whether voluntarily or involuntarily. 5.3.2 Forfeitures. All of such shares shall be forfeited to the Company without notice immediately upon the occurrence of any of the following events: a. The termination of the employment of the Participant with the Company and all subsidiaries for any reason other than Retirement, Disability, or death, or b. The performance of services by the Participant, while an employee of the company or any subsidiary or within two (2) years following his Retirement, as an employee, consultant or independent contractor for, or the acquisition of an ownership interest in excess of five percent (5%) in, any competitor of the Company or any subsidiary without the express written consent of the Company, or c. The failure of the Participant (for any reason other than Disability or death), within two (2) years following his Retirement, to render such consulting services, advice, and counsel to the Company or any subsidiary as the Company may reasonably request, or d. An attempt to transfer or cause to transfer such shares, whether voluntarily or involuntarily, in violation of Paragraph 5.3.1 above, or e. A. violation of such additional or more severe restrictions imposed by the Committee pursuant to paragraph 5.1. 5.4 Release of Restrictions. The restrictions set forth in paragraph 5.3 above on shares awarded under the Plan, to the extent such shares have not been forfeited pursuant to paragraph 5.3 above, shall lapse on the first to happen of (i) the date of the Participant's death, (ii) the termination of the Participant's employment by reason of his Disability, or (iii) the second anniversary of his Retirement; and shall lapse prior thereto either pursuant to such additional or more severe restrictions imposed by the Committee pursuant to paragraph 5.1 or as follows: -4- 5 5.4.1 Awards other than Supplemental Awards. Restrictions on shares in each Award under the Plan, other than a Supplemental Award, shall lapse as to fifty percent (50%) of the shares in such Award on the fifth anniversary of the Award Date. 5.4.2 Supplemental Awards. Restrictions on shares in each Supplemental Award under the Plan shall lapse: a. As to forty percent (40%) of the shares in such Award, on the second anniversary of the Award Date, b. As to thirty percent (30%) on the shares in such Award, on the fourth anniversary of the Award Date, and c. As to the remaining thirty percent (30%) of the shares in such Award, on the sixth anniversary of the Award Date. 6. Miscellaneous. 6.1 Administration. Subject to the express provisions of the Plan, the Committee shall have complete authority to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to it, and to make all other determinations necessary or advisable for the administration of the Plan. The Committee's determinations on the matters referred to herein shall be conclusive. 6.2 Limitations. Nothing in the Plan or in any Award shall confer on any employee the right to continue in the employ of the Company or any of its subsidiaries nor interfere in any way with the right of the Company or its subsidiaries to terminate the employment of that employee at any time. 6.3 Amendment and Termination. The Board may suspend or terminate the Plan, or amend the Plan in such respect as it shall deem advisable, provided, however, that such amendment shall not, without the consent of the Participant to whom any Award shall theretofore have been granted under the Plan, adversely affect the rights of such Participant under such Award, and further provided that such amendment shall not change the maximum number of shares available for awarding to all Participants or which may be awarded to any Participant as a Supplemental Award. 6.4 Effectiveness of the Plan. The Plan became effective on April 11, 1978. No stock shall be awarded under the Plan after May 31, 1984, or such earlier date as the Plan may have been terminated pursuant to paragraph 6.3. -5- 6 A meeting of the Board of Directors of CBI Industries, Inc. was held at the office of the Company in Oak Brook, Illinois at 8:45 A.M. on August 6, 1985. All the directors were present except Mr. C.W. Lake, Jr. Messrs. R.L. Brunot and B.T. Adams were present for part of the meeting. Mr. Pogue presided and Mr. Craigmile acted as secretary. On motion made, seconded and carried, the minutes of the Board meeting held June 4, 1985 were approved. Mr. Pogue said that formal action needed to be taken on management's recommendation that people terminated as a result of the Company's recent force reduction do not forfeit shares awarded pursuant to the Company's restricted stock award plan. After discussion, and on motion made, seconded and carried, the following resolution was adopted: RESOLVED, that the release of restrictions on stock awarded to a Participant under the CBI 1983 Restricted Stock Award Plan ("the 1983 Plan") or under the CBI Restricted Stock Award Plan ("the 1978 Plan") who may be involuntarily terminated pursuant to a program or plan of work force reduction, as determined by the Salary and Benefits Committee, shall occur under the terms of the 1983 Plan as though such Participant had Retired; provided, however, in the event such Participant is reemployed prior to the second anniversary of the date of such termination by CBI Industries, Inc., or any of its subsidiaries, the release of such restrictions shall occur in accordance with the otherwise applicable provisions of the 1978 Plan or the 1983 Plan, as the case may be, as though such termination had not occurred. There was a discussion concerning the cost of termination benefits resulting from the Company's recent force reduction and the fact that funds were available in the pension trust to cover such costs and, additionally, pay for retiree medical benefits. After discussion, and on motion made, seconded and carried, the following resolution was adopted: RESOLVED, that the officers of the Company, the General Counsel, and the Manager of Employee Benefits, as Plan Administrator of the CBI Pension Plan, are jointly authorized to amend the CBI Pension Plan and CBI Pension Trust, as necessary, effective January 1, 1985, to provide for the following: 1. Payment of special severance pay benefits from the Trust to Company or Participating Affiliate employees terminated from employment under a formal work force reduction program conducted over a specified time period, as designated by the Board. 2. Payment from the Trust of retired Participants' medical costs under the Company's health care program for retired employees, net of such Participants' own contributions to payment of such costs, and securing such Internal Revenue Service or other governmental approvals, or filing such notices or other documents, as necessary to implement such payments. Mr. Brunot presented management's recommendation with respect to adjustments to the carrying value of certain assets. There was a review of the recommended adjustments considering future business prospects in the energy and energy service markets, the effects of the recently Implemented restructuring and the redirection of the Company's efforts in the construction services segment, and the estimated realizable values in the event some of 7 Board of Directors Meeting CBI Industries, Inc. August 6, 1985 - Page 2 the specified assets were ultimately sold, the primary purpose of the adjustments being to establish appropriate recoverable values considering expected future operations. On motion made, seconded and carried, the Board approved adjustments to the carrying value of certain assets of the Company and its subsidiaries in the total amount of approximately $153,000,000, as set forth in the summary thereof attached to these minutes and identified by the Secretary of the Company. On Motion made, seconded and carried, a quarterly dividend of 35 cents per share was declared, payable September 13, 1985 to shareholders of record as of the close of business August 20, 1985. The remainder of the meeting was devoted to a discussion of the business of the Company, its subsidiaries and affiliates. There was no further business to come before the meeting and, accordingly, on motion made, seconded and carried, the meeting adjourned at 11:25 A.M. /s/ D.H. Craigmile ---------------------------- Secretary 8 A meeting of the Board of Directors of CBI Industries, Inc. was held at the office of the Company in Oak Brook, Illinois at 8:30 A.M. on August 5, 1986. All the directors were present. Messrs. R. L. Brunot and C. O. Ziemer were present for part of the meeting. Mr. Pogue presided and Mr. Craigmile acted as Secretary. On motion made, seconded and carried, the minutes of the Board meeting held June 3, 1986 were approved. Mr. Brunot reviewed the reasons for the Company's decision to change the present accounting method for oil and gas reserves from the "full cost" method to the "successful efforts" method, the change to take effect commencing with the second quarter 1986. On motion made, seconded and carried, a quarterly dividend of 15 cents per share was declared, payable September 12, 1986 to shareholders of record as of the close of business August 19, 1986. Mr. Pogue recommended the adoption of new employee stock purchase plans substantially the same as the existing plans which expire in January 1987. After discussion, and on motion made, seconded and carried, the directors approved the "CBI Employee Stock Purchase and Savings Plan (1987)" and the "Employee Stock Purchase Plan for Participating CBI Subsidiaries (1987)", in the form of which copies identified by the Secretary have been inserted in the minute book following these minutes, subject to the approval of shareholders and appropriate governmental agencies. After discussion, and on motion made, seconded and carried, the following resolutions were adopted: RESOLVED, that in accordance with Article 1, Section 1.09 of the CBI Employee Stock Purchase and Savings Plan (1987), the subsidiaries listed on the schedule attached to these minutes and identified by the Secretary are hereby designated "Participating Subsidiaries" under the plan; RESOLVED FURTHER, that in accordance with Section 1.07 of the CBI Employee Stock Purchase and Savings Plan (1987), Mr. R. G. Douglass is designated "Plan Administrator". It was reported that it was necessary to ratify certain actions and authorize other actions concerning the trading and escrow accounts with Banque de Paris et des Pays-Bas (Suisse) S.A., Geneva, in connection with the Statia terminal. On motion made, seconded and carried, the following resolutions were adopted: RESOLVED, that the actions of Mr. Julian Y. Barrolaza in opening on behalf of CBI Industries, Inc., Account Number 057045K designated "Statia Trading Account" and Account Number 057101T currently designated "Bridge Escrow Account" with Banque de Paris et des Pays-Bas (Suisse) S.A., Geneva, and in executing and delivering on behalf of CBI Industries, Inc. all applications, assignments, pledges, agreements and other documents relating to the opening of and the operation of said accounts and any balances deposited in and transfers to and from said accounts are hereby ratified and confirmed. 9 Board of Directors Meeting CBI Industries, Inc. August 5, 1986 - Page 2 RESOLVED FURTHER, that all actions of Mr. Julian Y. Barrolaza on behalf of CBI Industries, Inc., prior to the date of this resolution relating to the operation of said accounts and the giving of instructions to said bank with respect to said accounts in accordance with the foregoing resolution and the matters contemplated therein are hereby ratified and confirmed. RESOLVED FURTHER, that Mr. Buel T. Adams and Mr. Julian Y. Barrolaza be and they are hereby authorized on behalf of CBI Industries, Inc. to give instructions to said bank with respect to said accounts and to execute on behalf of CBI Industries, Inc., any and all other documents which may be required to continue the operation of or close said accounts all in accordance with the foregoing resolutions and the matters contemplated therein. There was a discussion regarding amending the by-laws to eliminate the present requirement that a directors' meeting be held immediately following the annual meeting each year. After due notice given in accordance with the by-laws, and on motion made, seconded and carried, the following resolution was adopted: RESOLVED, that the second sentence of Section 3 of Article V of the by-laws be and is hereby amended to read as follows: "Regular meetings of the board of directors shall be held at such times as may be fixed by resolution of the board." Mr. Clark gave the report of the Compensation and Nominating Committee. The Committee recommended that the Board take action to provide for the equitable handling of certain benefits previously earned by employees of the Company in the event of certain types of termination. After discussion, and on motion made, seconded and carried the following resolutions were adopted: WHEREAS, the directors of the Company wish to provide for the fair and equitable vesting of deferred compensation previously earned by employees of the Company and its subsidiaries and affiliates in the event of the termination by the Company of the employment of such employees for reasons other than death, disability (as defined in the CBI Pension Plan), or willful and material acts by such an employee causing direct and substantial injury to CBI or its business, when such employees have otherwise fulfilled the requirements or complied with the restrictions placed on the grant or awards of such deferred compensation but for the said termination; and WHEREAS, the Company and its subsidiaries and affiliates maintain the CBI 1983 Restricted Stock Award Plan and the CBI Restricted Stock Award Plan of 1978 ("the Plans") to provide such deferred compensation to several hundred management and administrative employees of such companies in the form of awards of shares of restricted stock in recognition of past performance and as an incentive for future service; and WHEREAS, the directors have previously implemented such a policy by authorizing the accelerated lapse of restrictions on shares awarded under the Plans for certain terminations of employment of such employees pursuant to a program of work force reduction by virtue of the resolution of August 6, 1985; 10 Board of Directors Meeting CBI Industries, Inc August 5, 1986 - Page 3 NOW, THEREFORE, the Board adopts the following resolutions: RESOLVED, that all restrictions shall be released on shares of stock awarded to a Participant under either or both of the Plans, or on any shares of stock awarded to an employee as a substitute for, in lieu of, or carrying restrictions substantially similar to those incident to participation in the Plans, whose employment may be terminated by the Company other than for the excepted reasons recited above throughout the three-year period following any "change in control" of the Company, as defined in the CBI Pension Plan, as amended March 4, 1986; RESOLVED FURTHER, that all such restrictions shall be released immediately as to all participants in either or both of the respective Plans, as the case may be, should either or both Plans at any time be terminated following any "change in control" of the Company, as defined in the CBI Pension Plan, as amended March 4, 1986. Mr. Clark also mentioned that the Committee concurred with Mr. Pogue's recommendation that the Chairman and Vice Chairman of the Board be given authority to commit up to a total of 10,000 shares of common stock of the Company to individuals in special situations. After discussion, and on motion made, seconded and carried, the Board gave the Chairman and the Vice Chairman of the Board the authority in their sole discretion to commit up to a total of 10,000 shares of the Company's common stock to individuals selected by those officers, such shares to be awarded pursuant to the CBI 1983 Restricted Stock Award Plan. The remainder of the meeting was devoted to a discussion of the business of the Company, its subsidiaries and affiliates. There was no further business to come before the meeting and, accordingly, on motion made, seconded and carried, the meeting adjourned at 11:15 A.M. /s/ D.H. Craigmile ------------------------------ Secretary EX-99.12 13 1983 RESTRICTED STOCK AWARD PLAN 1 EXHIBIT 12 CBI 1983 RESTRICTED STOCK AWARD PLAN (As Amended December 6, 1983) 1. Purpose. The purpose of this CBI 1983 Restricted Stock Award Plan (the "Plan") is to provide an incentive for Participants to contribute to the continued growth and profitability of the Company by encouraging stock ownership. The Plan is intended to further the interest of the Company by enabling it to attract and retain the services of highly qualified and motivated persons to serve the Company and its subsidiaries. 2. Definitions. As used in the Plan, the following terms shall have the following meanings: Award--The grant of Common Stock subject to the restrictions and pursuant to the terms of the Plan. Award Date--The date on which an Award is approved by the Board as provided by paragraph 4.3 below. Board--The Board of Directors of the Company, as from time to time constituted. Committee--The Compensation Committee of the Board, no member of which shall be eligible to participate in the Plan while serving as such member. Common Stock--Common shares of the Company, par value $2.50 per share. Company--CBI Industries, Inc., a Delaware corporation. Disability--That condition of a Participant, including but not limited to a physical or mental condition, which makes a Participant unable to perform the regular duties of his employment, as determined by the Committee, provided, however, that Disability shall not consist of a condition resulting from a cause which the Committee, in its rules, has excluded. Effective Date--May 1, 1983. Participant--An employee or former employee who has received an Award under the Plan. Retirement--The termination of employment of a Participant with the Company and all subsidiaries on or after attaining age 60, or after qualifying for any retirement as defined under the terms of the CBI Pension Plan as amended, or such earlier termination with the Company's consent and as may be determined by the Committee to constitute early retirement, provided, however, that no termination of such employment by reason of dishonesty, fraud or breach of trust against the Company or any of its subsidiaries, as determined by the Committee, shall constitute Retirement. -1- 2 3. Common Stock Subject to Plan. There will be reserved for issue upon the granting of Awards during the term of the Plan an aggregate of 500,000 shares of Common Stock, as adjusted by the Committee as required to reflect any stock dividend, stock split, reclassification or similar change in capitalization. If any such adjustment shall result in a fractional share such fraction shall be disregarded. Upon the granting of an Award, the number of shares reserved for Award shall be reduced by the number of shares so awarded, and upon the forfeiture to the Company of any shares awarded hereunder the number of shares reserved for Award shall be increased by such number of shares, and such forfeited shares may again be the subject of an Award. Awards may be made from authorized but unissued shares or from treasury shares. All authorized but unissued shares awarded hereunder shall be fully paid and nonassessable shares. 4. Eligibility and Awards. 4.1 Eligibility. All management employees (including officers but not directors unless also employees) of the Company and of its present and future subsidiaries are eligible to be selected by the Committee and approved by the Board as Participants. 4.2 Making of Awards. Subject to the express provisions of the Plan, the Committee shall in its discretion determine the employees to whom, and the time or times at which, Awards shall be made pursuant to the Plan and the number of shares to be awarded. In making such determinations, the Committee shall take into account the recommendations of the Management Committee of the Company and the nature of the services rendered by the respective employees, their present and potential contributions to the Company's success and such other factors as the Committee in its discretion shall deem relevant. Awards to any employee will not be made more frequently than once in each calender year. 4.3 Form of Award. As soon as reasonably practicable after making a determination as provided in paragraph 4.2 above, the Committee shall submit such determination to the Board which shall approve or disapprove the Award. Promptly upon the approval of an Award by the Board, the Committee shall advise the Participant in writing of the making of such Award, the number of shares awarded, the restrictions thereon and incidents of forfeiture thereof, and any other terms and conditions relating thereto. 5. Restrictions on Awarded Stock. 5.1 Rights of Participants as Shareholders. Shares awarded hereunder shall forthwith be duly issued and identified on the books of the Company in the Participant's name. The Participant shall thereupon be a shareholder with respect to all such shares and shall have all the rights of a shareholder with respect to all such shares, including the right to vote such shares and to receive all dividends and other distributions (subject to the provisions of paragraph 5.2 below) paid with respect to such shares, provided, however, that such shares shall be subject to the restrictions hereinafter described, and to such additional or more severe restrictions (including more severe provisions relating the the lapsing of restrictions) as may be imposed by the Committee in making any individual award. In aid of -2- 3 such restrictions, such shares shall be held by the Company in its control for the account of such Participant until such restrictions lapse as provided in paragraph 5.4 below or such shares are theretofore forfeited to the Company as provided by paragraph 5.3 below. 5.2 Changes in Capitalization. In the event that, as the result of a stock dividend, stock split, reclassification or similar change in capitalization, the Participant shall, as the owner of shares subject to restrictions hereunder, be entitled to new or additional or different shares of stock or securities, the certificate or certificates for, or other evidences of, such new or additional or different shares or securities, shall also be held by the Company in its control for the account of such Participant as provided in paragraph 5.1 above, and all provisions of the Plan relating to restrictions and lapse or restrictions herein set forth shall thereupon be applicable to such new or additional or different shares or securities to the extent they were distributed; provided, however, that if the Participant shall receive rights, warrants or fractional interests in respect of any of such shares, such rights or warrants may be held, exercised, sold or otherwise disposed of, and such fractional interests may be settled, by the Participant free and clear of the restrictions hereafter set forth. 5.3 Imposition of Restrictions. Each share awarded under the Plan shall be subject to the following restrictions except to the extent that such restrictions have lapsed pursuant to paragraph 5.4 below: 5.3.1 Transfer Restrictions. None of such shares shall be sold, exchanged, transferred, pledged, hypothecated, or otherwise disposed of in any manner, whether voluntarily or involuntarily. 5.3.2 Forfeitures. All of such shares shall be forfeited to the Company without notice immediately upon the occurrence of any of the following events: a. The termination of the employment of the Participant with the Company and all subsidiaries for any reason other than Retirement, Disability, or death, or b. The performance of services by the Participant, while an employee of the Company or any subsidiary or within two (2) years following his Retirement, as an employee, consultant or independent contractor for, or the acquisition of an ownership interest in excess of five percent (5%) in, any competitor of the Company or any subsidiary without the express written consent of the Company, or c. The failure of the Participant (for any reason other than Disability or death), within two (2) years following his Retirement, to render such consulting services, advice, and counsel to the Company or any subsidiary as the Company may reasonably request, or -3- 4 d. An attempt to transfer or cause to transfer such shares, whether voluntarily or involuntarily, in violation of Paragraph 5.3.1 above, or e. A violation of such additional or more severe restrictions imposed by the Committee pursuant to paragraph 5.1. 5.4 Release of Restrictions. The restrictions set forth in paragraph 5.3 above on shares awarded under the Plan, to the extent such shares have not been forfeited pursuant to paragraph 5.3 above, shall lapse on the first to happen of (i) the date of the participant's death, (ii) the termination of the Participant's employment by reason of his Disability, (iii) the second anniversary of his Retirement, or (iv) such earlier date as to any Participant as the Board may fix by resolution; and shall lapse prior thereto either (a) as to fifty percent (50%) of the shares in such Award, on the fifth anniversary of the Award Date, or (b) pursuant to such additional or more severe restrictions imposed by the Committee pursuant to paragraph 5.1. 6. Miscellaneous. 6.1 Administration. Subject to the express provisions of the Plan, the Committee shall have complete authority to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to it, and to make all other determinations necessary or advisable for the administration of the Plan. The Committee's determinations on the matters referred to herein shall be conclusive. 6.2 Limitations. Nothing in the Plan or in any Award shall confer on any employee the right to continue in the employ of the Company or any of its subsidiaries nor interfere in any way with the right of the Company or its subsidiaries to terminate the employment of that employee at any time. 6.3 Amendment and Termination. The Board may suspend or terminate the Plan, or amend the Plan in such respect as it shall deem advisable, provided, however, that such amendment shall not, without the consent of the Participant to whom any Award shall theretofore have been granted under the Plan, adversely affect the rights of such Participant under such Award, and further provided that such amendment shall not change the maximum number of shares available for awarding to all Participants or which may be awarded to any Participant as a Supplemental Award. 6.4 Effectiveness of the Plan. The Plan shall become effective on May 1, 1983. No stock shall be awarded under the Plan after April 30, 1989, or such earlier date as the Plan may have been terminated pursuant to paragraph 6.3. -4- 5 CBI RESTRICTED STOCK AWARD PLAN BRIEF DESCRIPTION OF FEDERAL INCOME TAX EFFECTS The Plan is not qualified under Section 401(a) of the Internal Revenue Code (hereinafter called "the Code") nor subject to the requirements of the Employee Retirement Income Security Act of 1974. The Company is advised by counsel that under the present laws and regulations, the Federal Income tax consequences to the Company and participants in the Plan will be as follows: Participants in the Plan will incur no income for Federal income tax purposes at the time they receive an award of restricted stock unless they affirmatively elect under Section 83(b) of the Code to incur income then. Otherwise, each participant will realize taxable income (and the Company will be entitled to a corresponding deduction) as risk of forfeiture of the awarded stock lapses. The amount of income will equal the fair market value of the stock at that time. Thereafter, the participant will realize capital gain or loss upon the sale or taxable exchange of the stock equal to the difference between the aggregate income incurred under the foregoing rules and the price received for the shares. The holding period for determining whether the gain or loss is long or short term will begin on the date on which the restrictions lapse. The risk of forfeiture after an individual has attained age 60 or retires, as defined in the Plan, depends upon certain events, such as, the failure to provide consulting services or the performance of services to a competitor. Counsel believes that under Section 83 of the Code, these events will normally be sufficient to prevent a lapse of restrictions (and concomitant incurring of income) after an individual has attained age 60 or has retired. However, this determination will depend on the facts and circumstances as to each individual participant at that time. In the event a participant makes the election under Section 83(b) referred to above (within 30 days of his receipt of the award), the participant will realize income (and the Company is entitled to a corresponding deduction) at the time of the award in an amount equal to the fair market value without regard to the restrictions on the stock at that time. If the participant thereafter forfeits the stock, no deduction will be allowed. Upon the lapse of restriction, the participant will not incur income. Thereafter the participant will realize capital gain or loss upon the sale or other taxable exchange of the stock equal to the difference between the aggregate income incurred under the foregoing rules and the price received for the stock. The holding period for determining whether the gain or loss is long or short term will begin on the date on which the stock was awarded. The foregoing tax analysis is intended to assist in the understanding of the operation and tax consequences of the Plan. The Company assumes no responsibility with respect to the income taxes of its employees or how such taxes should be computed, reported or paid. It is also pointed out that tax laws and regulations are subject to change at any time. D6/23 6 SAMPLE LETTER - 83(b) ELECTION Date Send to: The Internal Revenue Service Center where you will file your 1985 U.S. Individual Income Tax Return Attn: Internal Revenue Service Director RE: Election of Gross Income in year of Transfer Pursuant to Section 83(b) of Internal Revenue Code The undersigned hereby makes an election pursuant to 83(b) of Internal Revenue Code with respect to the property described below and supplies the following information in accordance with the regulations thereunder. (1) Name, address and tax identification number of undersigned are: Charles B. Iron 2960 South Street Anytown, Illinois 60613 Social Security # 999-99-9999 (2) Description of the property with respect to which the election is being made: One hundred (100) shares of common stock par value $2.50 per share of CBI Industries, Inc. (3) Date on which property was transferred is June 1, 1985. (4) Taxable year to which this election relates is calendar year 1985. (5) The nature of the restricted award is the following: AA. Imposition of Restrictions. Each share awarded under the Plan shall be subject to the following restrictions except to the extent that such restrictions have lapsed pursuant to paragraph BB below: A. Transfer Restriction. None of such shares shall be sold, exchanged, transferred, pledge, hypothecated, or otherwise disposed of in any manner, whether voluntarily or involuntarily. B. Forfeitures. All of such shares shall be forfeited to the Company without notice immediately upon the occurrence of any of the following events: B1 The termination of the employment of the Participant with the Company and all subsidiaries for any reason other than Retirement, Disability, or death, or 7 Sample Letter - 83(b) Election Page 2 B2 The performance of services by the Participant, while an employee of the Company or any subsidiary or within two (2) years following his Retirement, as an employee, consultant or independent contractor for, or the acquisition of an ownership interest in excess of five percent (5%) in any competitor of the Company or any subsidiary, without the express written consent of the Company, or B3 The failure of the Participant (for any reason other than Disability or death), within two (2) years following his Retirement, to render such consulting services, advice, and counsel to the Company or any subsidiary as the Company may reasonably request, or B4 An attempt to transfer or cause to transfer such shares, whether voluntarily or involuntarily, in violation of Paragraph A above, or B5 A violation of such additional or more severe restrictions imposed by the Company. BB. Release of Restrictions. The restrictions set forth in paragraph B above on the shares awarded under the Plan, to the extent such shares have not been forfeited pursuant to paragraph AA above shall lapse on the first to happen of (i) the date of the Participant's death (ii) the termination of the Participant's employment by reason of his Disability, (iii) the second anniversary of his Retirement, or (iv) such earlier date as to any Participant as the Board may fix by resolution; and shall lapse prior thereto either (a) as to fifty percent (50%) of the shares in such Award, on the fifth anniversary of the Award Date, or (b) pursuant to such additional or more severe restrictions imposed by the Company. (6) The fair market value at the time of transfer of the property with respect to which this election is being made is $______ per share. (Insert CBI stock closing price per share on May 31, 1985). (7) The amount paid by the taxpayer for said property is $0.00 per share. (8) A copy of this statement has been furnished to CBI Industries, Inc. (9) Date_______________ Signature_______________________________________ (10) Copies to: CBI Industries, Inc. 800 Jorie Blvd. Oak Brook, IL 60521 (i) Attn: Mr. R. G. Douglass Employee Benefit Plans (ii) Attn: Mr. G. B. Fenn Tax Department D7/46 lv 8 A meeting of the Board of Directors of CBI Industries, Inc. was held at the office of the Company in Oak Brook, Illinois at 8:45 A.M. on August 6, 1985. All the directors were present except for Mr. C. W. Lake, Jr. Messrs. R. L. Brunot and B. T. Adams were present for part of the meeting. Mr. Pogue presided and Mr. Craigmile acted as secretary. On motion made, seconded and carried, the minutes of the Board meeting held June 4, 1985 were approved. Mr. Pogue said that formal action needed to be taken on management's recommendation that people terminated as a result of the Company's recent force reduction do not forfeit shares awarded pursuant to the Company's restricted stock award plan. After discussion, and on motion made, seconded and carried, the following resolution was adopted: RESOLVED, that the release of restrictions on stock awarded to a Participant under the CBI 1983 Restricted Stock Award Plan ("the 1983 Plan") or under the CBI Restricted Stock Award Plan ("the 1978 Plan") who may be involuntarily terminated pursuant to a program or plan of work force reduction, as determined by the Salary and Benefits Committee, shall occur under the terms of the 1983 Plan as though such Participant had Retired; provided, however, in the event such Participant is reemployed prior to the second anniversary of the date of such termination by CBI Industries, Inc., or any of its subsidiaries, the release of such restrictions shall occur in accordance with the otherwise applicable provisions of the 1978 Plan or the 1983 Plan, as the case may be, as though such termination had not occurred. There was a discussion concerning the cost of termination benefits resulting from the Company's recent force reduction and the fact that funds were available in the pension trust to cover such costs and, additionally, pay for retiree medical benefits. After discussion, and on motion made, seconded and carried, the following resolution was adopted: RESOLVED, that the officers of the Company, the General Counsel, and the Manager of Employee Benefits, as Plan Administrator of the CBI Pension Plan, are jointly authorized to amend the CBI Pension Plan and CBI Pension Trust, as necessary, effective January 1, 1985, to provide for the following: 1. Payment of special severance pay benefits from the Trust to Company or Participating Affiliate employees terminated from employment under a formal work force reduction program conducted over a specified time period, as designated by the Board. 2. Payment from the Trust of retired Participants' medical costs under the Company's health care program for retired employees, net of such Participants' own contributions to payment of such costs, and securing such Internal Revenue Service or other governmental approvals, or filing such notices or other documents, as necessary to implement such payments. Mr. Brunot presented management's recommendation with respect to adjustments to the carrying value of certain assets. There was a review of the recommended adjustments considering future business prospects in the energy and energy service markets, the effects of the recently implemented restructuring and the redirection of the Company's efforts in the construction services segment, and the estimated realizable values in the event some of 9 Board of Directors Meeting CBI Industries, Inc. August 6, 1985 - Page 2 the specified assets were ultimately sold, the primary purpose of the adjustments being to establish appropriate recoverable values considering expected future operations. On motion made, seconded and carried, the Board approved adjustments to the carrying value of certain assets of the Company and its subsidiaries in the total amount of approximately $153,000,000, as set forth in the summary thereof attached to these minutes and identified by the Secretary of the Company. On motion made, seconded and carried, a quarterly dividend of 35 cents per share was declared, payable September 13, 1985 to shareholders of record as of the close of business August 20, 1985. The remainder of the meeting was devoted to a discussion of the business of the Company, its subsidiaries and affiliates. There was no further business to come before the meeting and, accordingly, on motion made, seconded and carried, the meeting adjourned at 11:25 A.M. /s/ D.H. Craigmile ------------------------------ Secretary EX-99.13 14 1989 RESTRICTED STOCK AWARD PLAN 1 Exhibit 13 CBI 1989 RESTRICTED STOCK AWARD PLAN 1. Purpose. The purpose of this CBI 1989 Restricted Stock Award Plan (the "Plan") is to provide an incentive for Participants to contribute to the continued growth and profitability of the Company by encouraging stock ownership. The Plan is intended to further the interest of the Company by enabling it to attract and retain the services of highly qualified and motivated persons to serve the Company and its Subsidiaries. 2. Definitions. As used in the Plan, the following terms shall have the following meanings: Award - The grant of Common Stock subject to the restrictions and pursuant to the terms of the Plan. Award Date - The date on which an Award is made by the Committee as provided by paragraph 4.2 below. Board - The Board of Directors of the Company, as from time to time constituted. Committee - The Compensation Committee of the Board, no member of which shall be eligible to participate in the Plan while serving as such member or in the prior calendar year. Common Stock - Common shares of the Company. Company - CBI Industries, Inc., a Delaware corporation. Disability - That condition of a Participant, including but not limited to a physical or mental condition, which makes a Participant unable to perform the regular duties of his employment, as determined by the Committee, provided, however, that Disability shall not consist of a condition resulting from a cause which the Committee has excluded. Effective Date - May 15, 1989. Participant - An employee or former employee who has received an Award under the Plan. Retirement - The termination of employment of a Participant with the Company and all Subsidiaries after qualifying for any retirement as defined under the terms of any qualified defined benefit pension plan sponsored by the Company or any Subsidiary in which such Participant also participates, or, if not participating in such a plan, then after attaining such age and service as would qualify for retirement under the terms of the CBI Pension Plan, as amended, or such earlier termination with the Company's consent and as may be determined by the Committee to constitute early retirement provided, however, that no termination of such employment by reason of dishonesty, fraud or breach of trust against the Company or any of its Subsidiaries or affiliates, as determined by the Committee, shall constitute Retirement. PAGE 1 2 Subsidiary - Any corporation of which more than 50% (by number of votes) of the voting stock is owned by the Company and/or one or more corporations which are themselves Subsidiaries of the Company. 3. Common Stock Subject to Plan. There will be reserved for issue upon the granting of Awards during the term of the Plan an aggregate of 500,000 shares of Common Stock, as adjusted by the Committee as required to reflect any stock dividend, stock split, reclassification or similar change in capitalization. If any such adjustment shall result in a fractional share such fraction shall be disregarded. Upon the granting of an Award, the number of shares reserved for Award shall be reduced by the number of shares so awarded, and upon the forfeiture to the Company of any shares awarded hereunder the number of shares reserved for Award shall be increased by such number of shares, and such forfeited shares may again be the subject of an Award. Awards may be made from authorized but unissued shares or from treasury shares. All authorized but unissued shares awarded hereunder shall be fully paid and nonassessable shares. 4. Eligibility and Awards. 4.1 Eligibility. All management employees (including officers but not directors unless also employees) of the Company and of its present and future Subsidiaries are eligible to be selected by the Committee as Participants. 4.2 Making of Awards. Subject to the express provisions of the Plan, the Committee shall in its sole discretion determine the employees to whom, and the time or times at which, Awards shall be made pursuant to the Plan and the number of shares to be awarded. In making such determinations, the Committee shall take into account the recommendations of the management of the Company and the nature of the services rendered by the respective employees, their present and potential contributions to the Company's success and such other factors as the Committee in its discretion shall deem relevant. Awards to any employee will not be made more frequently than once in each calendar year. 4.3 Form of Award. As soon as reasonably practicable after making a determination as provided in paragraph 4.2 above, the Committee or its designee shall advise the Participant in writing of the making of such Award, the number of shares awarded, the restrictions thereon and incidents of forfeiture thereof, and any other terms and conditions relating thereto; except, however, that in the case of any Award to the chief executive officer of the Company, the Committee shall first submit such determination to the Board, which shall approve or disapprove the Award. 5. Restrictions on Awarded Stock. 5.1 Rights of Participants as Shareholders. Shares awarded hereunder shall forthwith be duly issued and identified on the books of the Company in the Participant's name. The Participant shall thereupon be a shareholder with respect to all such shares and shall have all the rights of a shareholder with respect to all such shares, including the right to vote such shares and to receive all dividends and other distributions (subject to the provisions of paragraph 5.2 below) paid with respect to such shares, provided, however, that such shares shall be subject to the restrictions hereinafter described, and to such additional or more severe restrictions (including more severe provisions relating the lapsing of restrictions) as may be Page 2 3 imposed by the Committee in making any individual award. In aid of such restrictions, such shares shall be held by the Company in its control for the account of such Participant until such restrictions lapse as provided in paragraph 5.4 below or such shares are theretofore forfeited to the Company as provided by paragraph 5.3 below. 5.2 Changes in Capitalization. In the event that, as the result of a stock dividend, stock split, reclassification or similar change in capitalization, the Participant shall, as the owner of shares subject to restrictions hereunder, be entitled to new or additional or different shares of stock or securities, the certificate or certificates for, or other evidences of, such new or additional or different shares or securities, shall also be held by the Company in its control for the account of such Participant as provided in paragraph 5.1 above, and all provisions of the Plan relating to restrictions and lapse of restrictions herein set forth shall thereupon be applicable to such new or additional or different shares or securities to the extent they were distributed; provided, however, that if the Participant shall receive rights, warrants or fractional interests in respect of any such shares, such rights or warrants may be held, exercised, sold or otherwise disposed of, and such fractional interests may be settled, by the Participant free and clear of the restrictions hereafter set forth. 5.3 Imposition of Restrictions. Each share awarded under the Plan shall be subject to the following restrictions except to the extent that such restrictions have lapsed pursuant to paragraph 5.4 below: 5.3.1 Transfer Restrictions. None of such shares shall be sold, exchanged, transferred, pledged, hypothecated, or otherwise disposed of in any manner, whether voluntarily or involuntarily. 5.3.2 Forfeitures. All of such shares shall be forfeited to the Company without notice immediately upon the occurrence of any of the following events: a. The termination of the employment of the Participant with the Company and all Subsidiaries for any reason other than Retirement, Disability, or death, or b. The performance of services by the Participant, while an employee of the Company or any Subsidiary, as an employee, consultant or independent contractor for, or the acquisition of an ownership interest in excess of five percent (5%) in, any competitor of the Company or any Subsidiary without the express written consent of the Company, or c. An attempt to transfer or cause to transfer such shares, whether voluntarily or involuntarily, in violation of paragraph 5.3.1 above, or d. A violation of such additional or more severe restrictions imposed by the Committee pursuant to paragraph 5.1. Page 3 4 5.4 Release of Restrictions. The restrictions set forth in paragraph 5.3 above on shares awarded under the Plan, to the extent such shares have not been forfeited pursuant to paragraph 5.3 above, shall lapse on the first to happen of (i) the date of the Participant's death, (ii) the termination of the Participant's employment by reason of his Retirement or Disability, (iii) such earlier date as to any Participant or group of Participants as the Committee may fix, (iv) termination of employment for any reason other than wilful and material actions causing direct and substantial damage to the Company or its Subsidiaries or affiliates, or any termination of the Plan, throughout the three-year period following a "change of control", as defined in the CBI Pension Plan, and (v) involuntary termination of employment pursuant to a program of workforce reduction, as determined by the authorized officers of the Company; and shall lapse prior thereto either (a) as to fifty percent (50%) of the shares in such Award, on the fifth anniversary of the Award Date, or (b) pursuant to such additional or more severe restrictions imposed by the Committee pursuant to paragraph 5.1. 6. Miscellaneous. 6.1 Administration. Subject to the express provisions of the Plan, the Committee shall have complete authority to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to it, and to make all other determinations necessary or advisable for the administration of the Plan. The Committee's determinations on the matters referred to herein shall be conclusive. 6.2 Limitation. Nothing in the Plan or in any Award shall confer on any employee the right to continue in the employ of the Company or any of its Subsidiaries nor interfere in any way with the right of the Company or its Subsidiaries to terminate the employment of that employee at any time. 6.3 Amendment and Termination. The Board may suspend or terminate the Plan, or amend the Plan in such respect as it shall deem advisable, provided, however, that such amendment shall not, without the consent of the Participant to whom any Award shall theretofore have been granted under the Plan, adversely affect the rights of such participant under such Award, and further provided that such amendment shall not change the maximum number of shares available for awarding to all Participants. 6.4 Effectiveness of the Plan. The Plan shall become effective on May 15, 1989. No stock shall be awarded under the Plan after April 30, 1994, or such earlier date as the Plan may have been terminated pursuant to paragraph 6.3. Page 4 5 CBI RESTRICTED STOCK AWARD PLAN BRIEF DESCRIPTION OF FEDERAL INCOME TAX EFFECTS The Plan is not qualified under Section 401(a) of the Internal Revenue Code of 1986 (hereinafter called "the Code") nor subject to the requirements of the Employee Retirement Income Security Act of 1974. The Company is advised by counsel that under the present laws and regulations, the Federal income tax consequences to the Company and participants in the Plan will be as follows: Participants in the Plan will incur no income for Federal income tax purposes at the time they receive an award of restricted stock unless they affirmatively elect under Section 83(b) of the Code to incur income then. Otherwise, each participant will realize taxable income (and the Company will be entitled to a corresponding deduction) as risk of forfeiture of the awarded stock lapses. The amount of income will equal the fair market value of the stock at that time. Thereafter, the participant will realize gain or loss upon the sale or taxable exchange of the stock equal to the difference between the aggregate income incurred under the foregoing rules and the price received for the shares. Under the Tax Reform Act of 1986, capital gains will be taxed at the same rates as ordinary income. Capital losses are allowed in full against capital gains plus $3,000 of other income. In the event a participant makes the election under Section 83(b) referred to above (within 30 days of his receipt of the award), the participant will realize income (and the Company is entitled to a corresponding deduction) at the time of the award in an amount equal to the fair market value without regard to the restrictions on the stock at that time. If the participant thereafter forfeits the stock, no deduction will be allowed. Upon the lapse of restriction, the participant will not incur income. Thereafter, the participant will realize capital gain or loss upon the sale or other taxable exchange of the stock equal to the difference between the aggregate income incurred under the foregoing rules and the price received for the stock. The foregoing tax analysis is intended to assist in the understanding of the operation and tax consequences of the Plan. The Company assumes no responsibility with respect to the income taxes of its employees or how such taxes should be computed, reported or paid. It is also pointed out that tax laws and regulations are subject to change at any time. 6 SAMPLE LETTER - 83(b) ELECTION DATE Send to: The Internal Revenue Service Center where you will file your 1992 U.S. Individual Income Tax Return Attn: Internal Revenue Service Director Re: Election of Gross Income in year of Transfer Pursuant to Section 83(b) of Internal Revenue Code of 1986 The undersigned hereby makes an election pursuant to 83(b) of Internal Revenue Code with respect to the property described below and supplies the following information in accordance with the regulations thereunder. (1) Name, address and tax identification number of undersigned are: Charles B. Iron 2960 South Street Anytown, Illinois 60613 Social Security #999-99-9999 (2) Description of the property with respect to which the election is being made: One hundred (100) shares of common stock par value $2.50 per share of CBI Industries, Inc. (3) Date on which property was transferred is January 8, 1992. (4) Taxable year to which this election relates is calendar year 1992. (5) The nature of the restricted award is the following: AA. Imposition of Restrictions. Each share awarded under the Plan shall be subject to the following restrictions except to the extent that such restrictions have lapsed pursuant to paragraph BB below: A. Transfer Restriction. None of such shares shall be sold, exchanged, transferred, pledged, hypothecated, or otherwise disposed of in any manner, whether voluntarily or involuntarily. B. Forfeitures. All of such shares shall be forfeited to the Company without notice immediately upon the occurrence of any of the following events: B1 The termination of the employment of the Participant with the Company and all subsidiaries for any reason other than Retirement, Disability, or death, or 7 Sample Letter - 83(b) Election Page 2 B2 The performance of services by the Participant, while an employee of the Company or any Subsidiary, as an employee, consultant or independent contractor for, or the acquisition of an ownership interest in excess of five percent (5%) in, any competitor of the Company or any Subsidiary without the express written consent of the Company, or B3 An attempt to transfer or cause to transfer such shares, whether voluntarily or involuntarily, in violation of Paragraph A above, or B4 A violation of such additional or more severe restrictions imposed by the Company. BB. Release of Restrictions. The restrictions set forth in paragraph B above on shares awarded under the Plan, to the extent such shares have not been forfeited pursuant to paragraph AA above, shall lapse on the first to happen of (i) the date of the Participant's death, (ii) the termination of the Participant's employment by reason of his Retirement or Disability, (iii) such earlier date as to any Participant or group of Participants as the Board may fix (iv) termination of employment for any reason other than willful and material actions causing direct and substantial damage to the Company or its Subsidiaries or affiliates, or any termination of the Plan, throughout the three-year period following a "change of control," as defined in the CBI Pension Plan, and (v) involuntary termination of employment pursuant to a program of workforce reduction, as determined by the authorized officers of the Company; and shall lapse prior thereto either (a) as to fifty percent (50%) of the shares in such Award, on the fifth anniversary of the Award Date, or (b) pursuant to such additional or more severe restrictions imposed by the Company. (6) The fair market value at the time of transfer of the property with respect to which this election is being made is $_________ per share. (Insert CBI stock closing price per share on January 8, 1992.) (7) The amount paid by the taxpayer for said property is $0.00 per share. (8) A copy of this statement has been furnished to CBI Industries, Inc. (9) Date Signature ---------------------- -------------------------------- (10) Copies to: CBI Industries, Inc. 800 Jorie Blvd. Oak Brook, Illinois 60522-7001 (i) Attention: Mr. R. G. Douglass Employee Benefit Plans (ii) Attention: Mr. R. G. Owens Tax Department EX-99.14 15 1994 RESTRICTED STOCK AWARD PLAN 1 EXHIBIT 14 TABLE OF CONTENTS CBI 1994 RESTRICTED STOCK AWARD PLAN (Effective March 9, 1994) 1. Purpose .................................................................. 1 2. Definitions .............................................................. 1 Award ............................................................... 1 Award Date .......................................................... 1 Board ............................................................... 1 Committee ........................................................... 1 Common Stock ........................................................ 1 Company ............................................................. 1 Disability .......................................................... 1 Effective Date ...................................................... 1 Involuntary Termination ............................................. 1 Participant ......................................................... 1 Retirement .......................................................... 1 Subsidiary .......................................................... 2 3. Common Stock Subject to Plan ............................................. 2 4. Eligibility and Awards ................................................... 2 4.1 Eligibility ................................................. 2 4.2 Making of Awards ............................................ 2 4.3 Form of Award ............................................... 3 5. Restrictions on Awards ................................................... 4 5.1 Rights of Participants as Shareholders ...................... 4 5.2 Changes in Capitalization ................................... 4 5.3 Imposition of Restrictions .................................. 4 5.3.1 Transfer Restrictions ....................................... 4 5.3.2 Forfeitures ................................................. 5 5.4 Release of Restrictions ..................................... 5 5.5 Effect of Death Prior to Release of Restrictions ............ 5 5.6 Withholding of Shares ....................................... 6 6. Miscellaneous ............................................................ 6 6.1 Administration .............................................. 6 6.2 Limitation .................................................. 6 6.3 Amendment and Termination ................................... 6 6.4 Effectiveness of the Plan ................................... 6
2 CBI 1994 RESTRICTED STOCK AWARD PLAN (Effective March 9, 1994) 1. Purpose. The purpose of this CBI 1994 Restricted Stock Award Plan (the "Plan") is to provide an incentive for Participants to contribute to the continued growth and profitability of the Company by encouraging stock ownership. The Plan is intended to further the interest of the Company by enabling it to attract and retain the services of highly qualified and motivated persons to serve the Company and its Subsidiaries. 2. Definitions. As used in the Plan, the following terms shall have the following meanings: Award - The grant of Common Stock subject to the restrictions and pursuant to the terms of the Plan. Award Date - The date on which an Award is made by the Committee as provided by paragraph 4.2 below. Board - The Board of Directors of the Company, as from time to time constituted. Committee - The Compensation Committee of the Board, no member of which shall be eligible to participate in the Plan while serving as such member or in the prior calendar year. Common Stock - Common Stock, $2.50 par value per share, of the Company. Company - CBI Industries, Inc., a Delaware corporation. Disability - That condition of a Participant, including but not limited to a physical or mental condition, which makes a Participant unable to perform the regular duties of that Participant's employment, as determined by the Committee, provided, however, that Disability shall not consist of a condition resulting from a cause which the Committee has excluded. Effective Date - March 9, 1994, subject to shareholder approval. Involuntary Termination - Termination of employment as described in paragraph 5.4(a)(iv) below. Participant - An employee or former employee who has received an Award under the Plan. Retirement - The termination of employment of a Participant with the Company and all Subsidiaries after qualifying for any retirement as defined under the terms of any qualified defined benefit pension plan sponsored by the Company or any Subsidiary in which such Participant also participates, or, if not participating in such a plan, then after attaining such age and service as would qualify for retirement under the terms of the CBI Pension Plan, as amended, or such earlier termination with the Company's consent and as may be determined by the Committee to constitute early retirement, provided, however, that no termination of such employment by reason of dishonesty, fraud or breach of trust against 1 3 the Company or any of its Subsidiaries or affiliates, as determined by the Committee, shall constitute Retirement. Subsidiary - Any corporation of which more than 50% (by number of votes) of the voting stock is owned by the Company and/or one or more corporations which are themselves Subsidiaries of the Company. 3. Common Stock Subject to Plan. There will be reserved for issue upon the granting of Awards during the term of the Plan an aggregate of 1,250,000 shares of Common Stock, as adjusted by the Committee as required to reflect any stock dividend, stock split, reclassification or similar change in capitalization. If any such adjustment shall result in a fractional share such fraction shall be disregarded. Upon the granting of an Award, the number of shares reserved for Award shall be reduced by both the number of shares so awarded and the number of shares forfeited to the Company hereunder. Awards may be made from authorized but unissued shares or from treasury shares. All authorized but unissued shares awarded hereunder shall be fully paid and nonassessable shares. 4. Eligibility and Awards. 4.1 Eligibility. All employees (including officers, but not directors unless also employees) of the Company and of its present and future Subsidiaries within such levels of Supervisory or management responsibility, and such other key salaried employees, as designated or approved from time to time by the Committee are eligible to be Participants. 4.2 Making of Awards. Subject to the express provisions of the Plan, the Committee shall in its sole discretion determine the employees who may receive Awards pursuant to the Plan. In making such determinations, the Committee shall take into account the recommendations of the management of the Company and the nature of the services rendered by the respective employees, their present and potential contributions to the Company's success and such other factors as the Committee in its discretion shall deem relevant. Any employee may not receive Awards more frequently than once in each calendar year. (a) The size of a Participant's Award shall be determined in the following manner: At the beginning of each fiscal year of the Company, the Committee shall approve and record specific goals of performance for the Company and, as appropriate, each of its primary operating Subsidiaries to be achieved by the end of that current fiscal year, which goals shall be based on operating income (before taxes) as a return on net assets for the Company or Subsidiary, or a combination thereof, as appropriate. After the close of the fiscal year, the Committee will certify the level of performance achieved as compared to the goals established at the beginning of the fiscal year. At the same time as the performance goals described above are established, the Committee shall approve specific targets of numbers of shares of Common Stock ("Target Award"), either by individual Participant or a class of Participants, which shall become Awards following the end of such fiscal year only if the specified performance goals are achieved by the Company. No Award shall be made until and 2 4 unless the Committee shall certify that the performance goals have been achieved for a fiscal year for which Target Awards have been approved, or the extent to which such goals have been achieved. The date on which the Committee makes such certification shall be the Award Date for a fiscal year for those portions of Awards for which the number of shares of Common Stock is fixed based on that performance, as described below. At the same time that the performance goals are established by the Committee, the Committee may also approve that Awards for the fiscal year under consideration, if any, shall be made in an amount more or less than the Target Award, but in no case greater than 200% of the Target Award, on the basis of a scale approved by the Committee corresponding to a proportion of the performance goal actually achieved. Awards determined for a given fiscal year shall be allocated (i) 50% to the year for which performance is measured, and this portion of an Award shall not be subject to increase or decrease, (ii) 25% to the first fiscal year following ("First Year Awards"), and (iii) 25% to the second fiscal year following ("Second Year Awards"). First Year Awards and Second Year Awards shall be further subject to increase or decrease, each one time only, in the same manner and on the same scale, if applicable, as the amount of the Target Award may be increased or decreased for the fiscal year to which the First Year Awards and Second Year Awards are allocated. (b) In the event of Retirement or Involuntary Termination of a Participant after the first quarter of a fiscal year, or the death or Disability of a Participant on any date, an Award for such Participant relating to the fiscal year of the date of such event ("Final Year") shall be made, determined as follows: The Target Award, if any, for such Participant for the Final Year shall be pro-rated for that portion of the Final Year ending on the date of the event, and the achievement of the performance goal for determining the amount of the Award for the Final Year, and the adjustment of any First Year Awards and Second Year Awards allocated to the Final Year, if any, shall be measured, and certified by the Committee as appropriate, as of the end of the calendar quarter immediately preceding or coinciding with the date of the event, using the same number of calendar quarters immediately preceding the date of the event as corresponds to the period of time over which the performance goal established by the Committee for the Final Year is being measured. Any Second Year Awards allocated to a fiscal year subsequent to the Final Year shall not be subject to increase or decrease, and shall become part of the Award for the Final Year. In the event of Retirement or Involuntary Termination of a Participant during the first quarter of a fiscal year, the Participant shall not be eligible to receive a Target Award for the Final Year, but all First Year Awards and Second Year Awards allocated to the Final Year and any Second Year Awards allocated to a fiscal year subsequent to the Final Year shall not be subject to increase or decrease and shall become part of the Award for the Final Year. (c) No more than 50,000 shares shall be issued to any person in any fiscal year. 4.3 Form of Award. As soon as reasonably practicable after making a determination as provided in paragraph 4.2 above, the Committee or its designee shall advise the Participant in writing of the making of the Award, the number of shares not subject to increase or decrease, the amount of First Year Awards and Second Year Awards still subject to increase or decrease, the restrictions on any shares and incidents of forfeiture 3 5 thereof, and any other terms and conditions relating thereto; except, however, that in the case of any Award to the Chief Executive Officer of the Company, the Committee shall first submit such Award to the Board, which in its discretion may disapprove or reduce the Award. 5. Restrictions on Awards. 5.1 Rights of Participants as Shareholders. Shares awarded hereunder which are not subject to increase or decrease in accordance with this Plan shall forthwith be duly issued and identified on the books of the Company in the Participant's name as of an Award Date, as determined herein. The Participant shall thereupon be a shareholder with respect to all such shares and shall have all the rights of a shareholder with respect to all such shares, including the right to vote such shares and to receive all dividends and other distributions (subject to the provisions of paragraph 5.2 below) paid with respect to such shares; provided, however, that such shares shall be subject to the restrictions hereinafter described, and to such additional or more severe restrictions (including more severe provisions relating the lapsing of restrictions) as may be imposed by the Committee in approving any Target Awards. In aid of such restrictions, shares issued as of an Award Date shall be held by the Company in its control for the account of such Participant until such restrictions lapse as provided in paragraph 5.4 below or such shares are theretofore forfeited to the Company as provided by paragraph 5.3 below. No Participant shall be considered to be a shareholder with respect to any part of an Award which is still subject to increase or decrease in accordance with this Plan. 5.2 Changes in Capitalization. In the event that, as the result of a stock dividend, stock split, reclassification or similar change in capitalization, the Participant shall, as the owner of shares subject to restrictions hereunder, be entitled to new or additional or different shares of stock or securities, the certificate or certificates for, or other evidences of, such new or additional or different shares or securities, shall also be held by the Company in its control for the account of such Participant as provided in paragraph 5.1 above. Any allocated portion of an Award subject to adjustment as described in paragraph 4.2 above shall be increased or decreased in the same manner as shares already issued to a Participant subject to restrictions. All provisions of the Plan relating to restrictions and lapse of restrictions herein set forth shall thereupon be applicable to such new or additional or different shares or securities to the extent they were issued to a Participant; provided, however, that if the Participant shall receive rights, warrants or fractional interests in respect of any of such shares, such rights or warrants may be held, exercised, sold or otherwise disposed of, and such fractional interests may be settled, by the Participant free and clear of the restrictions hereafter set forth. 5.3 Imposition of Restrictions. Each share issued to a Participant under the Plan shall be subject to the following restrictions except to the extent that such restrictions have lapsed pursuant to paragraph 5.4 below: 5.3.1 Transfer Restrictions. None of such shares shall be sold, exchanged, transferred, pledged, hypothecated, or otherwise disposed of in any manner, whether voluntarily or involuntarily. 4 6 5.3.2 Forfeitures. All of such shares issued, and all shares subject to Awards, shall be forfeited to the Company without notice immediately upon the occurrence of any of the following events: a. The termination of the employment of the Participant with the Company and all Subsidiaries for any reason other than Retirement, Disability, Involuntary Termination or death, or b. The performance of services by the Participant, while an employee of the Company or any Subsidiary, as an employee, consultant or independent contractor for, or the acquisition of an ownership interest in excess of five percent (5%) in, any competitor of the Company or competitor of any Subsidiary without the express written consent of the Company, or c. An attempt to transfer or cause to transfer such shares, whether voluntarily or involuntarily, in violation of paragraph 5.3.1 above, or d. A violation of such additional or more severe restrictions which may be imposed by the Committee pursuant to paragraph 5.1. 5.4 Release of Restrictions. Subject to any adjustments required by paragraph 4.2(b) above, the restrictions set forth in paragraph 5.3 above on shares issued to Participants under the Plan, to the extent such shares have not been forfeited pursuant to paragraph 5.3 above, shall lapse: (a) on the first to happen of (i) the date of the Participant's death, (ii) the termination of the Participant's employment by reason of his Retirement or Disability, (iii) termination of employment for any reason other than wilful and material actions causing direct and substantial damage to the Company or its Subsidiaries or affiliates, or any termination of the Plan, throughout the three-year period following a "change of control", as defined in the CBI Pension Plan, (iv) involuntary termination of employment pursuant to a program of workforce reduction, as determined by the authorized officers of the Company, and (v) the fifth anniversary of the beginning of the fiscal year for which a Target Award is approved, as to all shares issued pursuant to such Target Award, as the same may be increased or decreased in accordance with the Plan; or (b) pursuant to such additional or more severe restrictions imposed by the Committee pursuant to paragraph 5.1. 5.5 Effect of Death Prior to Release of Restrictions. Should a Participant die, all shares to be issued by the Company with respect to such Participant under this Plan shall be transferred on the books of the Company and issued to such beneficiary or beneficiaries as have been effectively designated by the Participant or, if none, then to the deceased Participant's surviving spouse or, if none, then to the Participant's lawful descendants, per stirpes as defined by common law, or, if none, then to the deceased Participant's estate. Any such transfer shall be made effective as of the date of death of the Participant. To be effective, the designation of such beneficiary must be filed with the Committee or its 5 7 designee in such written form as it requires and may include secondary, successive or contingent beneficiaries. Any Participant may change a beneficiary designation at any time by filing with the Committee or its designee a new beneficiary designation meeting the above requirements. The determination of the Committee as to the identity of a beneficiary, or whether a beneficiary is living or dead, pursuant to any determinations of rights under this Plan shall be conclusive and binding on all concerned. 5.6 Withholding of Shares. To the extent the receipt of shares pursuant to a lapse of restrictions is subject to the withholding of any income or employment taxes by the Company for which the Company requires reimbursement from the recipient, the recipient may elect to reimburse the Company with shares withheld from the shares to be received, or cash, or a combination of such shares and cash, of sufficient value to make such reimbursement. Any such withholding or reimbursement shall comply with all applicable governing laws and regulations. 6. Miscellaneous. 6.1 Administration. Subject to the express provisions of the Plan, the Committee shall have complete authority to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to it, and to make all other determinations necessary or advisable for the administration of the Plan. The Committee's determinations on the matters referred to herein shall be final and conclusive. 6.2 Limitation. Nothing in the Plan or in any Award shall confer on any employee the right to continue in the employ of the Company or any of its Subsidiaries nor interfere in any way with the right of the Company or its Subsidiaries to terminate the employment of that employee at any time. 6.3 Amendment and Termination. The Board may suspend or terminate the Plan, or amend the Plan in such respect as it shall deem advisable, provided, however, that such amendment shall not, without the consent of the Participant to whom any Award shall theretofore have been granted under the Plan, adversely affect the rights of such Participant under such Award, including shares which may still be subject to increase or decrease as provided under the Plan, and further provided that such amendment shall not change the maximum number of shares available under the Plan or available for any one Participant. 6.4 Effectiveness of the Plan. The Plan shall become effective on March 9, 1994. No Awards shall be made under the Plan after April 30, 2000, nor shares issued under the Plan after April 30, 2002 when shares covered by First Year Awards and Second Year Awards based on the last Target Award under the Plan are no longer subject to increase or decrease, or such earlier date as the Plan may have been terminated pursuant to paragraph 6.3. 6 EX-99.15 16 SALARIED EMPLOYEE STOCK OWNERSHIP PLAN (1987) 1 EXHIBIT 15 TABLE OF CONTENTS CBI SALARIED EMPLOYEE STOCK OWNERSHIP PLAN (1987) (As Amended and Restated as of June 1, 1994) ARTICLE I: PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE II: DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2.01 AFFILIATE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2.02 ANNUAL ADDITION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2.03 BENEFICIARY: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2.04 BREAK IN SERVICE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2.05 CBI: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2.06 CODE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.07 COMMITTEE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.08 COMPANY: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.09 COMPANY CONTRIBUTION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.10 COMPANY STOCK: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.11 COMPENSATION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2.12 DEFINED BENEFIT PLAN FRACTION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.13 DEFINED CONTRIBUTION PLAN FRACTION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.14 DISABILITY: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.15 ELIGIBLE EMPLOYEE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2.16 ENTRY DATE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.17 ERISA: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.18 EXEMPT LOAN: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.19 EXEMPT LOAN STOCK SUBACCOUNT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.20 EXEMPT LOAN SUSPENSE ACCOUNT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.21 HOURS OF SERVICE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.22 KEY EMPLOYEE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.23 NORMAL RETIREMENT AGE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.24 PARTICIPANT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.25 PARTICIPATING AFFILIATE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.26 PLAN: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.27 PLAN ADMINISTRATOR: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.28 PLAN YEAR: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.28A REDUCTION IN FORCE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.29 RETIREMENT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.29A RETIRING PARTICIPANT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.30 SALARIED EMPLOYEE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.31 STOCK ACCOUNT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 2.32 SURPLUS STOCK SUBACCOUNT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2.33 SURPLUS SUSPENSE ACCOUNT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2.34 TOP HEAVY PLAN YEAR: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2.35 TRANSITION FRACTION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
i 2 2.36 TRUST: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2.37 TRUSTEES: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2.38 YEAR OF SERVICE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 ARTICLE III: PARTICIPATION IN BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 3.01 PARTICIPATION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 3.02 TERMINATION OF PARTICIPATION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 3.03 RESUMPTION OF PARTICIPATION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 3.04 BREAKS IN SERVICE FOR ACCRUING YEARS OF SERVICE OR ELIGIBILITY FOR ALLOCATIONS: . . . . . . . . . . 7 3.05 SERVICE AND COMPENSATION PRIOR TO EFFECTIVE DATE OF PLAN: . . . . . . . . . . . . . . . . . . . . . 7 ARTICLE IV: CONTRIBUTIONS AND OTHER SOURCES OF PLAN ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 4.01 COMPANY CONTRIBUTIONS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 4.02 TRANSFER FROM TERMINATED PENSION PLAN: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 4.03 TRANSFERS AND ROLLOVERS FROM OTHER QUALIFIED PLANS: . . . . . . . . . . . . . . . . . . . . . . . . 8 4.04 NO PARTICIPANT CONTRIBUTIONS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 ARTICLE V: STOCK ACCOUNTS AND ALLOCATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 5.01 STOCK ACCOUNTS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 5.02 ALLOCATION OF COMPANY CONTRIBUTIONS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 5.03 ALLOCATION OF SURPLUS TRANSFER: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 5.04 ALLOCATION OF DIVIDENDS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 5.05 ALLOCATION OF EXEMPT LOAN SHARES: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 5.06 ALLOCATION OF TRUST EARNINGS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 5.07 LIMITATION ON ANNUAL ADDITIONS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 5.08 COMBINED LIMITATION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 5.09 CONDITION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 ARTICLE VI: VESTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 6.01 GENERAL RULE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 ARTICLE VII: DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 7.01 DISTRIBUTIONS UPON TERMINATION OF EMPLOYMENT: . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 7.02 VALUATION OF ACCOUNT FOR DISTRIBUTIONS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 7.03 NOTICE OF THIRD-PARTY OFFERS TO PURCHASE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 7.04 OTHER OPTIONS OR RESTRICTIONS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 7.05 EFFECT OF DEATH BEFORE DISTRIBUTION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 7.06 LEGAL DISABILITY: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 7.07 UNCLAIMED PAYMENTS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 7.08 (RESERVED) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 7.09 DIRECT ROLLOVER OPTION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 ARTICLE VIII: ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 8.01 COMMITTEE AND PLAN ADMINISTRATOR: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ii 3 8.02 ADMINISTRATIVE POWERS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 8.03 DOCUMENTATION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 8.04 RETURNS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 8.05 CLAIMS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 8.06 TRUSTEE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 8.07 LIMITATIONS OF COMPANY LIABILITY: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 8.08 DISCRETIONARY AUTHORITY: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 ARTICLE IX: INVESTMENT OF TRUST ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 9.01 AUTHORIZED INVESTMENTS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 9.02 TRUSTEE TO DETERMINE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 9.03 BORROWING BY TRUSTEE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 9.04 INVESTMENT DIVERSIFICATION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 ARTICLE X: MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 10.01 INFORMATION TO BE PROVIDED TO PARTICIPANTS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 10.02 INFORMATION ON PARTICIPANTS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 10.03 REGULARLY KEPT RECORDS ARE BINDING: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 10.04 NO DERIVATIVE RIGHTS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 10.05 NON-ASSIGNABILITY: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 10.06 NO EMPLOYMENT RIGHT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 10.07 VOTING COMPANY STOCK: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 10.08 TENDER OFFER: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 10.09 CHANGE IN COMPANY STRUCTURE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 10.10 SEVERABILITY OF PROVISIONS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 10.11 APPLICABLE LAW: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 ARTICLE XI: CONTINGENT NON-QUALIFIED EXCESS BENEFIT PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 ARTICLE XII: REQUIRED TOP HEAVY PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 12.01 SPECIAL RULES FOR TOP HEAVY PLAN YEARS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 12.02 MINIMUM CONTRIBUTION: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 12.03 ADJUSTMENTS TO LIMITATIONS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 ARTICLE XIII: AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 13.01 RIGHT AND LIMITATIONS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 13.02 PROHIBITION AGAINST COMPANY BENEFIT: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 ARTICLE XIV: INTENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 ARTICLE XV: TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 15.01 POWER TO TERMINATE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 15.02 DISTRIBUTION OF ASSETS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 15.03 DISCHARGE OF TRUSTEE: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 15.04 PARTIAL TERMINATIONS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 15.05 BENEFIT UPON PLAN MERGER: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
iii 4 CBI SALARIED EMPLOYEE STOCK OWNERSHIP PLAN (1987) (As Amended and Restated as of June 1, 1994) ARTICLE I: PURPOSE Chi Bridge Holdings, Inc., a Delaware company, in order to give its salaried employees and the salaried employees of Participating Affiliates an opportunity to participate in the growth of the Company through ownership of its common stock or the stock of its affiliates, including its publicly held parent and sole shareholder, CBI Industries, Inc., a Delaware corporation, has established this CBI Salaried Employee Stock Ownership Plan (1987), adopted and effective October 20, 1987, and hereby amends and restates this Plan effective June 1, 1994. ARTICLE II: DEFINITIONS Unless the context clearly indicates otherwise, the following terms when used in this Plan shall have the following meanings: 2.01 AFFILIATE: Any corporation, trade or business, which at the relevant time is a member of either a "controlled group of corporations", within the meaning of Section 414(b) of the Code, a group of "trades or businesses (whether or not incorporated) which are under common control" within the meaning of Section 414(c) of the Code, or an "affiliated service group", within the meaning of Section 414(m) of the Code, which includes the Company, or which is required to be aggregated with the Company by regulations under Section 414(o) of the Code. 2.02 ANNUAL ADDITION: With respect to each Participant in this Plan, the sum, for any Plan Year, of (i) (A) that part of Company Contributions paid in cash used to repay the principal amount of an Exempt Loan releasing shares of Company Stock from the Exempt Loan Suspense Account, (B) that part of the Surplus Suspense Account, and (C) that part of any other employer contributions whether in cash or Company Stock as valued under Section 5.01, all as allocated to the Stock Account of a Participant under Article V, (ii) in a Plan Year in which more than one-third (1/3) of the Company Contributions are allocated to "highly compensated employees" as defined in Section 414(q) of the Code, that part of Company Contributions paid in cash used to repay interest on an Exempt Loan releasing shares of Company Stock from the Exempt Loan Suspense Account, as allocated to the Stock Account of a Participant under Article V; and (iii) any other employer contributions, employee contributions and forfeitures allocated to the account of such Participant under any other defined contribution plan or simplified employee pension plan of the Company or an Affiliate; and for purposes of the $30,000 limitation of Section 5.07(a)(i), any contributions allocated to any individual medical account of a Key Employee that is part of a pension or annuity plan, and any amount attributable to post-retirement medical benefits allocated to a Key Employee under a welfare benefit fund, shall also be considered Annual Additions. 2.03 BENEFICIARY: The person, persons or organizations designated to receive benefits under this Plan by reason of the death of a Participant. 2.04 BREAK IN SERVICE: A Plan Year, or, for purposes of Section 3.04, the twelve consecutive month period applied for purposes of Sections 2.13, during which a Participant or Salaried Employee has not completed more than 500 Hours of Service. 2.05 CBI: CBI Industries, Inc., a Delaware corporation, the publicly-held parent corporation of the Company. 1 5 2.06 CODE: The Internal Revenue Code of 1986, as from time to time amended. 2.07 COMMITTEE: The group appointed by the Company to direct the Trustee and the administration of the Plan pursuant to Section 8.01. 2.08 COMPANY: Chi Bridge Holdings, Inc., a Delaware corporation, or any successor corporation. 2.09 COMPANY CONTRIBUTION: A contribution to the Plan from the Company or any Participating Affiliate pursuant to Section 4.01. 2.10 COMPANY STOCK: Either: (a) the common stock of CBI, par value $2.50, or (b) the convertible voting preferred stock, Series C, of CBI, par value $1.00 ("Series C Preferred Stock") or (c) any other common stock, or convertible preferred stock meeting the requirements of Section 409(l) of the Code and the regulations thereunder, issued by CBI or any other member of a controlled group of corporations including the Company. If neither of such classes of stock is then readily tradable on an established securities market, then Company Stock that is common stock shall be that class of issued and outstanding stock having a combination of voting and dividend rights equal to or in excess of those of the respective classes with the greatest voting and dividend rights, and Company Stock which is preferred stock shall be convertible at any time into common stock at a reasonable conversion price, 2.11 COMPENSATION: The total of all wages and salaries paid by a Participating Affiliate to an employee while he or she is a Participant and attributable to periods of active and actual employment, and expressly including any elective deferrals or contributions under Code Sections 125 and 401(k), but excluding the following: (a) All overtime, shift and other premiums, bonuses, and all other incentive payments; (b) All severance payments under any severance plan or program of the Company, CBI or a Participating Affiliate, and all payments made at the time of a Participant's termination from employment which represent pay for vacation time earned, but not taken, as of the date of said termination of employment. (c) All payments under the CBI 401(k) Pay Deferral Plan, the CBI Pension Plan and any other deferred compensation plan or contract, whether a defined benefit or defined contribution pension plan; (d) All payments made by a Participating Affiliate for services performed outside the 50 states of the United States and the District of Columbia which are of a character not customarily made by the Participating Affiliate for services performed within those states; (e) All payments identified when made as an allowance for reimbursement of actual or estimated expense incurred or to be incurred by the recipient of such payment; and (f) Any remuneration realized from the grant, receipt, modification, relinquishment, exchange, assignment, transfer, sale or other disposition of Company Stock or rights or options with respect thereto, including those from or under this Plan. (g) Beginning in Plan Year 1994, any Compensation as otherwise defined herein exceeding $150,000 annually, as such amount is adjusted for increases in the cost of living in 2 6 accordance with Section 401(a)(17)(B) of the Code. If Compensation is being determined for a period, not exceeding 12 months, that is not a calendar year, the adjusted annual Compensation limit of this subsection (g) for the calendar year in which that determination period begins will apply to that determination period. If the determination period consists of fewer than 12 months, the adjusted annual Compensation limit will be multiplied by a fraction, the numerator of which is the number of months in the determination period, and the denominator of which is 12. If an employee's benefit accruing in any current Plan Year depends on Compensation for an earlier determination period, the adjusted annual Compensation limit for that earlier determination period will apply to that Compensation. For this purpose, the adjusted annual Compensation limit for periods before 1994 is $150,000. 2.12 DEFINED BENEFIT PLAN FRACTION: A fraction for any Plan Year, the numerator of which is the sum of the projected annual benefits (as defined in Section 415(b)(2) of the Code) for a Participant under all defined benefit plans of the Company or any Affiliate, determined as of the close of such Plan Year, and the denominator of which is the lesser of (a) the product of 1.25 multiplied by the maximum dollar limitation of Section 415(b)(1)(A) of the Code for such Plan Year, or (b) the product of 1.4 multiplied by the amount allowable under Section 415(b)(1)(B) of the Code for such Plan Year. 2.13 DEFINED CONTRIBUTION PLAN FRACTION: A fraction for any Plan Year, the numerator of which is the sum of the Annual Additions to a Participant's account under all defined contribution plans of the Company or any Affiliate as of the close of such Plan Year and the denominator of which is the sum of the lesser of the following amounts determined for all Plan Years of Service with the Company or an Affiliate: (a) the product of 1.25 multiplied by the dollar limitation of Section 415(c)(1)(A) of the Code for such Plan Year, or (b) the product of 1.4 multiplied by the amount allowable under Section 415(c)(1)(B) of the Code for such Plan Year. 2.14 DISABILITY: A physical or mental condition of a Participant, which, on the basis of evidence satisfactory to the Plan Administrator is determined by the Plan Administrator as totally and presumably permanently preventing that Participant from (a) engaging in any regular remunerative occupation or employment for which that Participant is qualified at the time of such determination, or (b) performing that Participant's regular duties as an employee of any Affiliate; excluding disability resulting from or arising out of self-inflicted injury, use of narcotics or the commission of or participation in a felony of which that Participant shall have been convicted by a court of competent jurisdiction. 2.15 ELIGIBLE EMPLOYEE: A Salaried Employee of a Participating Affiliate, including a Salaried Employee not a United States citizen employed by a Participating Affiliate within the United States who has completed, without a Break in Service, two periods of 12 consecutive months during each of which the employee, while employed in any capacity by any Affiliate, has at least 1000 Hours of Service. Where an employee fails to complete 1000 Hours of Service before such employee's first anniversary date of employment, the 12 consecutive month periods used thereafter shall be the Plan Year which includes that anniversary date and subsequent Plan Years. However, the term "Eligible Employee" shall not include a Salaried Employee who is a non-United States citizen employed outside of the United States, any "leased employee" within the meaning of Section 414(n)(2) of the Code, or any person covered by a collective bargaining agreement which does not by its terms provide for the inclusion of such person under the Plan. In the event, however, that persons otherwise eligible to participate in the Plan select a bargaining representative after the effective date of the Plan, such persons shall maintain their eligibility to participate pending the completion of negotiations between a Participating Affiliate and the employees' chosen bargaining representative. If, following the completion of negotiations, the resulting collective bargaining agreement does not provide for 3 7 continued coverage, such persons shall become ineligible to participate further in the Plan as of the effective date of the collective bargaining agreement. 2.16 ENTRY DATE: January 1 and July 1 of each Plan Year. 2.17 ERISA: The federal Employee Retirement Income Security Act of 1974, effective September 2, 1974, as from time to time amended. 2.18 EXEMPT LOAN: The non-recourse loan to the Trust from CBI pursuant to that certain Exempt Loan Agreement by and between the Trustee and CBI, dated April 18, 1988 ("1988 Exempt Loan"), and any other non-recourse loan to the Trust from, or guaranteed by, CBI, the Company or a Participating Affiliate which complies with the requirements of ERISA, the Code and regulations thereunder, and Section 9.03 of this Plan. 2.19 EXEMPT LOAN STOCK SUBACCOUNT: That corresponding part of a Participant's Stock Account consisting of those shares of Company Stock allocated to such Participant's Stock Account upon any payment made under an Exempt Loan and release from the Exempt Loan Suspense Account for that specific Exempt Loan. 2.20 EXEMPT LOAN SUSPENSE ACCOUNT: A specific account in the Trust consisting at any given time of all shares of Company Stock purchased with the proceeds of, and subject to or deemed to be subject to the terms of encumbrance of, a specific Exempt Loan, or any cash or other proceeds of such shares held by the Trust which are subject to such terms of encumbrance, and not yet released pursuant to Section 5.05 of this Plan. A separate Exempt Loan Suspense Account shall be established for each Exempt Loan. 2.21 HOURS OF SERVICE: Such hour or hours for which an employee of any Affiliate receives a wage or salary, directly or indirectly, or is entitled to such wage or salary, for the performance of duties, the normal hours usually worked for authorized but unpaid military, sickness or temporary disability leaves of absence; paid periods of vacation, holiday, illness and temporary disability; hours for which back-pay has been awarded or agreed to by any Affiliate; and any other hours required by Department of Labor regulations, Section 2530.200b-2(b) and (c); provided, however, that an employee shall not duplicate Hours of Service by reason of a provision of this definition., 2.22 KEY EMPLOYEE: A Participant who, at any time during a Plan Year or any of the four preceding Plan Years, is or was: (a) an officer of CBI, the Company or an Affiliate having annual Compensation of more than $45,000 (or as adjusted under Section 415(c)(1)(A) of the Code) and limited to the fifty (50) employees with the greatest Compensation; (b) one of the 10 employees of CBI, the Company or an Affiliate owning the largest interests in CBI, the Company or such Affiliate and having annual Compensation of more than $30,000 (or as adjusted under Section 415(c)(1)(A) of the Code); (c) a five percent (5%) owner of CBI, the Company or such Affiliate; or (d) a one percent owner (1%) of CBI, the Company or such Affiliate having annual Compensation of more than $150,000. For this purpose, Compensation shall include amounts described in Section 2.11(a) of this Plan, subject to Section 2.11(f). 2.23 NORMAL RETIREMENT AGE: The age of sixty-five (65) years. 2.24 PARTICIPANT: An Eligible Employee or former Eligible Employee for whom a Stock Account is currently being maintained and who is entitled to receive or has received benefits under this Plan, or a former Eligible Employee who is otherwise entitled to participate in an allocation pursuant to Article III. 4 8 2.25 PARTICIPATING AFFILIATE: The Company, CBI and every Affiliate, which shall participate in this Plan without the necessity of further corporate action by any of the Company, CBI or any Affiliate, unless any of the Company, CBI or such Affiliate affirmatively acts to exclude such Affiliate or a specific, identifiable group of Salaried Employees of such Affiliate. 2.26 PLAN: The "CBI Salaried Employee Stock Ownership Plan (1987)" as herein set forth and as from time to time amended. 2.27 PLAN ADMINISTRATOR: The person appointed by the Company and approved by CBI to administer the Plan, in accord with the powers and duties of the Committee, pursuant to Section 8.01. 2.28 PLAN YEAR: The fiscal year of the Plan. The Plan Year shall be the same as the Company's taxable year and, unless and until changed, shall be a 12 consecutive month period commencing on January 1 and ending on December 3 1. 2.28A REDUCTION IN FORCE: An involuntary, permanent termination of the employment of a Participant from either the Company or a Participating Affiliate as part of a formal program of workforce reduction by the Company or Participating Affiliate occurring at or within a designated unit, location, department or other subdivision thereof, and occasioned by adverse economic or business conditions; but excluding any termination of employment that is non-permanent (such as a layoff or leave of absence), any voluntary resignation or quit, or any termination of employment that the Company or Participating Affiliate determines to be for cause (which shall include, but not be limited to, misconduct, insubordination, or unsatisfactory job performance). 2.29 RETIREMENT: Termination of the employment of a Participant (i) by retirement as allowed under the provisions of (1) the CBI Pension Plan whether or not a participant in the CBI Pension Plan or (2) any other retirement pension plan in which the Participant participates by reason of his employment with an Affiliate, whichever of (1) or (2) may apply, or (ii) at any time and for any reason after such Participant has attained Normal Retirement Age. 2.29A RETIRING PARTICIPANT: A Participant, in any Plan Year, whose employment terminates by Disability, Retirement, Reduction in Force, or death within that Plan Year, or within the first three months of the following Plan Year but before the allocation of Company Stock pursuant to Section 5.02(c)(ii) for that preceding Plan Year has actually been determined. 2.30 SALARIED EMPLOYEE: An employee of the Company or a Participating Affiliate, without regard to whether such employee is eligible to receive overtime pay under applicable law, whose normal form of compensation is expressed as a fixed base amount per fixed time period of one week or longer (as opposed to an hourly wage), who normally is paid such fixed amount or pro-rata portion thereof for periods not worked due to vacation, prescribed holidays or on account of illness or accident, and for whom neither compensation nor employee benefits are subject to the provisions of a collective bargaining agreement; including, however, an employee who would otherwise meet this definition but for periods of employment in another payroll unit for training purposes or for the temporary convenience of the Company or a Participating Affiliate; and excluding, however, an employee not normally receiving such form of compensation, but temporarily being paid by a salaried payroll unit for the temporary convenience of the Company or a Participating Affiliate under rules to be adopted by the Committee and prescribed to all Participating Affiliates. 2.31 STOCK ACCOUNT: The record of whole or fractional shares of Company Stock, whole or fractional interests in other property, if any, and cash, if any, constituting a Participant's total interest in the Trust, including all subaccounts, if any, as provided for herein. 5 9 2.32 SURPLUS STOCK SUBACCOUNT: That part of a Participant's Stock Account consisting of the sum of all shares of Company Stock allocated to such Participant's Stock Account from the Surplus Transfer immediately upon transfer and all shares of Company Stock subsequently allocated to such Stock Account from the Surplus Suspense Account. 2.33 SURPLUS SUSPENSE ACCOUNT: A specific account in the Trust consisting at any given time of all shares of Company Stock held by the Trust and not allocated to Participants' Stock Accounts pursuant to Section 5.03 of this Plan, which shares of Company Stock are a part of, or have been purchased or acquired with, a Surplus Transfer. 2.34 TOP HEAVY PLAN YEAR: Any Plan Year for which the present value of cumulative accrued benefits under this Plan and any "aggregated plan" (defined below) for Key Employees exceeds 60% of the cumulative accrued benefits under this Plan and all aggregated plans for all employees. The computation of such present value shall utilize the uniform accrual method used in all of the employee pension benefit plans sponsored by the Company and all Affiliates aggregated for such purpose in accordance with Section 416 of the Code, or, if such accrual rate is not uniform, then the benefits of Participants in such plans who are not Key Employees shall be treated as accruing at a rate not faster than the slowest rate permitted under the fractional accrual rate of Section 411(b)(1)(C) of the Code. For purposes of this definition, an "aggregated plan" shall mean any other pension, profit-sharing, thrift or stock bonus plan maintained by the Company or any Affiliate in which any Key Employee participates. Such percentage shall, for a given Plan Year, be computed in accordance with Section 416 of the Code on the last day of the preceding Plan Year (except in the case of the first Plan Year of the Plan, the last day of the first Plan Year)(the "determination date"), and shall include the present value of the cumulative accrued benefits under any aggregated plans determined as of the same date. The present value of an accrued benefit under this Plan shall be determined as of the most recent Valuation Date within the past 12 month period. 2.35 TRANSITION FRACTION: A fraction the numerator of which is the lesser of (a) $51,875 or (b) 1.4 multiplied by 25% of the Participant's Compensation for Plan Year 1981, and the denominator of which is the lesser of (a) $41,500 or (b) 25% of the Participant's Compensation for Plan Year 1981. 2.36 TRUST: The "CBI Salaried Employee Stock Ownership Trust (1987)," an Illinois trust, as from time to time amended. 2.37 TRUSTEES: The Trustee or Trustees appointed pursuant to Section 8.06. 2.38 YEAR OF SERVICE: A Plan Year in which a Participant completes 1000 or more Hours of Service. ARTICLE III: PARTICIPATION IN BENEFITS 3.01 PARTICIPATION: Subject to Section 3.05, each Salaried Employee shall become a Participant in the Plan on the first Entry Date coincident with or subsequent to the date on which that Salaried Employee becomes an Eligible Employee, provided such Eligible Employee is employed by a Participating Affiliate on such Entry Date. If a Salaried Employee becomes an Eligible Employee but is not employed by a Participating Affiliate on such Entry Date, then such Salaried Employee shall become a Participant on the date such Salaried Employee thereafter becomes employed by a Participating Affiliate. Subject to all provisions of this Article III, a Participant shall, after that Participant's Entry Date or date of employment by a Participating Affiliate, whichever is applicable, be eligible to participate in allocations to Stock Accounts in accordance with Article V. 6 10 3.02 TERMINATION OF PARTICIPATION: (a) A Participant whose employment by any Affiliate is terminated other than by (i) Disability, (ii) Retirement, (iii) Reduction in Force, (iv) death, or (v) transfer to an Affiliate which is not a Participating Affiliate shall not participate in allocations under the Plan for any Plan Year which includes, or ends after, the date of such termination of employment, but shall participate in the allocation for the Plan Year preceding the Plan Year in which the Participant's employment is terminated, subject to all provisions of this Article III. (b) A Participant whose employment by any Affiliate is terminated because of (i) Disability, (ii) Retirement, (iii) Reduction in Force, (iv) death, or (v) transfer to an Affiliate which is not a Participating Affiliate, or who otherwise becomes employed in a class, group or unit of employees not eligible to participate in this Plan, shall not participate in allocations under the Plan for any Plan Year which begins after the date of such termination of employment or change in employment status, but shall participate in allocations under the Plan for the Plan Year in which such termination or change in employment status takes place, subject to all provisions of this Article III, with respect to that portion of the Plan Year in which such termination of employment or change in employment status occurred during which such Participant was an Eligible Employee. 3.03 RESUMPTION OF PARTICIPATION: A Participant who has become ineligible to participate in allocations pursuant to Sections 3.02 shall again be eligible to participate in such allocations, subject to all provisions of this Article III, with respect to that portion of a Plan Year beginning with the date on which such Participant becomes re-employed as a Salaried Employee of a Participating Affiliate, and all subsequent Plan Years, subject to Section 3.02. 3.04 BREAKS IN SERVICE FOR ACCRUING YEARS OF SERVICE OR ELIGIBILITY FOR ALLOCATIONS: An employee's Years of Service for purposes of commencing participation in this Plan shall be permanently canceled if, prior to becoming an Eligible Employee, such employee has any Break in Service. Any Participant who incurs a Break in Service in any Plan Year except for any of the reasons described in Section 3.02(b) shall not participate in allocations for such Plan Year. In computing a Break in Service, an employee shall be credited with up to a maximum of 501 Hours of Service on account of absence from active employment due to pregnancy, child birth, or post birth or pre-adoption care. If such absence occurs in more than one Plan Year, such Hours of Service granted on account of such absence shall be allocated to the Plan Year or Years, or applicable twelve-month period under Section 2.14, in a manner calculated to prevent any Break in Service. 3.05 SERVICE AND COMPENSATION PRIOR TO EFFECTIVE DATE OF PLAN: All prior periods of a Salaried Employee's employment subsequent to December 31, 1981 and preceding the date of adoption of this Plan which would otherwise constitute Years of Service if this Plan had then been effective, shall be counted as Years of Service for such Salaried Employee for purposes of commencing initial participation in this Plan. Notwithstanding anything in this Article III to the contrary, however, no Salaried Employee shall have such prior periods of employment counted as Years of Services, nor be eligible to participate in any allocation under this Plan for Plan Year 1987, unless such Salaried Employee is still actively employed by a Participating Affiliate as of the end of Plan Year 1987; and further provided that such Participants eligible as provided herein for an allocation for Plan Year 1987 shall have considered all 1987 Compensation earned after the date such Participant would have begun participation in this Plan if the Plan had been in effect for all of Plan Year 1987. 7 11 ARTICLE IV: CONTRIBUTIONS AND OTHER SOURCES OF PLAN ASSETS 4.01 COMPANY CONTRIBUTIONS: (a) Except as may be otherwise provided herein, each Plan Year the Company and each Participating Affiliate shall contribute to the Trust such Company Contribution as may be determined by the Company's Board of Directors, which may be none in a given Plan Year, as of the end of such Plan Year. The respective amount of the total Company Contribution to be made by each Participating Affiliate shall be the same percentage of the total Company Contribution which the Compensation of the Participants employed by such Participating Affiliate bears to the total Compensation of all Participants. The Company Contribution for each Plan Year in which any Exempt Loan is outstanding shall at a minimum include cash sufficient, when combined with other income and assets available for such purpose under ERISA and the Code, to enable the Trust to make timely payment of all required payments on all outstanding Exempt Loans. Such Company Contribution shall be used first for the payment of interest due on such Exempt Loans, and then to the payment of principal due. But such minimum cash contributions shall be required only to the extent dividends paid on Company Stock and received by the Trust, and available for such purposes under ERISA and the Code, are insufficient to make such payments. Company Contributions made pursuant to this Section 4.01 shall be made, for each Plan Year, not later than the due date (including extensions) for filing the Company's federal income tax return for such Plan Year. (b) Company Contributions shall be in cash or Company Stock. Company Contributions in cash shall be allocated to Participants' Stock Accounts in accordance with Section 5.02 and shall then be used by the Trustee either to repay principal and interest on an Exempt Loan or to purchase whole shares of Company Stock or other permitted investments for allocation to Participants' Stock Accounts, subject to the fiduciary duties of the Trustee under the provisions of ERISA. 4.02 TRANSFER FROM TERMINATED PENSION PLAN: The Trustee shall be authorized to accept into the Trust a transfer of part or all of the assets which would otherwise revert to the Company or a Participating Affiliate as a consequence of the termination of the CBI Pension Plan (Salaried) ("Surplus Transfer"), and such assets, to the extent not transferred in the form of Company Stock, shall be used to the greatest extent possible by the Trustee within ninety (90) days of such transfer (or within such extended period greater than 90 days as permitted by the Code or regulations thereunder or pursuant to an individual ruling of the Internal Revenue Service) for the purchase of Company Stock to be allocated in accordance with Article V. To the extent not so used, such unused Surplus Transfer shall be treated as reverted to the Company and recontributed to this Plan to the extent deductible by the Company under the provisions of the Code. 4.03 TRANSFERS AND ROLLOVERS FROM OTHER QUALIFIED PLANS: (a) The Trustee shall be authorized, upon the direction of the Committee, to accept into the Trust on behalf of any Eligible Employee or group of Eligible Employees either a direct plan-to-plan or trust-to-trust transfer of assets, or funds constituting a "qualifying rollover distribution" (as defined in the Code) made to an Eligible Employee, from another plan or trust ("Transferror Plan") which is qualified under Section 401 (a) and exempt under Section 501 (a) of the Code. (b) A qualifying rollover distribution shall be accepted only if made no later than the sixtieth (60th) day after such distribution to the Eligible Employee, and shall be subject 8 12 to the maximum rollover provisions of the Code. Funds so transferred or rolled over shall be allocated to a Stock Account either newly or already established for such Eligible Employee, and shall be used immediately upon transfer to acquire Company Stock for such Stock Account, which shall be immediately fully vested in such Eligible Employee. Such Eligible Employee shall thereafter be a Participant to the extent of his or her interest in the funds so transferred or rolled over. (c) A direct plan-to-plan or trust-to-trust transfer of assets shall be accepted only if (i) it arises from or as a result of a separate agreement between the Company or a Participating Affiliate and the sponsor of the Transferror Plan, by which the Company or such Participating Affiliate has purchased or otherwise acquired, or merged or consolidated with, such sponsor, or all or a part of such sponsor's business or assets, and such agreement specifies that such Eligible Employees shall receive credit in this Plan for past service under the Transferror Plan, or if the Transferror Plan is a terminated plan previously sponsored by either the Company or a Participating Affiliate (ii) the Trustee determines that such funds may be made subject to the provisions of this Plan under provisions of the Code and ERISA and is otherwise not detrimental to the Plan or Trust, and (iii) such Eligible Employee was previously employed by such sponsor or one of its affiliates or subsidiaries participating in such Transferror Plan. 4.04 NO PARTICIPANT CONTRIBUTIONS: Participants shall not be required nor permitted to make contributions to the Trust. ARTICLE V: STOCK ACCOUNTS AND ALLOCATIONS 5.01 STOCK ACCOUNTS: (a) The Plan Administrator shall cause a Stock Account including, as necessary, an Exempt Loan Stock Subaccount and a Surplus Stock Subaccount to be maintained for each Participant, reflecting the interest of such Participant in the Trust. Such interest shall be expressed in shares, and fractional shares as appropriate, of Company Stock, and an interest in any other assets, including cash, allocated to Participants' Stock Accounts. The record of such Stock Accounts shall further show the number of such shares which are common stock, the number which are Series C Convertible Voting Preferred Stock, and the number which are other Company Stock, and to which Subaccount any such shares are allocated. The Plan Administrator shall maintain adequate records of the aggregate cost basis of Company Stock allocated to each Participant's Stock Account. (b) For all purposes of this Plan, Company Stock shall be valued at the closing price of such Company Stock on the trading day immediately preceding the Valuation Date (as defined in Section 7.02) provided such Company Stock is currently trading publicly on a national or representative regional securities exchange or a national securities quotation service, pursuant to registration under the Federal Securities Act of 1934 ("publicly traded"). Company Stock that is not publicly traded shall be valued at the most recent appraised fair market value. The appraisal of such fair market value shall be instituted by the Trustee, and shall be conducted in accordance with Section 401(a)(28)(c) of the Code no less than once each calendar quarter by an independent appraiser within the meaning of Section 170(a)(1) of the Code and regulations thereunder, and based on all relevant factors for determining the fair market value of securities. Such an appraisal shall be made as of the last day of the calendar quarter, and the Trustee shall specify the date, with the agreement of the Plan Administrator, by which such independent appraiser shall report and publish its appraisal. 9 13 5.02 ALLOCATION OF COMPANY CONTRIBUTIONS: (a)(i) Company Contributions for each Plan Year shall be allocated to the Stock Accounts of Participants who are entitled to participate in an allocation for that Plan Year in accordance with Article III. Except as otherwise provided in this Section 5.02, such allocations shall for valuation purposes be deemed made as of the last day of the Plan Year for which the allocation is being made, but the actual allocation shall be determined and made as soon as is practicable (as determined by the Plan Administrator) after the date of the last Company Contribution for such Plan Year, but in no event later than May 1 of the calendar year following the close of said Plan Year; provided, however, that Participant rights with respect to shares so allocated, including but not limited to, dividend and voting rights, shall not attach until the allocated is actually determined and made. Notwithstanding the foregoing general rule, the allocation for any Retiring Participant shall be made as of the last day of the month in which his or her employment terminates by Retirement, Disability, Reduction in Force, or death ("Retirement Date"), to the Stock Accounts of such Retiring Participant who is entitled to participate in that allocation in accordance with Article III. Said allocation to the Stock Account of a Retiring Participant shall be determined and made on or as soon as practicable (as determined by the Plan Administrator) after the Retiring Participant's Retirement Date. (a)(ii) For the Plan Years which end on December 31, 1993, and December 31, 1994, a Retiring Participant who (A) qualifies as an Incentive Eligible Participant as defined under the CBI Pension Plan, and (B) has satisfied all conditions under the CBI Pension Plan to receive special pension benefits under the Liquid Carbonic Salaried Employee Voluntary Retirement Incentive Program (an "Incentive Eligible ESOP Participant"), shall have his or her allocation determined for each such Plan Year using the formula set forth in Section 5.02(c)(i) and made as soon as practicable (as determined by the Plan Administrator) after April 30, 1994. Such Incentive Eligible ESOP Participant shall not participate in any other allocation for such Plan Years. (b) For purposes of the allocation, the Company Contribution shall be the sum of cash contributed by the Company, shares contributed by the Company, and any other assets other than Company Stock contributed by the Company. (c) The number of shares of each class of such Company Stock (and the amount of cash or other assets) allocable to the Stock Account of each such Participant shall be: (i) in the case of a Retiring Participant, that number equal to: (A) (I) the number of shares scheduled to be released from the Surplus Suspense Account for the Plan Year pursuant to Section 5.03, plus (II) the number of shares scheduled to be released from any Exempt Loan Suspense Account based on scheduled repayments for such Plan Year pursuant to Section 5.05, minus (III) the number of shares respecting dividends estimated to be allocated for such Plan Year pursuant to Section 5.05(b), as determined by the Plan Administrator on the assumptions that dividends will be declared in accordance with the terms of such Company Stock (if any) and the Company's dividend practices, multiplied by: 10 14 (B) a fraction, the numerator of which is the Retiring Participant's Compensation for such Plan Year, and the denominator of which is the total Compensation of all Participants for the previous Plan Year (rounded to the nearest $1,000) increased by the average annual percentage increase in such total Compensation of all Participants over all Plan Years since 1987. (ii) in the case of any other Participant, that number equal to: (A) the total number of each class of such shares (and the amount of cash or other assets to be allocated excluding any shares or amounts to be allocated for such Plan Year under clause (i) above), multiplied by: (B) a fraction, the numerator of which is such Participant's Compensation for such Plan Year, and the denominator of which is the total Compensation of all Participants eligible for such allocation (excluding Compensation of Retiring Participants applied in allocations for the same Plan Year under clause (i) above). 5.03 ALLOCATION OF SURPLUS TRANSFER: The Surplus Transfer shall be allocated to Participants' Stock Accounts, to their respective Surplus Stock Subaccounts, as an allocation for the Plan Year 1987, in which the Surplus Transfer commenced, in an amount equal to one-eighth (1/8) of the Surplus Transfer or such larger amount as may be required to meet the requirements of Section 4980(c)(3)(C) of the Code, and the remainder, if any, shall be held in the Surplus Suspense Account and allocated at the direction of the Committee no less rapidly than ratably over no more than the next seven Plan Years, in each Plan Year, however, subject to the limitation on Annual Additions in Section 5.07. Should any part of the Surplus Transfer remain unallocated by reason of Section 5.07 after such seven Plan Years, such part shall revert to the Company and be recontributed to this Plan, to the extent deductible by the Company, in the Plan Year following such seventh Plan Year. For each such Plan Year, the allocation of Surplus Transfer shall be determined and made at those times as set forth in Section 5.02(a), and the number of shares from such Surplus Transfer to be so allocated to a Participant's Stock Account shall be determined by the formula set forth in Section 5.02(c). 5.04 ALLOCATION OF DIVIDENDS: All cash dividends on Company Stock held by the Trust shall to the extent permitted by ERISA and the Code be used first by the Trustee to pay required payments of interest on an outstanding Exempt Loan and then to pay required payments of principal on such Exempt Loan. All cash dividends paid on Company Stock in excess of such dividends used to repay an Exempt Loan as provided above, and paid on Company Stock held in the Surplus Suspense Account, shall be paid immediately to Participants in proportion to their respective Surplus Stock Subaccount balances. All cash dividends paid on Company Stock in excess of such dividends used to repay an Exempt Loan as provided above, and paid on Company Stock held in an Exempt Loan Suspense Account, shall be used to purchase additional shares of Company Stock which shall be allocated to Participants' Stock Accounts at the same time and on the same basis as the shares of Company Stock upon which such dividends are paid, are also allocated. Any other cash dividends paid on Company Stock held in the Trust which are already allocated to Participants' Stock Accounts, and are not otherwise required to meet current or reasonably anticipated cash obligations of the Trust, shall be used to purchase additional shares of Company Stock to be immediately allocated directly to such Stock Accounts. All dividends paid on Company Stock previously allocated to the Stock 11 15 Accounts of Participants, if paid in the form of Company Stock, shall be allocated directly to such Stock Accounts immediately upon receipt thereof by the Trust. 5.05 ALLOCATION OF EXEMPT LOAN SHARES: The Company Stock purchased with the proceeds of the 1988 Exempt Loan, or any other Exempt Loan made to the Trust, shall be allocated to its own Exempt Loan Suspense Account and the number of shares to be allocated to Participants' Stock Accounts, released from each respective Exempt Loan Suspense Account, shall be determined by multiplying the total number of shares in each such Exempt Loan Suspense Account by a fraction, the numerator of which is the total amount of all payments of principal and interest made by the Trustee under the provisions of such Exempt Loan for the Plan Year, and the denominator of which is the sum of all required payments of principal and interest under such Exempt Loan to be paid for the current and all future Plan Years, on a loan by loan basis for each such Exempt Loan for the release of shares from the corresponding Exempt Loan Suspense Account. In the event an Exempt Loan provides for a variable interest rate, the formula described above for the allocation of shares shall use the interest rate for the current Plan Year as though in effect throughout the remainder of the term of the loan for computing the total payments of principal and interest to be made under such Exempt Loan. The allocation of shares of Company Stock released from the Exempt Loan Suspense Account and to be allocated to individual Participants' Stock Accounts in any Plan Year shall be determined as follows: (a) An individual Participant's portion of the total number of shares to be allocated which have been released from the Exempt Loan Suspense Account where the source of funds for the loan payment resulting in such release are either Company Contributions previously allocated in accordance with Section 5.02 or dividends paid on shares previously unallocated to Participant's Stock Accounts, shall be determined by using the formula described in Section 5.02(c). Such allocation shall be made at those times as set forth in Section 5.02(a). (b) That portion of the total number of shares to be allocated which have been released from the Exempt Loan Suspense Account as a result of payments under the Exempt Loan, where the source of funds for the loan payment resulting in such release are dividends paid on shares already allocated to Participants' Stock Accounts, shall be allocated in an amount equal in value to the amount of such dividends directly to and proportionally to the Stock Accounts of the Participants for which such dividends were paid to make the Exempt Loan payments resulting in the release of such shares, or in a manner as otherwise required by the applicable provisions of the Code and Regulations. Such allocations shall be made as soon as practicable (as determined by the Plan Administrator) after the date on which such dividends are paid. 5.06 ALLOCATION OF TRUST EARNINGS: All earnings or losses of the Trust, other than dividends paid on Company Stock, shall be allocated to the Stock Accounts of Participants as soon as is practicable following the close of each calendar quarter and the amount of such income or loss allocable to the Stock Account of each Participant shall be that amount which bears the same proportion to the amount of all such income or loss allocable to such Stock Accounts for such calendar quarter as the amount of each such Stock Account as of the end of such calendar quarter bears to the total of all such Stock Accounts as of the end of such calendar quarter. 5.07 LIMITATION ON ANNUAL ADDITIONS: Notwithstanding any other provisions of the Plan, a Participant's Annual Addition shall not exceed the lesser of: 12 16 (a) The sum of (i) the greater of $30,000 or 25% of the dollar limitation of Section 415(b)(1)(A) of the Code (as adjusted by Section 415(d)(1)); and (ii) the lesser of the amount in paragraph (i) above, or the sum of the portions of the Company contributions and Surplus Transfer which are treated as Annual Additions and allocated to such Participant's Stock Account; or (b) 25% of the Compensation paid to the Participant by Participating Affiliates in that Plan Year. For this purpose only, Compensation shall not include the total of contributions made for such Participant under a cash or deferred arrangement pursuant to Section 401(k) of the Code, but shall include amounts described in Section 2.11(a) of this Plan, subject to Section 2.11(f). Paragraph (ii), above, shall apply in a Plan Year only if no more than one-third (1/3) of the Company Contributions are allocated to "highly compensated employees", as defined in Section 414(q) of the Code. In the event this limitation would be exceeded by what would otherwise be such Participant's properly determined Annual Addition, such excess shall be held in the Trust in a special "Annual Addition Suspense Account." Beginning in the following Plan Year and continuing in each of the following Plan Years such an excess continues to exist, the shares in such Annual Addition Suspense Account shall be allocated and reallocated to Participants' Stock Accounts in accordance with the formula described in Section 5.02(c), subject to the limits of Section 415 of the Code. Such allocation shall be done prior to allowing any Company contributions to the Plan which would constitute Annual Additions in that Plan Year. In determining a Participant's Annual Addition limitation, any allocation made to such Participant's Stock Account pursuant to Section 5.03 shall be counted first, before any other contribution or allocation which would otherwise be made in the same Plan Year on behalf of such Participant under this Plan or any other defined contribution plan in which the Participant participates. 5.08 COMBINED LIMITATION: In the case of an employee who is a Participant in both this Plan and the CBI Pension Plan, or any other defined benefit plan sponsored by the Company or an Affiliate (considered as one plan), the sum of the Defined Benefit Plan Fraction and the Defined Contribution Plan Fraction (computed by taking into account the limitation of Section 5.07(a)) for the Plan Year shall not exceed 1.0. Where the sum of the Defined Benefit Plan Fraction and the Defined Contribution Plan Fraction for a Plan Year would otherwise exceed 1.0, the Participant shall cease to accrue benefits payable under the CBI Pension Plan or such other defined benefit plan in such a manner that the sum of the above Fractions shall be maintained equal to 1.0. In the discretion of the Plan Administrator, for Plan Years 1983 and later, the amount taken into account for the denominator of the Defined Contribution Plan Fraction for a Participant for all Plan Years 1982 and prior shall be an amount equal to the product of (a) the amount of the denominator of such Fraction as otherwise determined for Plan Years 1981 and prior, multiplied by (b) the Transition Fraction. 5.09 CONDITION: Notwithstanding any other provisions of this Plan other than Article XI, all Company contributions are expressly conditioned on qualification of this Plan and the Trust under Sections 401 and 501, and meeting the applicable conditions of Sections 409 and 4975, of the Code, and on the deductibility of such contribution under the provisions of the Code. Any contribution, to the extent not theretofore distributed, may be returned to the respective contributing Participating Affiliate within one year after the date of denial of initial qualification of this Plan or the Trust or deductibility of such contribution. 13 17 ARTICLE VI: VESTING 6.01 GENERAL RULE: A Participant's Stock Account shall be 100% vested at all times. ARTICLE VII: DISTRIBUTIONS 7.01 DISTRIBUTIONS UPON TERMINATION OF EMPLOYMENT: (a) Each Participant whose employment is terminated from all of the group consisting of the Company and all Affiliates (or the Beneficiary of a Participant whose employment so terminated by death) shall be entitled to request in writing, in a manner prescribed by the Plan Administrator, a distribution of such Participant's Stock Account. A distribution to a Retiring Participant shall be made on his or her Retirement Date (as defined in Section 5.02(a)) if so elected by the Retiring Participant in a request received by the Plan Administrator not later than the 15th day of the month closing with his or her Retirement Date. All distributions shall be made as soon as practicable after the Quarterly Valuation Date (as defined in Section 7.02) that coincides with the end of the calendar quarter on which the first applicable condition for distribution, as described below, is met if so elected by the Participant (or Beneficiary) in a request received by the Plan Administrator not later than the 15th day of the month which follows such Quarterly Valuation Date. If a Participant's request is received after the 15th day of the month after such Quarterly Valuation Date, such distribution will be made as soon as practicable after the earlier of the first Quarterly Valuation Date following the Plan Administrator's receipt of the request or the end of the Plan Year during which the Participant's termination of employment occurred. The date of all distributions (other than Retirement Date distributions to Retiring Participants) respecting a given quarterly Valuation Date shall be a single date designated by the Plan Administrator occurring as soon as practicable following the date of publication of the appraisal, if any, conducted pursuant to Section 5.01(b). Such designated distribution date ("Distribution Date") shall be the date such distribution is mailed or otherwise delivered from the Trustee for transmittal to the Participant (or Beneficiary) receiving such distribution. (i) A distribution of a Participant's Stock Account may be made pursuant to this Section 7.01 following the earliest to occur of: (A) the commencement of benefits to such Participant from either the CBI Pension Plan or any other pension benefit plan maintained by the Company or any Affiliate as a result of Retirement; (B) the death or Disability of the Participant; (C) the latest of the date the Participant terminates employment, attains Normal Retirement Age or the tenth anniversary of the Entry Date on which the Participant entered the Plan; (D) the date the Participant attains age 70-1/2; (E) the date applicable under Section 9.04 of this Plan to the extent of the distribution provided thereunder; or (F) the date a Participant separates from service for any reason other than in (A) or (B) above. 14 18 If no request for distribution is received by April 1 of the calendar year following the date specified in (D) above, distribution shall be made on such date, and annually thereafter to the extent of any additional benefits accrued in this Plan in each subsequent Plan Year. Also, no distribution shall be deferred without the consent of the Participant or the Beneficiary who is the surviving spouse of a deceased Participant to a date later than sixty (60) days after the close of the Plan Year in which the date specified in (C) occurs or at the end of five years following the date described in (B), if either shall be applicable. (b) All distributions shall be made in whole shares of common stock of CBI and cash, as computed in Section 7.02; provided, however, that to the extent a Participant (or other distributee) elects under Section 7.09 to make a direct rollover from this Plan to any other eligible retirement plan sponsored by the Company, CBI, or a Participant Affiliate, of that portion of the Participant's Stock Account that will be accepted in a direct rollover by such plan, the portion of the distribution transferred to such plan by direct rollover shall be in cash. All distributions shall be in a single lump sum, except as otherwise provided in (a) above or in Section 9.04 or pursuant to a direct rollover election under Section 7.09. (c) If a Participant who is otherwise entitled to a distribution or distributions is re-employed by the Company or by any Affiliate before such Participant has received all the distributions to which such Participant is entitled, no distribution shall be made to such Participant during the period of such employment unless otherwise required by subsection (a)(i)(D) above. 7.02 VALUATION OF ACCOUNT FOR DISTRIBUTIONS: There shall be at least one valuation date (an "Annual Valuation Date") on the last day of each Plan Year for appraising the fair market value of any Company Stock which is not publicly traded. The Trustee may, and if directed by the Committee shall, cause additional valuations to occur regularly on the last day of each quarter ("Quarterly Valuation Date") or the last day of each month ("Monthly Valuation Date"). The amount of a cash distribution to be made to a Participant pursuant to Section 7.01 on a Distribution Date respecting a given Valuation Date (or on a Retirement Date for a Retiring Participant) shall be the sum of (i) the product of (x) the number of shares of Series C Preferred Stock in such Participant's Stock Account, and (y) the difference in value between Series C Preferred Stock and CBI common stock, determined pursuant to Section 5.01, (ii) the value, so determined, of any fractional shares of Company Stock in such Stock Account, and (iii) any cash or property other than Company Stock being held in such Stock Account. The Trustee shall have a "put option" to CBI on Series C Preferred Stock it holds to the extent required, as determined by the Trustee, to make such distribution; and a "put option" to CBI on CBI common stock it holds to the extent required, as determined by the Trustee, to make a transfer to the CBI Pension Plan of that portion of the Participant's Stock Account that will be accepted in a direct rollover by the CBI Pension Plan pursuant to the election of a Participant under Section 7.09. Either such put option shall be implemented as follows: (a) If permitted under applicable law, rulings and regulations, and not a prohibited transaction under Section 4975(c) of the Code or Section 406 and 407 of ERISA (or a prohibited transaction exemption), the Trustee, in its discretion, shall put Series C Preferred Stock to CBI, and shall be paid therefor the fair market value of such Series C Preferred Stock determined pursuant to Section 5.01. The payment for the purchase by CBI under such put option shall be in the form of the number of shares of common stock of CBI (which when delivered to the Trustee shall be publicly traded, as defined in Section 5.01(b)) into which such shares of Series C Preferred Stock so put are convertible, if such shares of Series C 15 19 Preferred Stock were then converted, at the time such shares are put, and cash equal to the amount computed in clause (i), above. (b) The Committee, in its discretion, may direct the Trustee to cause a special valuation of the Series C Preferred Stock to be made by an independent appraiser as of the date of the put option to CBI, and it may cause benefits to be distributed based on the value of a Participant's Series C Preferred Stock as of the special valuation date. (c) To the extent necessary to accomplish a direct rollover to any other eligible retirement plan sponsored by the Company, CBI, or a Participating Affiliate, of the portion of a Participant's Stock Account that will be accepted in direct rollover by the CBI Pension Plan, and if permitted under applicable law, rulings and regulations, and not a prohibited transaction under Section 4975(c) of the Code or Section 406 and 407 of ERISA (or a prohibited transaction exemption), the payment for the purchase by CBI of Series C Preferred Stock shall, notwithstanding subsection (a), be in cash; and the Trustee in its discretion shall put CBI common stock to CBI, and shall be paid therefor in cash. The cash payment shall be equal to the fair market value on the date of the direct rollover of the number of shares of CBI common stock attributable to the Series C Preferred Stock as determined under subsection (a) and the number of shares of CBI common stock otherwise put to CBI, plus cash equal to the amount computed in clause (i) above. (d) The Trustee may exercise a put option to CBI for the fair market value of such Series C Preferred Stock to be paid by CBI pursuant to any other arrangement agreed upon by the Trustee and the Committee to the extent permitted by applicable law, rulings and regulations. A distribution of Company Stock shall be in the form of stock certificates for the number of whole shares of stock being distributed from the recipient Participant's Stock Account. 7.03 NOTICE OF THIRD-PARTY OFFERS TO PURCHASE: In the event a prospective bonafide third party purchaser offers to buy from the Trust any shares of Company Stock which are then not publicly traded, the Trustee shall promptly notify the Company and CBI in writing of the terms of such offer prior to the Trustee's response to such offer. 7.04 OTHER OPTIONS OR RESTRICTIONS: Except as otherwise provided in this Article VII, a Participant may not be required to sell Company Stock to the Company, CBI or any other Participating Affiliate, nor may the Trust enter into an agreement which obligates the Trust to purchase Company Stock upon the death of a shareholder, nor shall there be any other restrictions on the alienation of Company Stock for purposes of this Plan. 7.05 EFFECT OF DEATH BEFORE DISTRIBUTION: Should a Participant die before receiving all distributions due to such Participant, the balance of such deceased Participant's Stock Account shall be distributed to the Beneficiary or Beneficiaries effectively designated by the Participant or, if none, then to the deceased Participant's surviving spouse or, if none, then to the Participant's lawful descendants, per stirpes as defined by common law, or, if none, then to the deceased Participant's estate. To be effective, a beneficiary designation must be filed with the Plan Administrator in such written form as the Plan Administrator requires and may include secondary, successive or contingent Beneficiaries; provided, however, that any designation by a Participant who is married at the time of his death which fails to name his surviving spouse as the sole primary Beneficiary shall not be effective unless such surviving spouse has consented to the designation in writing, witnessed by a Plan representative or notary public, acknowledging the effect of the designation and the specific non-spouse Beneficiary, including any class of Beneficiaries or any contingent Beneficiary. Such consent 16 20 shall not be required if, at the time of filing such designation, and also at the time of death of the Participant if the marital status of the Participant has changed since the filing of such designation, the Participant or Beneficiary, as the case may be, establishes to the satisfaction of the Plan Administrator that the consent of the Participant's spouse could not be obtained because there was no spouse, such spouse could not be located, or because of other reasonable circumstances. Any consent by a spouse (or establishment that the consent of a spouse could not be obtained) shall be effective only with respect to such spouse, but shall be irrevocable unless and until the Participant changes his Beneficiary designation, in which case a new spousal consent shall (unless the spouse is the sole primary Beneficiary) be obtained for such change. Any Participant may change his Beneficiary designation at any time by filing with the Plan Administrator a new Beneficiary designation meeting the above requirements. 7.06 LEGAL DISABILITY: Should any distribution under this Plan be to a minor or to any other person under legal disability, the Plan Administrator in his sole discretion may direct that such distribution be made in any one or more of the following ways: (a) directly to such minor or other person; or (b) to the legal guardian or conservator of such minor or other person; or (c) to the spouse or to any parent, child, brother, sister or other relative or dependent of such minor or other person, or to any person or persons who is or are caring for or supporting such minor or other person, in each case for the use of such minor or other person; or (d) by expenditure of the same for education, health, or maintenance of such minor or other person. 7.07 UNCLAIMED PAYMENTS: If any check or other instrument in payment of a benefit hereunder, which was mailed by regular United States mail to the address of the payee furnished the Plan Administrator by the payee or a Participating Affiliate, is returned unclaimed, the Plan Administrator shall direct that further payments to such payee be discontinued until the Plan Administrator receives further information from such payee or a Participating Affiliate. Such discontinuance shall not be treated as a forfeiture of any unclaimed or future payment provided, however, that where the Plan Administrator is unable to locate a payee, the Plan Administrator may, at any time after an amount has been distributable and unclaimed for at least three (3) years following the date distribution is to be made, and in its sole discretion, direct that the entire amount payable to such payee shall be reallocated to the Stock Accounts of other Participants as an additional Company Contribution as set forth in Section 5.02 hereof. Any amounts so reallocated shall again become payable to such payee upon his filing a written claim for benefits under the Plan with the Plan Administrator, in accordance with Section 8.05, containing his complete mailing address and such evidence that he is entitled to such benefits as the Plan Administrator may require, and upon allowance of such claim, such amount shall be paid as an administrative expense of the Plan. 7.08 (Reserved) 7.09 DIRECT ROLLOVER OPTION: Notwithstanding any other provision of this Plan to the contrary that would otherwise limit a distributee's election under this Article, a distributee may elect, in writing at the time and in the manner prescribed by the Committee, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan, specified by the distributee, which will accept such rollover, in a direct rollover (the "Direct Rollover Option"). 17 21 (a) In the event a distributee elects the Direct Rollover Option, the Trustee may exercise on the Distribution Date the put option described in Section 7.02 for a number of shares of Series C Preferred Stock (and, if applicable under Section 7.02(c), CBI common stock) it holds for the Participant's Stock Account so that, immediately after such exercise (and without regard to any cash to be paid under Section 7.02 equal to the amount computed in clause (i) of Section 7.02), the Stock Account will contain a sufficient number of shares of CBI common stock such that (i) CBI common stock equal in value to (or, if applicable under Section 7.02(c), cash in) the amount to be transferred in the direct rollover can be transferred to the transferee eligible retirement plan; and (ii) immediately thereafter the ratios of CBI common stock and Series C Preferred stock to each other and to all other assets held in the Participant's Stock Account will be the same as such ratios immediately before such exercise of the put option and transfer. (b) For purposes of the Direct Rollover Option: (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 distributions is required under section 401(a)(9) of the Code 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 Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, an annuity plan described in Section 403(a) of the Code, or a qualified trust described in Section 401(a) of the Code, that accepts the distributee's eligible rollover distribution; however, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or an individual retirement annuity; (iii) a "distributee" includes any Participant; and a Beneficiary who is the Participant's surviving spouse, and the Participant's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Code, are distributees with respect to the interest of the spouse or former spouse; and (iv) a "direct rollover" is a payment by the Plan to the eligible retirement plan specified by the distributee. ARTICLE VIII: ADMINISTRATION 8.01 COMMITTEE AND PLAN ADMINISTRATOR: The Plan will be administered by a Committee and a named Plan Administrator, both appointed by the Board of Directors of the Company and approved by CBI, as provided in this Article VIII. Unless otherwise designated in writing by the Board of Directors of the Company, and with proper notice to interested parties, the 18 22 Plan Administrator, as defined by and required by ERISA, shall be the Manager of Employee Benefits of CBI. 8.02 ADMINISTRATIVE POWERS: The Committee shall have full power and authority, within the limits provided by the Plan: (a) to determine all questions arising concerning the construction and interpretation of the Plan and its administration, including, but not by way of limitation, the determination of the rights or eligibility under the Plan of employees and Participants and their Beneficiaries, the amount of their respective benefits, procedures and forms for claims therefor, and the existence or nonexistence and the continuance or termination of a Participant's Disability; (b) to adopt such rules and regulations, subject to review and approval by the Board of Directors, as it may deem reasonably necessary for the proper and efficient administration of the Plan and consistent with its purposes; (c) to enforce the Plan in accordance with its terms, (d) to prepare and distribute, as required or appropriate, information explaining the Plan, (e) to receive from the Company, the Board of Directors, the Trustee, and from Participants and beneficiaries, such information, and to maintain records concerning such information, as shall be necessary for the proper administration of the Plan, (f) to furnish the Company such annual and other reports with respect to the administration of the Plan as are reasonable and appropriate, (g) to give instructions to the Trustee regarding the payment of benefits, and distribution of Trust funds, and such other matters except those specifically reserved to the Trustee in this Plan and the Trust Agreement, (h) to receive, review and maintain on file reports of the financial condition and of the receipts and disbursements of the Trust Fund from the Trustee, (i) to delegate any of the above to the Plan Administrator, (j) to establish sub-committees, as and when directed by the Board of Directors of the Company, to exclusively carry out any specific duties or powers enumerated herein; and (k) to do all other acts, in its judgment necessary or desirable, for the proper and advantageous administration of the Plan. 8.03 DOCUMENTATION: The Committee may require Participants and Beneficiaries to supply it with such evidence of their eligibility to participate and receive benefits under this Plan and with such mailing addresses, specimen signatures, and other data as it may reasonably require in order to determine and pay any benefits which may be due hereunder, and it, the Plan Administrator and Trustee and their respective agents shall be protected in relying thereon. 19 23 8.04 RETURNS: The Committee shall cause to be filed such information and other returns, and retain such records, as may be required from time to time by governmental authority except returns, if any, required to be filed or kept by a Participating Affiliate or by the Trustee. 8.05 CLAIMS: Other than the request for distribution prescribed by Section 7.01(a), no formal request for benefits that are due hereunder shall be required. Any claim for benefits not received shall be made in writing to the Plan Administrator. The Plan Administrator shall consider such claim and within 90 days of receipt thereof, shall either approve it or deny it, or, if having first given written notice to the claimant within such 90 days of the need for addition information or consideration, within 90 days of receipt thereof. Each denial shall be in writing, setting forth the specific reasons for such denial and written in a manner calculated to be understood by the claimant and shall be delivered to the claimant either in person or by mail. The claimant may appeal such denial in writing, filed within 60 days of the date of denial. The Committee shall afford a reasonable opportunity to any claimant whose claim is denied for a full and fair review by the Committee of the appeal of such denial, and shall respond within 60 days of the filing of the appeal. 8.06 TRUSTEE: The Board of Directors of the Company shall appoint, as approved by CBI, one or more individuals or corporations eligible under the provisions of ERISA to act as Trustee or Trustees under the Plan, who shall execute the Trust Agreement. Except for those independent or discretionary powers and duties specifically reserved to them in this Plan or in the Trust Agreement, the Trustee shall only act subject to the direction of the Committee. The Trustee shall hold and invest the contributions paid to the Trustee and the earnings thereon in accordance with the terms of the Plan and the Trust Agreement. The Trustee shall be entitled to receive reasonable compensation as agreed between the Trustee and the Company in the Trust Agreement or otherwise. The Company upon CBI's approval may remove any Trustee at any time by written notice to such Trustee and the remaining Trustees, if any, or in accordance with the Trust Agreement. 8.07 LIMITATIONS OF COMPANY LIABILITY: In no circumstances shall an Affiliate be liable for the payment of any benefit either in whole or in part; nor shall an Affiliate have any financial liability or obligation of any kind to any employee, Participant or Beneficiary or to anyone else whomsoever or whatsoever because of or with respect to the Plan or any provision thereof or anything done or omitted by an Affiliate in connection with the Plan or its administration, except as may otherwise be provided in ERISA, and except for the benefit, if any, payable under Article XI. No Affiliate guarantees the Trust against loss or depreciation and no Affiliate shall have any liability or obligation whatever for or with respect to the assets of the Trust or any part thereof or any transaction affecting the same, except as may otherwise be provided in ERISA. The limitations herein shall be subject to the provisions of Article IX of the Trust Agreement. 8.08 DISCRETIONARY AUTHORITY: To the extent not expressly delegated or limited otherwise in this Plan, the Committee and, as to those matters which have been delegated to him, the Plan Administrator, shall have full and absolute discretion to determine the eligibility for or amount of benefits due or payable under the Plan, or to otherwise interpret and apply the terms of the Plan, and such decisions shall be final and binding on all parties to the fullest extent permitted by law. ARTICLE IX: INVESTMENT OF TRUST ASSETS 9.01 AUTHORIZED INVESTMENTS: The purpose of the Plan shall be, and the primary duty and obligation of the Trustee shall be, to invest primarily in Company Stock. It is the specific intention of the Company that the Plan constitute and qualify as an "employee stock ownership plan" or "ESOP", as defined in Section 4975 of the Code and the regulations thereunder. The Trustee may invest funds under the Plan, to the extent not used to purchase Company Stock, in savings accounts, certificates of deposit, United States Treasury securities, high-grade short-term securities, or other 20 24 investment-grade stocks, bonds, or commercial paper deemed by the Trustee to be desirable for the Trust, pooled investment funds for the investment of qualified plan assets including any such pooled fund maintained by the Trustee, or such funds may be held in cash, all in accordance with the Trust Agreement. 9.02 TRUSTEE TO DETERMINE: Except as otherwise provided herein, all investments will be made by the Trustee, and all purchases of Company Stock shall be made at prices which, in the judgment of the Trustee, do not exceed the fair market value of such shares as of the date of the transaction. 9.03 BORROWING BY TRUSTEE: Subject to any additional provisions of the Trust Agreement, the Trustee may borrow from time-to-time for the purpose of maintaining reasonable fund liquidity, for investments in other than Company Stock which the Trustee deems necessary and prudent for the Trust, and for the acquisition of Company Stock. However, any borrowing for the purpose of acquiring Company Stock shall be in the form of an Exempt Loan only, and the Trustee may not borrow from the Company, CBI or any Participating Affiliate for any other purpose except for short-term interest free loans to obtain cash for distributions to Participants under Article VII, as agreed between the Trustee and the Company, CBI or a Participating Affiliate. The proceeds of an Exempt Loan may be used only to acquire Company Stock, to repay such Exempt Loan, or to repay a prior Exempt Loan. Any such Loan must not be prohibited by either Section 4975 of the Code or by ERISA, or the regulations thereunder, and shall meet the requirements thereof, shall bear a reasonable rate of interest, and may be secured by a collateral pledge of the Company Stock so acquired. No other Trust assets may be pledged as collateral by the Trustee, and no lender shall have recourse against Trust assets other than any share of Company Stock remaining subject to pledge, any Company contributions made to meet the obligations of an Exempt Loan under Section 4.01(a), or any dividends in the Trust that were paid on shares subject to pledge. Any pledge of Company Stock must provide for the release of shares so pledged on a pro rata basis in accordance with the formula stated in Section 5.05. To the extent permitted by ERISA and the Code, repayments on any Exempt Loan shall be made by the Trustee first from any dividends paid on Company Stock held by the Trust, applied first to outstanding interest and then principal due; next from any Company contributions in the form of cash, applied first to outstanding interest due and then to principal; and next from the Surplus Transfer or any Exempt Loan to refinance the outstanding Exempt Loan. Should this Plan cease to be an "employee stock ownership plan" (as defined in Section 4975 the Code and the regulations thereunder), Company Stock acquired with the proceeds of an Exempt Loan will continue after the loan is paid to be subject to the provisions of Sections 7.03 and 7.04, and of this Section 9.03. 9.04 INVESTMENT DIVERSIFICATION: A Participant who has attained age fifty-five (55) and who has completed at least ten years of participation under this Plan shall have the right to elect within 90 days after the close of that Plan Year and each Plan Year during the "qualified election period" (as defined below) to direct the Trustee as to the investment of at least 25% of the total balance of the Participant's Stock Account to the extent such balance exceeds the amount to which a prior election under this Section has been applied. For purposes of this Section, the term "qualified election period" shall mean the five-Plan Year period beginning with the Plan Year after the Plan Year in which the Participant satisfies the above conditions. In the case of the Plan Year in which the Participant can make his last election, such percentage shall be 50% of such balance rather than 25%. The Participant shall make such investment election by directing that part of his Stock Account balance covered by the election shall be distributed to him within ninety (90) days after the close of the election period during which such election is made. Valuation of that part of such Participant's Stock Account balance so distributed or reinvested shall be in accordance with Section 7.02. 21 25 ARTICLE X: MISCELLANEOUS 10.01 INFORMATION TO BE PROVIDED TO PARTICIPANTS: At least once in each Plan Year, the Plan Administrator shall cause to be furnished to each Participant a statement indicating, on the basis of the latest available information, the status of the Participant's Stock Account, including the number of shares of Company Stock allocated thereto. 10.02 INFORMATION ON PARTICIPANTS: Participants shall furnish promptly to the Plan Administrator such information as the Plan Administrator reasonably considers necessary or desirable for the purpose of administering the Plan. If such information is not submitted, or shows that information previously furnished has been misstated on the records of the Plan, the Plan Administrator will make such corrections and adjustments in accordance with the available facts as it considers appropriate. 10.03 REGULARLY KEPT RECORDS ARE BINDING: The regularly kept records of a Participating Affiliate shall be conclusive and binding upon all persons with respect to a person's Hours of Service; date, nature and length of employment; time, type and amount of Compensation paid and the manner of payment thereof-, type and length of absence from work and other matters contained therein relating to such person. 10.04 NO DERIVATIVE RIGHTS: No Participant or Beneficiary shall have any right to, or interest in, any specific assets of the Trust, nor in any part of the general assets of the Trust except as expressly provided in this Plan. Any person claiming benefits under this Plan shall look solely to the Trust for payment. In no event will any Affiliate or any officers, directors, or employees thereof, or the Plan Administrator, or the Trustee be liable, in their respective individual capacities, to any person whomsoever to pay benefits under the provisions of this Plan. 10.05 NON-ASSIGNABILITY: (a) No part of the assets of the Trust or interest of a Participant or Beneficiary in the assets of the Trust or any part thereof shall be assignable in anticipation of payment, either by voluntary or involuntary act or by operation of law, or be liable in any way for any debt or other obligation of such Participant or Beneficiary. Any effort to exercise the powers herein denied, except as provided in (b) shall be ineffective and need not be recognized by the Plan Administrator or by the Trustee. (b) Notwithstanding (a), above, the Plan Administrator and Trustee shall make payments of benefits in compliance with, but only with, the provisions of any "qualified domestic relations order", as that term is defined in the Code and ERISA. Under no circumstances shall such payment be made to an "alternate payee" (as defined therein) in the form of a "joint and survivor annuity" (as defined in the Code). The Plan Administrator shall adopt notice and determination procedures for reviewing all qualified domestic relations orders presented to him, the Plan or the Trustee. 10.06 NO EMPLOYMENT RIGHT: Nothing contained in this Plan shall be construed as a contract of employment between an Affiliate and any person, or a conferring a right upon any person to be continued in the employment of an Affiliate, or as a limitation of the right of an Affiliate to discharge any person at any time with or without cause. 10.07 VOTING COMPANY STOCK: Each Participant is entitled to direct the Trustee as to how any Company Stock allocated to his Stock Account is to be voted, which shall specifically 22 26 include the power to direct the Trustee to abstain from voting on any issue. The Company shall timely distribute or cause to be distributed to the Participant such information as is distributed to all other shareholders of the Company in connection with such voting, and shall provide the means by which the Participant can instruct the Trustee in what manner it should vote (or abstain from voting) the Company Stock allocated to such Participant's Stock Account. The Company shall provide the Trustee with a copy of any materials provided to Participants. A Participant shall elect to exercise such right by a proxy or such other writing filed with the Trustee or an independent third party delegated to receive and compile such direction, or in such other form as applicable law may reasonably require. Such directions shall be held confidential by the party compiling them. Fractional shares of Company Stock in a Participant's Stock Account shall be combined with fractional shares in other Participants' Stock Accounts and voted to reflect, to the extent the Trustee determine is possible, the directions of the Participants with respect to such fractional shares. Company Stock held in the Trust in Stock Accounts for which Participants have not exercised their right to direct the Trustee as to how to vote such Company Stock shall be voted by the Trustee at it determines is in the best interests of the Participants affected, provided, however, that prior thereto the Trustee in its sole discretion shall determine, based on the information available to it concerning those Participants from whom directions have not been previously received, the type of information distributed to Participants, and the directions of Participants actually received, to what extent, if at all, and in what manner to attempt to secure the directions of those Participants who theretofore have failed to give the Trustee directions. Such actions by the Trustee may include, but shall not be limited to, mailing by certified mail, return receipt requested, a second set of proxy or other materials containing voting instructions to such Participants. All Company Stock held in the Trust which is unallocated shall be voted by the Trustee by taking that portion of unallocated Company Stock corresponding to the proportion of allocated Company Stock for which the Trustee have received directions, and voting it in the same proportions as the Company Stock for which they have received directions is voted, and by voting the remainder of unallocated Company Stock as the Trustee determine in the best interests of the Participants. In the case of Company Stock which is convertible preferred stock, the right and power to determine whether and when to convert such stock shall not be directed by the Plan's Participants, but shall be exercised exclusively by the Trustee or converted otherwise only in accordance with either this Plan or the stock certificate of designation. 10.08 TENDER OFFER: Notwithstanding any other provisions of this Plan, including Section 10.07 or Section 10.09, the provisions of this Section shall govern the tendering of Company Stock held in this Plan. For purposes of this Section, "Company" shall include CBI. (a) Upon commencement of a tender offer for any securities of the Trust that are Company Stock, the Company shall notify each Participant of such tender offer and shall timely distribute or cause to be distributed to the Participant such information as is distributed to all other shareholders of the Company in connection with such tender offer, and shall provide a means by which the Participant can instruct the Trustee whether or not to tender the Company Stock allocated to such Participant's Stock Account. The Company shall provide the Trustee with a copy of any materials provided to Participants. (b) Each Participant shall have the right to instruct the Trustee as to the manner in which the Trustee is to respond to the tender offer for any or all of the Company Stock allocated to such Participant's Stock Account. The Trustee shall respond to the tender offer with respect to the Company Stock as instructed by the Participant. All such instructions received by the Trustee shall be held in confidence and shall not be divulged to the Company, any subsidiary of the Company, to any officer or employee thereof, or to any other person, except to the extent necessary to the Plan Administrator, who shall also hold such information confidential. The Trustee shall exercise its discretion in the best interests of the Participants affected whether to tender Company Stock allocated to a Participant's Stock Account for 23 27 which the Trustee has received no instructions from the Participant, prior thereto, however, using the procedure described in Section 10.07, above, to secure to the extent possible directions from such Participants who have theretofore failed to give directions to the Trustee. (c) The Trustee shall tender that number of unallocated shares of Company Stock which is determined by multiplying the number of unallocated shares by a fraction of which the numerator is the number of shares of Company Stock allocated to Participants' Stock Accounts which the Trustee tender pursuant to paragraph (b) above, and the denominator is the total number of shares of Company Stock allocated to Participants' Stock Accounts. That portion of unallocated shares which corresponds pro-rata to that portion of allocated shares for which the Trustee has not received instructions as to tendering shall be tendered or not by the Trustee as it shall determine in its discretion to be in the best interests of Plan Participants. (d) A Participant who has directed the Trustee to tender shares of Company Stock allocated to such Participant's Stock Account may, at any time, up to one business day prior to the tender offer withdrawal date, instruct the Trustee in writing to withdraw, and the Trustee shall withdraw, such shares of Company Stock from the tender offer prior to the withdrawal deadline. Prior to such withdrawal deadline, if unallocated shares of Company Stock have already been tendered, the Trustee shall re-determine the number of shares of Company Stock which would be tendered under paragraph (c) above, if the date of such withdrawal were the date of determination, and withdraw the number of unallocated shares necessary to reduce the number of unallocated shares tendered to the amount so re-determined. A Participant shall not be limited as to the number of instructions to tender or withdraw which he may give to the Trustee. (e) The Trustee shall credit the proceeds, whether cash or securities, received in exchange for allocated Company Stock which has been tendered to the Stock Account of each Participant who instructed the Trustee to so tender. (f) In the event of a self-tender or other purchase or repurchase offer of Company Stock by the Company or any Affiliate, prior to responding to any such self-tender or other offer, the Trustee shall consult with the Company, and the Company shall disclose to the Trustee such information as is legally permissible regarding the Company's intentions for continuing, amending or terminating the Plan, the projected affect of such self-tender or purchase on the Company's business and finances, and any other relevant information, as shall enable the Trustee to determine the prudence and desirability of tendering any Company Stock held by the Trust in response to such self-tender or offer. 10.09 CHANGE IN COMPANY STRUCTURE: Notwithstanding any other provisions of this Plan, including Sections 10.07 and 10.08, the provisions of this Section shall govern events following certain "Business Combinations", as hereinafter defined. For purposes of this Section 10.09 and Article XI, the terms "Business Combination" and "Continuing Directors" shall have the respective meanings ascribed to such terms in Article Fifteenth of CBI's Certificate of Incorporation, as amended to March 1, 1988. Upon the consummation of any Business Combination which has not been approved by a majority of the Continuing Directors, then this Plan shall immediately and automatically terminate; Company Stock held in the Exempt Loan Suspense Account shall be applied, to the extent required, to prepay any outstanding Exempt Loan balance; and no further Company Contributions will be made. 24 28 In the event of any such termination of the Plan, any unallocated shares of Company Stock which upon such termination are not then in an Exempt Loan Suspense Account, or are released from such Exempt Loan Suspense Account by any repayment of any such Exempt Loan upon, or as a result of, the occurrence of such Business Combination or termination of this Plan, or other property then in the Trust shall not revert to the Company, any Participating Affiliate, or any successor of either under any circumstances, but shall be immediately allocated, as the final allocation, to the Stock Accounts of those, and only those, Participants in the Plan who were Participants immediately prior to the effective date of such Business Combination, pro-rata on the basis of the balances of such Stock Accounts as of the date of the termination, but only, however, up to the limitations of Section 415 of the Code for the Plan Year of such termination. The Trustee shall hold, administer and distribute any remaining unallocated property in accordance with the provisions of the plan described in Article XI herein. 10.10 SEVERABILITY OF PROVISIONS: The invalidity of any provision of this Plan shall not affect the validity of any other provision of this Plan, but the invalid provision shall be fully severable, and this Plan shall be construed and enforced as though the invalid provision had never been included herein. 10.11 APPLICABLE LAW: To the extent not otherwise preempted by ERISA, the Code or any other applicable federal law, the provisions of this Plan and the interpretation thereof shall be governed by the laws of the State of Illinois. ARTICLE XI: CONTINGENT NON-QUALIFIED EXCESS BENEFIT PLAN Any remaining unallocated property held by the Trustee of the CBI Salaried Employee Stock Ownership Plan (1987) ("the Qualified Plan") following the final allocation upon that Plan's termination, pursuant to Section 10.09, shall be held, administered and distributed by such Trustee as the Trustee of the plan described in this Article XI ("the Excess Plan"), which shall be a nonqualified excess benefit plan within the meaning of ERISA and the Code, and which shall not be, or considered or treated as, a part of the Qualified Plan. This Article XI is included herein only for the reference and information of those Participants who may become covered by the Excess Plan at any time. Following the termination of the Qualified Plan, the Trustee, with the cooperation of the Plan Administrator, shall establish separate accounts under the Excess Plan for the benefit of those Participants, and only those Participants, of the Qualified Plan who were such Participants immediately preceding the effective date of the Business Combination described in Section 10.09 of the Qualified Plan, who shall henceforth be Participants in this Excess Plan. The Trustee shall allocate to each Participant's account under this Excess Plan a pro-rata share of all property held under this Excess Plan, based on the balance of each Participant's Stock Account in the Qualified Plan as a percentage of the sum of all such balances as of the date of termination of the Qualified Plan, following the final allocation under the Qualified Plan. The pro-rata share of all property, other than shares of Company Stock or other securities, shall be based on the fair market value of such property as of the date of allocation, determined in the same manner as valuation of Stock Accounts under Section 7.02 of the Qualified Plan. As soon as practicable after such allocation, the Trustee shall distribute all account balances of this Excess Plan to all its Participants. The Trustee shall, in its discretion, make such distribution in the form of shares, cash or whatever combination of shares, cash and other securities and property as they determine shall result in the greatest value to recipients. The form of distribution shall be consistent as to all Participants. All distributions in cash shall be in a single lump-sum only. The Trustee shall make any withholding of federal or state taxes of any type as may be required of them by the Code 25 29 or other applicable law. After all such distributions are made, the Excess Plan shall terminate and the Trustee shall be discharged hereunder. ARTICLE XII: REQUIRED TOP HEAVY PROVISIONS 12.01 SPECIAL RULES FOR TOP HEAVY PLAN YEARS: Notwithstanding any other provisions of this Plan, Sections 12.02 and 12.03 shall apply in any Top Heavy Plan Year beginning after December 31, 1983, for determining the Company Contributions with respect to such Top Heavy Plan Year. 12.02 MINIMUM CONTRIBUTION: The Company Contribution for a Top-Heavy Plan Year for each Participant who is not a Key Employee and who is not entitled to the applicable minimum benefit under the special provisions of any defined benefit plan of the Company or any Affiliate for Top Heavy Plan Years of such plan, shall not be less than 7-1/2% of the Participant's compensation (within the meaning of Treas. Reg. Section 1.415 - 2(d). 12.03 ADJUSTMENTS TO LIMITATIONS: If a Top-Heavy Plan Year would remain a Top-Heavy Plan Year if a figure of "90%" were substituted for "60%" in Section 2.29, a figure of "1.0" shall be substituted for "1.25" in Sections 2.12 and 2.13. ARTICLE XIII: AMENDMENTS 13.01 RIGHT AND LIMITATIONS: The Company reserves the right to amend this Plan in any manner at any time and from time to time by resolution of its Board of Directors, but such right of amendment shall not include the right in any way or to any extent: (a) to revest or otherwise transfer any interest in or to the assets of the Trust, or any income therefrom, in or to an Affiliate, except as provided in Article XV; or (b) to divest any Participant or Beneficiary of then vested benefits in such Trust; or (c) to cause any part of the assets of the Trust, including income therefrom, to be used for, or diverted to, any purpose other than the exclusive benefit of Participants or their Beneficiaries; but this Plan may nevertheless be amended in any manner whatsoever, with prospective or retroactive effect, for the purpose of qualifying it under the appropriate Section or Sections of the Code, as now in effect or as hereafter amended, or for complying with ERISA, or any similar law hereafter applicable. A certified copy of each such amendment shall be filed with the Trustee. 13.02 PROHIBITION AGAINST COMPANY BENEFIT: In no event shall any interest in the assets of the Trust or any part thereof or any income therefrom revest in an Affiliate or otherwise be transferred to an Affiliate, except to the extent provided in Article XV, below, or as permitted by ERISA for the return of a Company Contribution made under a mistake of fact, or for which a deduction pursuant to the Code is later denied or made impermissible, if such Company Contribution is returned within one year of being contributed. ARTICLE XIV: INTENT The Company intends that this Plan, as amended from time to time, (a) shall constitute a qualified plan under the provisions of Section 401(a) of the Code, (b) shall constitute an employee stock 26 30 ownership plan as defined in Section 4975(e)(7) of the Code and Section 407(d)(6) of ERISA, and (c) shall meet the requirements of Sections 409 and 401(a)(28) of the Code as necessary to comply with (a) and (b), above. The Company intends that this Plan and Trust shall be in full compliance with the provisions of ERISA. The Company intends that this Plan shall continue to be maintained by it for the above purposes indefinitely, subject, however, to the rights reserved by the Company to amend and terminate the Plan as set forth herein. Nothing contained in this Plan shall be construed as disqualifying any person from receiving any benefits under any other plan or program to which such person would be entitled in the absence of this Plan. ARTICLE XV: TERMINATION 15.01 POWER TO TERMINATE: Subject only to Section 10.09 and Article XI, the Company may terminate this Plan in its entirety at any time by a duly adopted resolution of its Board of Directors. In addition, this Plan may be terminated as to any Participating Affiliate at any time by a duly adopted resolution of its respective Board of Directors, and a complete and final discontinuance of Company contributions hereunder by or for any Participating Affiliate will constitute a termination of the Plan as to that Participating Affiliate. In the event of any such termination of the Plan as to any Participating Affiliate, the assets of the Trust attributable to such Participating Affiliate and its employees who are Participants shall be held and administered by the Trustee and the Plan Administrator for the benefit of such Participants in the same manner and with the same powers, rights, duties and privileges herein described, until such assets have been fully distributed pursuant to the provisions of Article VII hereof. 15.02 DISTRIBUTION OF ASSETS: Upon termination as provided in Section 15.01, the Trustee shall make allocations to all Participant's Stock Accounts for any contributions, Surplus Transfer, dividends, purchased shares not then in an Exempt Loan Suspense Account, and trust earnings, pursuant to Article V, not previously made and properly allocable up to the date of such termination. After such allocations are made, all Stock Accounts shall be distributed after the effective termination date in accordance with Article VII. Any remaining Surplus Transfer, purchased shares or other property not then allocated and not properly allocable by reason of Section 5.07 or 5.08 shall revert to the Company or the contributing Affiliate after, and only upon, the final distribution of all Stock Accounts, anything in this Plan to the contrary notwithstanding except for the operation of Section 10.09 and Article XI. 15.03 DISCHARGE OF TRUSTEE: When all of the assets of the Trust have been distributed hereunder, this Plan shall terminate and the Trustee shall be discharged. 15.04 PARTIAL TERMINATIONS: In the event of a partial termination of the Plan, or in the event of the extraordinary sale, shut-down, or other disposition or closure of a division, plant or other facility of a Participating Affiliate or the extraordinary lay-off or termination of a significant number of Participants which nevertheless does not affect a sufficient number of Participants to constitute a partial termination of the Plan, an appropriate and equitable portion of the assets of the Trust attributable to the Participants and Beneficiaries subject to such partial termination or extraordinary event, as determined by the Committee, shall be separated by the Trustee and such separated portion of the assets of the Trust shall be allocated among the Participants and the Beneficiaries subject to such partial termination or extraordinary event. 15.05 BENEFIT UPON PLAN MERGER: No merger or consolidation with, or transfer of assets or liabilities to or from any other plan shall be effected unless each Participant in the Plan would, if the Plan then terminated, receive a benefit immediately after the merger, consolidation, or transfer which is equal to or greater than the benefit each Participant would have been entitled to 27 31 receive immediately before the merger, consolidation, or transfer if the Plan (or transferring plan) had then terminated. END 28 32 CHI BRIDGE HOLDINGS, INC. DIRECTORS' CONSENT IN LIEU OF A BOARD OF DIRECTORS MEETING The undersigned, being all of the Directors of Chi Bridge Holdings, Inc., a Delaware Corporation (the "Corporation"), hereby consent to and approve of the following actions taken by the Board of Directors of the Corporation, without a meeting, namely, the adoption by the Board of Directors of the Corporation of the following resolutions and declarations, authorizations, approvals, and actions of the Board of Directors therein expressed and set forth: RESOLVED, that all of those functions, duties, powers and authority heretofore granted to the Committee under the CBI Salaried Employee Stock Ownership Plan (1987) (the "Plan") are hereby transferred effective immediately to the Plan Administrator; provided, however, that review of claims denials by the Plan Administrator as provided under Section 8.05 of the Plan shall be made by a Committee consisting of not less than three (3) persons as may from time to time be appointed by the Vice President of Human Resources of CBI Industries, Inc. or in the event of his absence or inability to act, appointed by the President of CBI Industries, Inc. or such other officer of CBI Industries, Inc. as the President may designate. Members of the Committee may be officers, directors, or employees of the Corporation or of CBI Industries, Inc., or may be any other persons appointed hereunder, and shall serve without compensation. FURTHER RESOLVED, that the General Counsel of CBI Industries, Inc., the Vice President of Human Resources of CBI Industries, Inc., and the Plan Administrator are hereby authorized to take such actions to amend or restate the Plan as they deem necessary and appropriate to effectuate the purposes and intent of the foregoing resolution. Dated: March 27, 1995 /s/ J.E. Jones ------------------------------ J.E. Jones /s/ G.L. Schueppert ------------------------------ G.L. Schueppert EX-99.17 17 EXECUTIVE LIFE INSURANCE PLAN 1 EXHIBIT 17 --------------------------------- CBI EXECUTIVE LIFE INSURANCE PLAN -------------------------------- 12/1/92 2 CBI EXECUTIVE LIFE INSURANCE PLAN 1. Introduction This document sets forth the terms of the CBI Executive Life Insurance Plan, a plan sponsored by CBI Industries, Inc. for Selected Key Executives of the Company, its subsidiaries and affiliates. This document, along with the Insurance Policy issued to the Executive or his designee under the Plan, the Assignment Form, the Plan Participation Form and the life insurance application documents described herein constitute the official Plan documents. 2. Plan Purpose The purpose of the Plan is to encourage Selected Key Executives, who have rendered and will render in the future valuable services to the Company, its subsidiaries and affiliates, to continue in employment by providing an insured death benefit with respect to the Executive before and after retirement. 3. Effective Date December 1, 1992 4. Definitions "Annual Premium" means the amount of consideration determined annually by the Insurance Company for an Insurance Policy issued under the Plan. For Plan purposes, if necessary, the Annual Premium shall be separated into two component parts: (i) the "Basic Annual Premium" shall be the part of the Annual Premium for standard risk life insurance coverage; and (ii) the "Extra Premium" shall be the part of the Annual Premium, if any, required for a life insurance risk determined by the Insurance Company to be substandard. "Assignment" or "Assignment Form" means a written agreement between the Executive and the Rabbi Trust, whereby the Executive assigns certain Insurance Policy rights and interests to the Rabbi Trust, in accordance with the terms of the Plan documents. "Beneficiary(ies)" means the individual(s) or entity(ies) designated by the Executive or his designee to be the beneficiary of certain Death Benefit Proceeds payable under the Insurance Policy subject to the terms of the Plan documents. "CBI Group Life Insurance Plan" means that employee benefit plan sponsored by the Company that provides group life insurance benefits to certain salaried employees of the Company, its subsidiaries and affiliates, as it may hereinafter be amended, and including any successor plan(s). 12/1/92 -1- 3 "CBI Long Term Disability Plan" means that employee benefit plan sponsored by the Company that provides disability benefits to certain salaried employees of the Company, its subsidiaries and affiliates, as it may be hereinafter amended,and including any successor plan(s). "Change in Control" shall mean the occurrence at any time of any of the following events: (a) An "Acquiring Person" (as defined below) has become such; or "Continuing Directors" (as defined below) cease to comprise a majority of the Board of Directors of the Company. For purposes of this definition, the terms "Acquiring Person" and "Continuing Directors" shall have the same meaning as ascribed to such terms in the Amendment and Restatement of Rights Agreement dated as of March 4, 1986, between the Company and First Chicago Trust Company of New York, as Rights Agent, without regard to whether said Amendment and Restatement of Rights Agreement shall continue to remain in effect. For convenience of reference, the relevant portions of said Amendment and Restatement of Rights Agreement are reproduced as Exhibit B to this Plan document. "Corporate Capital Interest" means, at the earliest of the following to occur, the cumulative amount of Annual Premiums paid by the Rabbi Trust for an Insurance Policy, less the cumulative amount of Imputed Income attributed to the Executive with respect to that Insurance Policy, plus whichever of the following is applicable: (i) the amount, if any, at the conclusion of the Normal Premium Period, by which the Insurance Policy's remaining cash value exceeds the projected amount of cash value for that Insurance Policy necessary, based on conservative, actuarial funding assumptions as determined at the time by the Plan Administrator, to provide the Executive or his designee with an Insurance Policy that will provide the Scheduled Death Benefit Amount without the necessity of any further payment of Annual Premiums by the Rabbi Trust, the Executive or his designee; (ii) the amount, if any, in the event the Executive dies before the Corporate Capital Interest is otherwise recovered, by which the Death Benefit Proceeds of the Insurance Policy exceed the Scheduled Death Benefit Amount for the Executive at the time of death; or (iii) the amount, if any, in the event of the insolvency of the Company, the termination of the Plan pursuant to Section 12, or the termination of the Executive's employment for any reason other than death or Retirement, by which the Insurance Policy's remaining actual cash value exceeds an estimated cash value determined by the Plan Administrator, provided that the estimated cash value shall be equal to that amount of cash value which would have accumulated in the Insurance Policy had Annual Premiums been paid based upon: (a) the Executive's actual Salary progression rather than the assumed Salary progression utilized by the Company in determining funding of the Insurance Policy; and (b) the actual earnings performance of the Insurance Policy rather than the earnings assumptions attributed to the Insurance Policy utilized by the Company in determining the funding of the Insurance Policy. At all times, the amount of the Corporate Capital Interest shall be determined by the Company, and such determination shall be binding upon the Insurance Company and any person or entity having an ownership or beneficial interest in the Insurance Policy. The Corporate Capital Interest shall be reduced by policy loans, if any (including interest thereon), made by the Rabbi Trust from the Insurance Policy. 12/1/92 -2- 4 "Company" means CBI Industries, Inc., a Delaware corporation, and its successors and assigns. "Death Benefit" or "Death Benefit Proceeds" means the amount of proceeds paid, or to be paid, at the death of the Executive by the Insurance Company under an Insurance Policy. "Executive" or "Selected Key Executive" (collectively "Executives" or "Selected Key Executives") means: (i) an actively employed executive of the Company, or one of its subsidiaries or affiliates, nominated by an Officer of the Company, and approved by the Chairman of the Board of Directors of the Company, to be eligible to participate in the Plan; or (ii) a retired Executive of the Company, or one of its subsidiaries or affiliates, who was participating in the Plan at the date of Retirement. "Imputed Income" means that amount of annual income imputed to the Executive equal to the lower of (i) the one-year term insurance premium rate prescribed by the Internal Revenue Service or (ii) the Insurance Company's alternate term insurance premium rate, with either (i) or (ii), as applicable, multiplied by the Scheduled Death Benefit Amount provided to the Executive under the Plan at the time such imputed income is determined. "Insurance Company" means the life insurance company(ies) selected by the Company to issue Insurance Policies pursuant to the Plan. "Insurance Policy" means the life insurance policy, together with additional policy benefits and riders, if any, issued by the Insurance Company pursuant to the Plan. Unless otherwise required by the Plan, Insurance Policy terms used herein shall have the same meaning as in the Insurance Policy. "Normal Premium Period" means that time period during which the Rabbi Trust will pay Annual Premiums, subject to the limits on the amount of Annual Premiums to be paid by the Rabbi Trust set forth in Section 15, to the Insurance Company for an Insurance Policy issued pursuant to the Plan. The Normal Premium Period will extend from the date the first Annual Premium is paid until the later to occur of either: (i) the date the Executive reaches age sixty-five (65); or (ii) the date the cumulative amount of Annual Premiums paid by the Rabbi Trust and, if applicable, the cumulative amount of Extra Premiums paid by the Executive or his designee pursuant to Section 15, create sufficient cash value under the Insurance Policy, after taking into account the recovery of the Corporate Capital Interest by the Rabbi Trust, so that the Scheduled Death Benefit Amount can be sustained without further payment of Annual Premiums by the Rabbi Trust, the Executive or his designee, provided that this period shall generally not be less than ten (10) years nor more than fifteen (15) years. "Plan" means the CBI Executive Life Insurance Plan. "Plan Participation Form" means a written agreement between the Executive and the Company, wherein the Executive is designated as being eligible to participate in the Plan, and whereby the Executive and the Company agree to be bound by the terms and conditions of the Plan. 12/1/92 -3- 5 "Rabbi Trust" means the CBI Industries, Inc. Supplemental Survivors' Benefit, Executive Life Insurance and Benefit Restoration Trust, a trust established by the Company for the purpose of providing funds for certain employee benefits. "Retirement" means retirement under the CBI Pension Plan. "Salary" means: (i) in the case of an Executive paid on the basis of a weekly base salary, the Executive's base weekly salary expressed in terms of United States dollars, or the currency in which the Executive is normally paid, multiplied by fifty-two (52); or (ii) in the case of an Executive paid on any basis other than a weekly base salary, the aggregate of the Executive's base salary expressed in terms of United States dollars, or the currency in which the Executive is normally paid, received each pay period, multiplied by the number of pay periods normally occurring during a calendar year. "Scheduled Death Benefit Amount" means that amount of life insurance which is set forth in Appendix A and is to be provided to the Executive pursuant to the Plan. Definitions of other terms are provided in the Plan. 5. Eligibility Selected Key Executives nominated by an Officer of the Company and approved by the Chairman of the Board of Directors of the Company are eligible to participate in the Plan as indicated herein. 6. Participation Participation begins on the date an Insurance Policy under the Plan is issued on the life of the Executive to the Executive or his designee and all other Plan documents are completed by the Executive to the satisfaction of the Plan Administrator and the Insurance Company. Participation in the Plan by an Executive will not cause that Executive's participation in the CBI Group Life Insurance Plan to terminate. 7. Plan Operation The Plan is a "split dollar" life insurance program. In general, the Executive or his designee is the owner of an Insurance Policy on the Executive's life issued by the Insurance Company, for which the Company, through the Rabbi Trust, pays the Annual Premiums for the duration of the Normal Premium Period. The Company, through the Rabbi Trust, retains an economic interest in both the cash value and Death Benefit Proceeds of the Insurance Policy documented by the Assignment Form. Except as otherwise provided in the Plan, the Executive is not responsible for payment of Annual Premiums, but under United States tax laws in effect on the effective date of the Plan, the Executive may be responsible for paying income tax on the Imputed Income attributed to the Executive's participation in the Plan until the Rabbi Trust recovers the Corporate Capital Interest and cancels the Assignment Form. Executives who are not covered by 12/1/92 -4- 6 United States income tax laws may have income tax or other tax consequence under applicable laws of other countries. The Scheduled Death Benefit Amount provided to the Executive will be a multiple of the Executive's Salary. The amount of the Executive's multiple is set forth in Exhibit A. If applicable, at the conclusion of the Normal Premium Period, the Rabbi Trust will cease paying Annual Premiums and, under the Assignment Form, will recover from the Insurance Policy's cash value the Corporate Capital Interest. The aggregate amount of Annual Premiums paid by the Rabbi Trust is intended to produce sufficient cash value so that after the Rabbi Trust recovers the Corporate Capital Interest and cancels the Assignment Form, the Executive or his designee will own the Insurance Policy providing the Scheduled Death Benefit Amount without payment of any further Annual Premiums. The Executive or his designee may continue the Scheduled Death Benefit Amount from the Insurance Policy or withdraw all or part of the remaining cash value at any point after the Rabbi Trust has recovered the Corporate Capital Interest, although withdrawing cash value will void the guarantee under Section 8. In the event the Executive dies before the Corporate Capital Interest is recovered, the Rabbi Trust will recover the Corporate Capital Interest from the Death Benefit Proceeds attributable to the Executive's Insurance Policy pursuant to the Assignment Form. 8. Guarantee of Benefits The funding of the Plan is intended to create sufficient cash values in the Insurance Policy at the conclusion of the Normal Premium Period so that the Scheduled Death Benefit Amount will be available under the Insurance Policy until the Executive's death, based upon conservative, actuarial assumptions as determined from time to time by the Plan Administrator. However, in the event the Death Benefit Proceeds actually paid to the Beneficiary under the Insurance Policy are not at least equal to the Scheduled Death Benefit Amount, or, if applicable, the Reduced Death Benefit as provided in Section 15, an additional payment will be made from the Rabbi Trust to the Beneficiary. The amount of this additional payment from the Rabbi Trust will be the difference between the Scheduled Death Benefit Amount, or Reduced Death Benefit, whichever is applicable, and the Death Benefit Proceeds actually paid to the Beneficiary under the Insurance Policy, adjusted so that the total net after tax amount payable to the Beneficiary, both from the Insurance Policy and the Rabbi Trust, after taking into account the assumed liability of the Beneficiary to pay income taxes on the additional payment from the Rabbi Trust, equals the Scheduled Death Benefit Amount, or Reduced Death Benefit, as the case may be, under the Insurance Policy. For purposes of determining assumed income taxes under this Section, the highest marginal personal United States Federal Income Tax rate for married individuals filing jointly in effect at the date of the Executive's death will be used. 12/1/92 -5- 7 It is the intent of the Plan to guarantee the Scheduled Death Benefit Amount only insofar as such guarantee is described in this Section, and there is no other guarantee concerning the cash value or any other Death Benefit Proceeds under the Insurance Policy at any time. Furthermore, the guarantee under this Section shall be void and of no effect in the event the Executive or his designee withdraws any part of the cash value or dividends payable under the Insurance Policy following recovery of the Corporate Capital Interest and cancellation of the Assignment Form. In the event the Executive or his designee obtains a loan under the Insurance Policy which has not been completely repaid at the date of the Executive's death, the guarantee provided by this Section shall be reduced by the amount of any such loan and any unpaid interest thereon. The guarantee under this Section shall not apply in the event the Insurance Company, during the two year contestability period that begins with the date of issue of the Insurance Policy, rescinds the Insurance Policy or denies a claim thereunder on the basis of a misstatement in Insurance Company applications, or in the event the Insurance Company denies or limits a claim where the Executive dies by suicide within one year from the date of issue of the Insurance Policy. 9. Scheduled Death Benefit Amount The Executive's Scheduled Death Benefit Amount is set forth in Appendix A. 10. Company Participation in Funding of Plan Subject to the terms of the Plan, the Company, through the Rabbi Trust, will pay Annual Premiums for Insurance Policies issued pursuant to the Plan until the earliest to occur of the following: - The termination of the Normal Premium Period. - The Executive's death. - The Executive's termination from employment by reason other than death or Retirement, provided the Executive's termination is not in connection with a Change in Control. Upon the earliest to occur of these events, the Rabbi Trust will withdraw the Corporate Capital Interest and terminate the Assignment against the Insurance Policy. Prior to such withdrawal, the Rabbi Trust may borrow against the Insurance Policy to the extent of the Corporate Capital Interest. If the Executive is living after the Rabbi Trust withdraws the Corporate Capital Interest, the Executive or his designee will own the Insurance Policy free of any interest on the part of the Company or the Rabbi Trust and may then exercise without restriction all the rights available under the Insurance Policy, although the exercise of such rights may affect the guarantee provided under Section 8. 12/1/92 -6- 8 11. Security The Company will ensure that the Rabbi Trust, on each date on which the Rabbi Trust evaluates its obligations, has sufficient assets to provide funding equal to the net present value (utilizing a discount rate equal to the Insurance Company's then current dividend rate minus 100 basis points) of future Annual Premiums for Insurance Policies issued to Executives under the Plan and against which the Rabbi Trust holds an Assignment Form payable for the next ten (10) years (hereinafter the "Security Fund"). In the case of a decision by the Company to terminate or amend the Plan pursuant to Section 12, or if the Company fails or refuses to ensure that the Rabbi Trust has sufficient assets available to meet funding obligations pursuant to the Plan, the Security Fund shall be used by the Rabbi Trust to pay Annual Premiums on the Insurance Policies to the extent and in the amount available. In the case of the insolvency of the Company, the Rabbi Trust would be subject to the claims of the Company's creditors (which would include participants in the Plan) and funds in the Rabbi Trust (including the Security Fund) may not be available to pay future Annual Premiums or to meet the guarantee to participants under Section 8. The amount of the Corporate Capital Interest in the Insurance Policies would also be subject to the claims of the Company's creditors. The interests of the Executive under the Insurance Policy in excess of the Corporate Capital Interest, however, generally should not be subject to the claims of the Company's creditors. Accordingly, in the case of the insolvency of the Company (as that term is defined in the Rabbi Trust) the Rabbi Trust will recover from the Insurance Policy the Corporate Capital Interest, to the extent allowed by law, terminate the Assignment of the Insurance Policy and have no further obligations under this Plan. The Executive or his designee may thereafter elect to maintain the Insurance Policy by assuming responsibility for paying Annual Premiums. If the Executive or his designee elects to maintain the Insurance Policy, he will deal directly with the Insurance Company. 12. Right to Terminate or Amend The Company reserves the right to terminate the Plan if the Company, in its sole discretion, determines that changes in the U.S. tax laws or other laws, or other government action or events beyond the control of the Executive or the Company adversely and materially affect the Plan. If the Plan is terminated and the Company has instituted at the time of termination of the Plan a comparable replacement plan providing benefits, security and a guarantee to all Executives not less than the benefits, security and guarantee provided under the Plan, the Rabbi Trust may recover the Corporate Capital Interest from the Insurance Policies and the guarantee provided under Section 8 of the Plan shall be void and of no further force and effect. If the Plan is terminated and a comparable replacement plan has not been instituted at the time of termination of the Plan, to the extent outlined in Section 11 payment of future Annual Premiums will be made from the Rabbi Trust from the Security Fund. The Rabbi Trust will thereafter recover the Corporate Capital Interest upon the earliest to occur of 12/1/92 -7- 9 the following: (a) the date on which funds in the Security Fund are exhausted; or (b) the date on which the Company's obligations to pay Annual Premiums pursuant to Section 10 ceases. Subsequent to termination of the Plan, the Company may institute, at any time, a comparable replacement plan providing benefits, security and a guarantee to all Executives not less than the benefits, security and guarantee previously provided by the Plan, in which event the Rabbi Trust may recover the Corporate Capital Interest upon institution of the replacement plan, and the guarantee previously provided under Section 8 of the Plan and surviving the prior termination shall be void and of no further force and effect. In the event the Company does not institute a comparable replacement plan, as previously defined, the guarantee provided in Section 8 shall survive termination of the Plan. Following termination of the Plan and recovery of the Corporate Capital Interest, the Executive or his designee will thereafter have the option of surrendering his share of the Insurance Policy for its remaining cash value or making Annual Premium payments, if required, directly to the Insurance Company in order to maintain the Insurance Policy. The Company may amend the Plan at any time, provided that no amendment shall reduce or eliminate the obligation of the Rabbi Trust to make payments of the guarantee of benefits as described in the Plan, and that any amendment to reduce or eliminate the obligation to provide the Security Fund shall be prospective in application only. No amendment shall reduce the benefits in effect for Executives before the amendment without the prior written consent of the Executives affected by the amendment whose Scheduled Death Benefit Amounts in the aggregate represent at least 51% of the total amount of Scheduled Death Benefit Amounts then provided to them. Amendments to the Plan shall be made by a written instrument signed by the Plan Administrator. The Plan Administrator will inform Executives affected by the amendment in writing of the amendment to the Plan. 13. Termination of Employment If the Executive's employment is terminated for any reason other than death or Retirement, and the Executive's termination is not in connection with a Change in Control of the Company, the Rabbi Trust will withdraw the Corporate Capital Interest and terminate the Assignment. The Executive or his designee may thereafter maintain the Insurance Policy by assuming responsibility for paying Annual Premiums. If the Executive or his designee elects to maintain the Insurance Policy, he will deal directly with the Insurance Company. Thereafter, neither the Company nor the Rabbi Trust shall have further responsibility to such Executive for any of the benefits or the guarantee of benefits provided under the Plan. If the employment of an Executive is terminated in connection with a Change in Control of the Company, Annual Premiums will be paid by the Rabbi Trust to the extent of the Security Fund as provided in Section 11. 12/1/92 -8- 10 14. Disability If the Executive becomes disabled and, as a result, becomes eligible for benefits from the CBI Long-Term Disability Plan, the Executive will be treated as being actively employed for purposes of this Plan and subject to the terms of this Plan. If an Executive who is receiving benefits from the CBI Long Term Disability Plan retires under the CBI Pension Plan, the Executive will be deemed retired for purposes of this Plan. 15. Underwriting In order to participate in the Plan and be issued an Insurance Policy under the Plan, the Executive will be required to provide medical evidence of insurability satisfactory to the Insurance Company. This medical evidence will include taking a physical examination. If the Insurance Company, based upon the medical evidence obtained, issues an Insurance Policy on the Executive's life that will require the payment of an Extra Premium, the Rabbi Trust will pay that portion of the Extra Premium that does not exceed 40% of the Basic Annual Premium. The Executives affected by the requirement for an Extra Premium will be so notified. If the cost of the Extra Premium exceeds 40% of the Basic Annual Premium, the following three (3) options will be available to the Executive or his designee: - Pay that portion of the Extra Premium that exceeds 40% of the Basic Annual Premium in order to maintain an Insurance Policy that will provide the Scheduled Death Benefit Amount; - Accept a Death Benefit equal to the amount of Death Benefit the Basic Annual Premium and that portion of the Extra Premium that does not exceed 40% of the Basic Annual Premium would purchase (herein the "Reduced Death Benefit"). If the Executive elects to accept a Reduced Death Benefit, the obligation to provide the Scheduled Death Benefit Amount and the guarantee under Section 8 shall be limited to the amount of the Reduced Death Benefit; or - Remain a participant in the CBI Group Life Insurance Plan, and not participate in the Plan. If the Insurance Company determines that the Executive is uninsurable, the Executive will remain a participant in the CBI Group Life Insurance Plan, and will not be a participant in this Plan. Benefit changes brought about by changes in Salary will be handled as follows: - Except as provided below, adjustments will be made to the Scheduled Death Benefit Amount provided by the Insurance Policy at the same time 12/1/92 -9- 11 that the Salary change is effective and, in general, these adjustments will not require medical evidence. - Where any Salary increase in any calendar year causes an increase in the Scheduled Death Benefit Amount in excess of 8%, medical evidence of insurability may be required for the portion of the Scheduled Death Benefit Amount increase exceeding 8%. If an Executive is found uninsurable based on medical evidence for the portion of the Scheduled Death Benefit Amount increase exceeding 8%, the Scheduled Death Benefit Amount increase for that year will be limited to that amount not exceeding 8%. If the Insurance Company determines that an Extra Premium will be required on the Scheduled Death Benefit Amount increase, the Rabbi Trust will pay that portion of the Extra Premium that does not exceed 40% of the Basic Annual Premium applicable to the increase in Scheduled Death Benefit Amount. If the Extra Premium exceeds 40% of the Basic Annual Premium required for the Scheduled Death Benefit Amount increase, the options set forth previously in this Section will be available to the Executive. 16. Enrollment Procedures To participate in the Plan, the Executive must: - Sign a Plan Participation Form. - Designate who will apply for and be the owner of the Insurance Policy to be issued, if other than the Executive. - Complete any required Insurance Company applications and cooperate in providing the Insurance Company with medical evidence of insurability. - Designate a Beneficiary under the Insurance Policy. - Sign an Assignment Form. 17. Plan Administration Unless otherwise designated in writing by the CBI Industries, Inc. Vice President of Administration, the Plan Administrator ("Plan Administrator") will be the CBI Industries, Inc. Director of Human Resources, 800 Jorie Boulevard, Oak Brook, IL 60521-2268, (708) 572-7000, who shall have control over the administration and interpretation of the Plan. To the extent not limited otherwise in this Plan, the Plan Administrator shall have full and absolute discretion to construe, interpret and apply the terms of the Plan, and 12/1/92 -10- 12 decisions of the Plan Administrator shall be final and binding on all parties to the fullest extent permitted by law. The Plan Administrator will have all power needed to carry out his duties, and as he deems necessary or advisable, may adopt rules and regulations relating to the Plan, may delegate administrative responsibilities to advisors or other persons, and may rely on information or opinions of legal counsel or experts. The Insurance Company under the Plan is Northwestern Mutual Life Insurance Company, 720 E. Wisconsin Avenue, Milwaukee, WI 53202, (414) 299-1444, unless such other Insurance Company is selected by the Company. The Insurance Company shall be responsible for all matters relating to any Insurance Policy. The trustee of the Rabbi Trust is the Gary-Wheaton Bank, 120 East Wesley, Wheaton, IL 60187, (708) 665-2600. 18. Claims Procedure For all benefits to be paid by the Insurance Policy, the claims procedure will be the claims procedure established by the Insurance Company. In any other case, a written claim must be filed with the Plan Administrator or the Trustee of the Rabbi Trust. The Plan Administrator or the Trustee of the Rabbi Trust, as applicable, will fully and fairly review all claims and provide a final written decision within sixty (60) days of the date the claim is received by the Plan Administrator or the Trustee. The Plan Administrator is designated as the agent to receive service of legal process on behalf of the Plan. 19. No Relation Between Plan and Continued Employment -------------------------------------- Nothing in this Plan and/or any actions taken under it shall be construed or interpreted as a contract of employment giving the Executive a right to be retained as an employee of the Company for any period of time, or to restrict the right of the Company or the Executive to terminate employment at any time for any reason, or to give the Executive a right to continued employment in a capacity eligible to participate in the Plan. 20. Rules of Construction As used in this Plan and where appropriate, the singular shall include the plural, and vice versa, and the masculine shall include the feminine, and vice versa. 21. Statement of ERISA Rights Executives are entitled to certain rights and protection under the Employee Retirement Income Security Act of 1974 ("ERISA"). ERISA imposes duties upon the people who are responsible for the operation of the Plan. The people who operate the Plan, called "fiduciaries" of the Plan, have a duty to do so prudently and in the interest of Executives 12/1/92 -11- 13 and their beneficiaries and designees. The Company may not fire or otherwise discriminate against the Executive in any way to prevent him from obtaining Plan benefits to which he is entitled or from exercising his rights under ERISA. If a claim for a benefit is denied in whole or in part, the Executive must receive a written explanation of the reason for the denial. The Executive has the right to have the Plan reviewed and his claim reconsidered. Under ERISA, there are steps to enforce the above rights. For instance, if a claim for benefits is denied or ignored, in whole or in part, the Executive may file suit in a state or federal court. If it should happen that Plan fiduciaries misuse the Plan's money, or if the Executive is discriminated against for asserting his rights, he may seek assistance from the U.S. Department of Labor, or may file suit in a federal court. The court will decide who should pay court costs and legal fees, for example, if it finds that the Executive's claim is frivolous. If there are any questions about this statement or the Executive's rights under ERISA, contact the Plan Administrator or the nearest Area Office of the U.S. Labor-Management Service Administration, Department of Labor. 22. Controlling Law To the extent not controlled by federal law, the Plan shall be interpreted according to the laws of the State of Illinois. 12/1/92 -12- 14 CBI EXECUTIVE LIFE INSURANCE PLAN APPENDIX A Your Scheduled Death Benefit Amount under the Plan as of December 1, 1992, is:
Scheduled Death Benefit Amount ------------------------------ Pre-Retirement 4 x Salary at Date of Death Post-Retirement 2 x Salary at Date of Retirement
15 APPENDIX B NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows: Section 1. Certain Definitions. For purposes of this Agreement, the following terms have the meanings indicated: 1.1 "Acquiring Person" shall mean any Person (as such term is hereinafter defined) who or which, together with all Affiliates (as such term is hereinafter defined) and Associates (as such term is hereinafter defined) of such Person, shall be the Beneficial Owner (as such term is hereinafter defined) of 20% or more of the shares of Common Stock then outstanding, but shall not include an Exempt Person (as such term is hereinafter defined). Notwithstanding the foregoing, no Person shall become an "Acquiring Person" as the result of an acquisition of shares of Common Stock by the Company which, by reducing the number of shares outstanding, increases the proportionate number of shares beneficially owned by such Person to 20% or more of the Common Stock of the Company then outstanding; provided, however, that if a Person (other than an Exempt Person) shall become the Beneficial Owner of 20% or more of the shares of Common Stock of the Company then outstanding by reason of share purchases by the Company and shall, after such share purchases by the Company, become the Beneficial Owner of any additional shares of Common Stock -2- 16 of the Company, then such Person shall be deemed to be an "Acquiring Person". 1.2 "Acquisition Event" shall mean a Subsection 11.1(b) Event (as such term is hereinafter defined) or any event described in subsection 13.1 hereof. 1.3 "Adjustment Shares" shall have the meaning set forth in subsection 11.1(b). 1.4 "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect on the date of this Agreement. 1.5 A Person shall be deemed the "Beneficial Owner" of, and shall be deemed to "beneficially own," any securities: (a) which such Person or any of such Person's Affiliates or Associates beneficially owns, directly or indirectly; (b) which such Person or any of such Person's Affiliates or Associates has (i) the right to acquire (whether such right is exercisable immediately or only after the -3- 17 States of New York or Illinois are authorized or obligated by law or executive order to close. 1.7 "Close of business" on any given date shall mean 5:00 P.M., New York City time, on such date; provided, however, that if such date is not a Business Day it shall mean 5:00 P.M., New York City time, on the next succeeding Business Day. 1.8 "Common Stock" when used with reference to the Company shall mean the common stock, $2.50 par value per share, of the Company. "Common Stock" when used with reference to any Person other than the Company which is organized in corporate form shall mean the capital stock or other equity security with the greatest voting power of such Person. "Common Stock" when used with reference to any Person which is not organized in corporate form shall mean units of beneficial interest which represent the right to participate in profits, losses, deductions and credits of such Person and which shall be entitled to exercise the greatest voting power per unit of such Person. 1.9 "Common Stock equivalents" shall have the meaning set forth in subsection 11.1(c) hereof. 1.10 "Continuing Director" shall mean any member of the Board, while such person is a member of the Board, who -6- 18 is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, and was a member of the Board prior to the date of this Agreement. A "Continuing Director" shall also mean any person who subsequently becomes a member of the Board, while such person is a member of the Board, who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a representative of an Acquiring Person or of any such Affiliate or Associate, if (a) such person's nomination for election or election to the Board is recommended or approved by resolution of a majority of the Continuing Directors or (b) such person is included as a nominee in a proxy statement of the Company distributed when a majority of the Board consists of Continuing Directors. 1.11 "Current Market Price" shall have the meaning set forth in subsection 11.4 hereof. 1.12 "Current Value" shall have the meaning set forth in subsection 11.1(c) hereof. 1.13 "Distribution Date" shall have the meaning set forth in subsection 3.1 hereof. 1.14 "equivalent preferred stock" shall have the meaning set forth in subsection 11.2 hereof. -7- 19 BACKGROUND Amendment of the Company's Shareholders' Rights Plan on December 20, 1994 has caused there to be certain inconsistencies in the language of the CBI Executive Life Insurance Plan, CBI Industries, Inc. Supplemental Survivors' Benefit, Executive Life Insurance and Benefit Restoration Trust (the Rabbi trust) and certain Executive Termination Agreements. It is recommended that the Board adopt the following resolutions in order to amend the documents related to the foregoing in order to correct such inconsistencies. -------------- RESOLVED, that the definition of "Change in Control" set forth in Section 4 of the CBI Executive Life Insurance Plan is hereby amended to read as follows: "Change in Control" shall mean the occurrence at any time of any of the following events: (a) An "Acquiring Person" (as defined below) has become such; or (b) "Continuing Directors" (as defined below) cease to comprise a majority of the Board of Directors of the Company. For purposes of this definition, the terms "Acquiring Person" and "Continuing Directors" shall have the same meaning as ascribed to such terms in the Amendment and Restatement dated as of August 8, 1989, of Rights Agreement dated as of March 4, 1986, between the Company and First Chicago Trust Company of New York, as Rights Agent, as has been or may be amended from time to time; and that the Plan Administrator is authorized to take such actions as necessary to implement said amendment to the CBI Executive Life Insurance Plan, including but not limited to informing executives who participate in said plan in writing of the aforementioned amendment. FURTHER RESOLVED, that Section 5.3 of the CBI Industries, Inc. Supplemental Survivors' Benefit, Executive Life Insurance and Benefit Restoration Trust is hereby amended to read as follows: 5.3 AMENDMENT OF TRUST PRIOR TO CHANGE IN CONTROL. Notwithstanding Section 5.1, CBI may amend (but not revoke) this 7-1 20 Trust Agreement prior to a Change in Control (as defined below) with respect to Participants, Designees, Beneficiaries and the Trustee without limitation and in any manner and effective as of any date, including a retroactive effective date, by delivery to the Trustee of a written notice executed by CBI of the substance and effective date of such amendment, accompanied by the written certification of the Secretary of CBI that no Change in Control has occurred; provided that no amendment may have the effect of revoking the Trust by returning to CBI or diverting to others any of the Trust Fund before all payment of benefits and premiums have been made to or for the benefit of Participants and their Designees and Beneficiaries pursuant to the terms of the Plan(s), except as provided in Section 1.3; and, provided further, that no amendment shall enlarge the duties or responsibilities of the Trustee without its written consent. For purposes of this Section 5.3, the term "Change in Control" shall mean the occurrence at any time of any of the following events: (a) An "Acquiring Person" (as defined below) has become such; or (b) "Continuing Directors" (as defined below) cease to comprise a majority of the Board of Directors of CBI. For purposes of this Section 5.3, the terms "Acquiring Person" and "Continuing Directors" shall have the respective meaning as ascribed to such terms in that certain Amendment and Restatement dated as of August 8, 1989, of Rights Agreement dated as of March 4, 1986, between CBI and First Chicago Trust Company of New York, as Rights Agent, as has been or may be amended from time to time. If a Change in Control occurs, CBI shall within five (5) days notify the Trustee in writing of that fact and the date thereof, and CBI shall upon the written request of the Trustee and may at any other time in its discretion notify the Trustee in writing whether a Change in Control is expected to occur; provided, however, that the Trustee shall have sole discretion to determine for purposes of this Trust Agreement whether a Change in Control has actually occurred, and such determination shall be conclusive and binding on all parties hereto. FURTHER RESOLVED, that Section 2 of each Executive Termination Agreement entered into between the Corporation and an executive of the Corporation is hereby amended to read as follows: 2. Change in Control. The term "Change in Control" shall mean the occurrence at any time of any of the following events: 7-2 21 (a) An "Acquiring Person" (as defined below) has become such; or (b) "Continuing Directors" (as defined below) cease to comprise a majority of the Board of Directors of CBI. For purposes of this Agreement, the terms "Acquiring Person" and "Continuing Directors" shall have the same meaning as ascribed to such terms in that certain Amendment and Restatement dated as of August 8, 1989, of Rights Agreement dated as of March 4, 1986, between CBI and First Chicago Trust Company of New York, as Rights Agent, as has been or may be amended from time to time. 7-3 EX-99.18 18 BENEFIT RESTORATION PLAN 1 EXHIBIT 18 CBI BENEFIT RESTORATION PLAN (as amended through September 9, 1986) This CBI Benefit Restoration Plan is adopted by CBI Industries, Inc., for the purpose of restoring to certain Participants retirement benefits of which they would otherwise be deprived through the operation of certain laws of the United States. 1. Each person who is a Participant (as that term is defined in the respective plans) in the CBI Pension Plan or the CBI Profit Sharing Plan who is deprived of benefits that otherwise would accrue and be payable to him or his beneficiary but for the limitation provision of the Employee Retirement Income Security Act of 1974 or the Internal Revenue Code and limiting provisions of either plan implementing those statutory limitations shall be entitled to a benefit under this plan in the amount of benefits so deprived because of such statutory limitations, so that the aggregate benefits under this plan and those plans shall equal the benefits such person would have been entitled to receive under those plans if the statutory limitations had not been in effect. 2. Such benefit shall be paid by the Company in the same form and at the same time as benefits paid under the respective Plan in respect to which the excess amount is paid. However, the payment of such excess amount shall not otherwise be subject to any of the provisions of those plans. 3. Payment of such benefit shall be made only from either the general assets of the Company, or from assets placed by the Company in such form of grantor trust (as that term is used in the Internal Revenue Code, as amended) as shall permit access to such assets only by the Company's judgment creditors. No person shall have rights in or to any specific assets of the Company. 4. This plan may be amended by further action of the board of directors, but no such amendment shall have the effect of terminating or reducing benefits of any retired person who was a Participant at the time of retirement or of depriving any person who is a Participant at the time of such amendment of any future benefit to which that person would have otherwise become entitled upon retirement pursuant to this plan as it existed immediately prior to such amendment, or of reducing any such benefit. Notwithstanding the foregoing, nothing in this plan shall confer upon any Participant any right of continued employment. 2 Identified as resolutions duly adopted by the Board of Directors of CBI Industries, Inc. at its regular meeting of March 1, 1988. After discussion, and on motion made, seconded and carried, the following resolutions were unanimously adopted: RESOLVED, that the CBI Benefit Restoration Plan, as amended through September 9, 1986, is further amended effective February 1, 1988 such that Paragraph 3 of the Plan shall henceforth read as follows: "Payment of such benefit shall be made only from either the general assets of the Company, or from assets placed by the Company in such form of grantor trust (as that term is used in the Internal Revenue Code of 1986, as amended) as shall permit access to such assets only by the Company's general creditors in bankruptcy or insolvency. No person shall have rights in or to any specific assets of the Company." RESOLVED FURTHER, that the Board hereby ratifies and confirms action taken by the Vice-President - Human Resources on behalf of the Company in executing the "CBI Supplemental Survivors' Benefit and Benefit Restoration Trust Agreement", dated February 8, 1988, by and between the Company and Gary-Wheaton Bank, an Illinois banking corporation, which Agreement establishes a Trust which is intended to constitute a grantor trust as is contemplated by this resolution and which trust shall merger and consolidate into a single trust the CBI Supplemental Survivors' Benefit Trust and CBI Benefit Restoration Trust all as further provided by the terms of the Agreement. 3 Identified as a resolution duly adopted by the Board of Directors of CBI Industries, Inc. at its regular meeting of January 10, 1990. After discussion, and on motion made, seconded and carried, the following resolutions were unanimously adopted: RESOLVED, that the CBI Benefit Restoration Plan, as amended through February 1, 1988, is further amended effective January 1, 1990 such that Paragraph 1 of the Plan shall henceforth read as follows: "Each person who is a Participant (as that term is used in the respective plans) in the CBI Pension Plan, CBI 401(k) Pay Deferral Plan (formerly the CBI Profit-Sharing Plan), the CBI Salaried Employee Stock Ownership Plan (1987) or any other tax qualified pension benefit plan who is deprived of benefits that otherwise would accrue and be payable to him or his beneficiary but for the limitation provisions of the Employee Retirement Income Security Act of 1974, as amended, or the Internal Revenue Act of 1986, as amended, and limiting provision of any of such plans implementing such statutory limitations, shall be entitled to a benefit under this plan in the amount of benefits so deprived because of such statutory limitations, so that the aggregate benefits under this plan and those plans shall equal the benefits such person would have been entitled to receive under those plans if the statutory limitations had not been in effect. The computation of such "aggregate benefits" shall take into account 1) any individual employee agreements with respect to pension benefits, and 2) non-statutory limitations within the terms of any of such plans, including, but not limited to, limitations on or deductions from benefits payable under the CBI Pension Plan as a result of the benefits paid under the CBI Salaried Employee Stock Ownership Plan (1987)." EX-99.19 19 SUPPLEMENTAL SURVIVOR'S BENEFIT, ETC. 1 EXHIBIT 19 CBI INDUSTRIES, INC. SUPPLEMENTAL SURVIVORS' BENEFIT, EXECUTIVE LIFE INSURANCE AND BENEFIT RESTORATION TRUST This amended and restated Trust Agreement (herein "Trust Agreement") entered into as of this 30th day of November, 1992 at Wheaton, Illinois between CBI INDUSTRIES, INC., a Delaware corporation (herein "CBI"), and the GARY-WHEATON BANK, N.A., a national banking association, as trustee (herein "Trustee") WITNESSETH: WHEREAS, CBI has adopted the CBI Benefit Restoration Plan (herein the "Restoration Plan") as an excess benefit plan within the meaning of Section 3(36) of the Employee Retirement Income Security Act of 1974 ("ERISA"), which is "unfunded" (within the meaning of Section 4(b)(5) of ERISA), to provide certain employees of CBI and its subsidiaries and affiliates (herein the "Participants") with the benefits they would otherwise accrue under the CBI Pension Plan, the CBI 401(k) Pay Deferral Plan, the CBI Salaried Employee Stock Ownership Plan (1987) or any other tax-qualified employee benefit plan sponsored by CBI or an affiliate (together referred to herein as the "Underlying Plans") but for Section 415 of the Internal Revenue Code of 1986 (herein the Code); and WHEREAS, CBI and its wholly-owned subsidiary, Liquid Carbonic Industries Corporation, a Delaware corporation (herein "Liquid"), have entered into certain supplemental survivors' benefit agreements (herein the "Survivors' Agreements") with certain employees of CBI and its subsidiaries and affiliates (herein also "Participants") providing certain benefits to the survivors of such employees as designated in or pursuant to their Survivors' Agreements (herein their "Beneficiaries"); and WHEREAS, CBI has adopted the CBI Executive Life Insurance Plan (herein the "Insurance Plan") effective December 1, 1992, as an employee welfare benefit plan within the meaning of Section 3(1) of ERISA, pursuant to which CBI has entered into certain Plan Participation Forms, (herein "Insurance Agreements") with selected key executives of CBI and its subsidiaries and affiliates (herein also "Participants") in which CBI has agreed to contribute to the cost of providing certain life insurance benefits as described in the Insurance Plan to such Participants, or their designees (herein "Designees") and beneficiaries (herein "Beneficiaries"), with the payment of 2 premiums for life insurance policies to be issued pursuant to the Insurance Plan and the death benefit guarantees set forth in said Plan to be an obligation of the trust maintained under this Trust Agreement as provided in the Insurance Plan; and WHEREAS, Pursuant to the Insurance Plan the Trustee shall hold certain rights and interests in the insurance policies to be issued to Participants or their Designees, said interests to be documented in an assignment form executed between the Trustee and each Participant or Designee (herein the "Assignment"); and WHEREAS, the Insurance Agreements entered into between CBI and the Participants further provide that, except as otherwise provided in the Insurance Plan, in the event a life insurance policy is issued on the life of a Participant under the Insurance Plan, the Participant relinquishes any and all rights that he or she may have pursuant to any prior Survivor's Agreement between the Participant and CBI; and WHEREAS, CBI has entered into certain agreements (herein "Service Agreements") with certain officers of CBI regarding the granting of past service with another employer for the payment of pension benefits directly by CBI and not the CBI Pension Plan, which benefits shall also be considered "excess benefits" for the purposes herein, including agreements with J.E. Jones, G.L. Schueppert and any other officer whose name may be certified in writing to the Trustee; and WHEREAS, Liquid has entered into certain agreements (herein "Retirement Agreements") with certain of its employees (herein also "Participants") for the direct payment by Liquid of certain supplements and/or post-retirement increases to the pension benefits payable to such employees from the CBI Pension Plan or any other tax-qualified pension plan sponsored by CBI or Liquid; and WHEREAS, the Survivors' Agreements, Insurance Agreements, Service Agreements and Retirement Agreements are hereinafter referred to collectively as "the Agreements"; and WHEREAS, CBI and the Trustee previously established on October 3, 1986, the "CBI Industries, Inc. Supplemental Survivors' Benefit Trust" (herein the "Survivors' Trust") and the "CBI -2- 3 Industries, Inc. Benefit Restoration Trust" (herein the "Restoration Trust"), and entered into a First Amendment to the latter on November 3, 1986; and WHEREAS, CBI and the Trustee then previously established on February 8, 1988 the "CBI Industries, Inc. Supplemental Survivors' Benefit and Benefit Restoration Trust", which continued, merged and consolidated the Survivors' Trust and the Restoration Trust into one trust for simplicity, efficiency and cost of administration, as well as the commonality of purpose of the two trusts, to the benefit of CBI, the Trustees and the trust beneficiaries herein; and WHEREAS, CBI desires to amend, restate and continue the trust established under this Trust Agreement for the purpose of segregating on its books certain insurance policies, Assignments and other assets that shall be held therein, subject to the rights and claims of CBI's general creditors in the event of Insolvency (as defined in Section 2.3, below), until paid as benefits or insurance premiums to or for the benefit of Participants and their Designees and Beneficiaries in such manner and at such times as specified under the Restoration Plan, the Insurance Plan and the Agreements; of appointing the Trustee to hold custody of such policies, Assignments and other assets; and of facilitating payment of such benefits and insurance premiums and the exercise of rights under the Assignments by the Trustee as agent of CBI; and WHEREAS, it is the intention of the parties that this Trust shall constitute an unfunded arrangement and shall not affect the status of the Restoration Plan, the Insurance Plan and the Agreements as unfunded plans maintained for the purpose of providing deferred compensation or welfare benefits for a select group of management or highly compensated employees for purposes of Title I of the ERISA; and WHEREAS, CBI desires to rename this Trust the "CBI Industries, Inc. Supplemental Survivors' Benefit, Executive Life Insurance and Benefit Restoration Trust"; NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained it is hereby agreed as follows: -3- 4 ARTICLE 1: TRUST, AGREEMENTS AND TRUST FUND 1.1 TRUST. CBI and the Trustee have established the Trust evidenced hereby ("Trust") to facilitate the operation of the Restoration Plan, Insurance Plan, the Survivors' Agreements, Insurance Agreements, Service Agreements and Retirement Agreements (collectively herein, the "Plans") which are maintained by CBI or its affiliates primarily for the purpose of providing benefits to a select group of management or highly compensated employees. 1.2 TRUST FUND. CBI has deposited with the Trustee to comprise the fund (the "Trust Fund") under this Trust certain life insurance policies on the lives of Participants, of which CBI or Liquid is the owner and beneficiary, and certain other assets. CBI has also deposited with the Trustee for execution and holding by the Trustee as part of the Trust Fund, certain Assignments setting forth the specific rights and interests of the Trustee in the insurance policies to be issued to Participants under the Insurance Plan. CBI shall from time to time deposit with the Trustee such additional life insurance policies, Assignments or other assets to form part of the Trust Fund as the Trustee in its sole discretion reasonably exercised determines is necessary or appropriate to enable the Trustee to carry out all of its present and future obligations under this Trust Agreement on behalf of CBI with respect to the Plans, and may from time to time deposit with the Trustee as it desires such further life insurance policies, Assignments or other assets to form part of the Trust Fund. The Trustee shall, by itself or in consultation with CBI, re-evaluate annually the Trust's total obligations under this Trust Agreement with respect to the Plans for these purposes. In this regard, the obligations of the Trust shall include the net present value (utilizing a discount rate equal to the then current dividend rate of the insurance company issuing policies under the Insurance Plan minus 100 basis points) of future insurance premiums payable for (but not beyond) the next ten years following the evaluation date for insurance policies then currently issued under the Insurance Plan and for which the Trustee is then holding Assignments. The Trustee, and its successor or successors, shall receive, hold, invest, administer, distribute, assert, exercise and enforce rights and interests in the assets of the Trust Fund in accordance with the provisions of this Trust as a fiduciary for the Participants and their Designees or Beneficiaries under the Plans. Except as herein otherwise provided, title to the assets of the Trust Fund shall at all times be vested in the Trustee, subject to the right of the Trustee to hold title in bearer form or in the name of a nominee, and the interest of others in the Trust Fund shall be only the right to have the Trust Fund receive, -4- 5 hold, invest, administer, distribute, assert, exercise and enforce rights and interests in the assets of the Trust Fund in accordance with the provisions of the Trust. 1.3 TRUSTEE TO INVEST. The Trustee shall invest the Trust Fund to the extent necessary in life insurance policies on the lives of Participants for the purpose of paying survivors' benefits under the Survivors' Agreements, and may fund the premiums for such policies and the payment of benefits in accordance with any of the Plans by borrowing from life insurance policies held in the Trust Fund. The Trustee shall invest the Trust Fund as provided in Section 3.2 to the extent necessary to pay premiums on insurance policies issued pursuant to the Insurance Plan, and may fund the premiums for such policies by borrowing from life insurance policies, or pursuant to rights under Assignments, held in the Trust Fund; provided, however, that any borrowing against insurance policies in which the Trustee maintains an interest pursuant to the Insurance Plan and any Assignment shall be limited to the extent of the Trustee's interest in said policies. All borrowings under this Section shall conform to such requirements of Section 264(c) or other applicable provision of the Code as may be necessary to make the interest paid or accrued on any such borrowing fully deductible by CBI. Subject to the foregoing limitations, the Trustee shall be granted discretion in and responsibility for investment, management and control of the assets in the Trust Fund. The Trustee may in its sole discretion reasonably exercised borrow from any such life insurance policy to pay premiums under any other life insurance policy or to pay benefits in accordance with any Plan whether or not the borrowing is applied to the benefit of the Participant who is the named insured under the life insurance policy from which the borrowing is made; provided, however, that the Trustee shall not borrow from any policy in an amount so that the death benefit payable upon the death of the insured shall be less than the survivors' benefit payable to the Beneficiaries of the insured under a Survivors' Agreement, if any, between CBI or Liquid and the insured, or less than the death benefit payable to a Beneficiary named under a life insurance policy issued pursuant to the Insurance Plan. 1.4 PLANS AND AGREEMENTS. A true and correct copy of the Restoration Plan, Insurance Plan, the Agreements, the CBI Pension Plan, the CBI 401(k) Pay Deferral Plan, and the CBI Salaried Employee Stock Ownership Plan (1987), all as in effect on the date hereof, are attached hereto as, respectively, Exhibits I, II, III, IV, V and VI. CBI shall file with the Trustee promptly -5- 6 upon its adoption a true and correct copy of each amendment to the Restoration Plan, Insurance Plan, an Underlying Plan, or an Agreement. (a) NEW AGREEMENTS. CBI may from time to time enter into new Agreements on similar or substantially identical terms with other employees of CBI and its subsidiaries and affiliates. In such event CBI may, but shall not be required to, deliver copies of such new Agreements to the Trustee together with such life insurance policies, Assignments or other assets to the Trust Fund in a value or amount as the Trustee in its sole discretion reasonably exercised determines is necessary or appropriate to enable the Trustee to carry out its obligations under the Trust Agreement with respect to such new Agreements. The Trustee shall then determine, in its sole discretion reasonably exercised, whether all life insurance policies, Assignments and other assets contained in the Trust Fund are adequate to make payment to the Beneficiaries of all Participants or Designees under all the Plans; and if so the Trustee shall accept the new Agreements by written notice to CBI and any new Agreement so delivered to and accepted by the Trustee shall be deemed incorporated in Exhibit II with the same effect as if originally included therein. Except as provided in Section 2.3, the Trustee shall have no liability, responsibility, or obligation respecting Agreements not so accepted by the Trustee. (b) VOID AGREEMENTS. In the event an Agreement, other than one entered into pursuant to the Insurance Plan, becomes void prior to a Change in Control (as defined in Section 5.3 below) by reason of the Participant having ceased to be an officer or ceased to be an employee of CBI or one of its subsidiaries or affiliates for any reason other than retirement or death, CBI shall so notify the Trustee, and the Trustee shall have no liability, responsibility or obligation under this Trust respecting such void Agreement. In the event an Agreement becomes void upon or after a Change in Control (as defined in Section 5.3 below) by reason of the Participant having ceased to be an officer or ceased to be an employee of CBI or one of its subsidiaries or affiliates for any reason other than death, or in the event a Participant ceases to be eligible to participate in the Insurance Plan for any reason, CBI shall so notify the Participant in writing a copy of which shall be delivered to the Trustee; and shall upon request of the Trustee substantiate that assertion with objective evidence directly relevant to the provisions of the Insurance Plan or Agreement. If within sixty (60) days after the later of the date such notice is delivered to the Participant or such copy is delivered to the Trustee, or with respect to the Insurance Plan at any time thereafter, the -6- 7 Participant (or his personal representative) objects in writing to the Trustee to the assertion that such Agreement is void, the Trustee shall promptly make its best effort to verify the correctness of the assertion by consulting with CBI, the Participant, or such other persons as it chooses. If the Participant (or his personal representative) files no objection within the time provided herein, or if the Trustee finds that the Participant (or his personal representative) has not substantiated his objection, such Agreement shall become void for purposes of this Trust and the Trustee shall have no liability, responsibility or obligation under this Trust respecting such void agreement, except that in the case of an Insurance Agreement, the Trustee shall be obligated to make premium payments and pay death benefit guarantee amounts as provided under the Insurance Plan and Sections 1.2, 2.1 and 2.2. 1.5 GRANTOR TRUST. The Trust shall be deemed to be a grantor trust under Sections 671 eg seq. of the Code with the Trust Fund being deemed assets of CBI and subject at all times to the rights of its general creditors (which may include Participants, Designees and Beneficiaries) in the event of Insolvency (as defined in Section 2.3, below) but thereafter to the rights and claims of the Participants, Designees and Beneficiaries and the fiduciary obligations of the Trustee which are subordinated only to the rights of general creditors of CBI in the event of Insolvency (as defined in Section 2.3, below). 1.6 PARTICIPANTS' UNSECURED CONTRACTUAL RIGHTS. The Trust Fund shall be held separate and apart from other funds of CBI and shall be used exclusively for the uses and purposes of Participants and general creditors as herein set forth. Participants and their Designees and Beneficiaries shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust Fund. Any rights created under the Plan(s) and this Trust Agreement shall be mere unsecured contractual rights of Participants and their Designees and Beneficiaries against CBI. Any assets held by the Trust will be subject to the claims of CBI's general creditors under federal and state law in the event of insolvency (as defined in Section 2.3 below). To the extent that any Participant, Designee or Beneficiary actually receives, or has distributed on their behalf a distribution from the Trust Fund, such distribution shall to the extent of the distribution be deemed in full satisfaction of the Participant's, Designee's or Beneficiary's contractual claim against CBI or Liquid under the Plan to which such distribution relates. To the extent the Trustee has made distributions or otherwise acted in accordance with a Plan or this Trust, the Trustee shall have no -7- 8 further obligation with respect to that Participant, Designee or Beneficiary and except as provided in Section 2.3 shall not be a proper party to any court or other proceeding brought by or on behalf of a Participant, Designee or Beneficiary against CBI, Liquid, or any subsidiary or affiliate for enforcement of any rights under any Plan. ARTICLE II: DISTRIBUTIONS FROM THE TRUST FUND 2.1 DISTRIBUTIONS TO PARTICIPANTS AND BENEFICIARIES. Except as provided in Section 2.2, distributions to or for the benefit of Participants or Beneficiaries in accordance with a Plan shall be initiated either by (i) written direction to the Trustee from CBI certifying that such distribution is in accordance with the particular Plan to which such distribution relates, or (ii) by a written request to the Trustee from the Participant or Beneficiary or personal representative of either, with a copy to CBI, certifying to the date on which payments to the Participant (or Beneficiary) under a Plan or Underlying Plan are scheduled to begin (or be made), and the form, payee and amount of such benefits, and either (A) the amount of benefits under an Underlying Plan to which the Participant or Beneficiary would be entitled but for the provisions of such Underlying Plan, if applicable, implementing Section 415 of the Code; or (B) such information about the Participant as the Trustee may reasonably require to determine the amount of benefits under the Plan or Underlying Plan to which the Participant or Beneficiary would be entitled. The Trustee shall promptly confirm to CBI the date of its receipt of such direction or request (herein the "Distribution Date"). Unless within fifteen days from the Distribution Date (i) the Trustee notifies CBI in writing that it has reason to believe a distribution directed by CBI is not in accordance with the applicable Plan or (ii) CBI notifies the Trustee in writing that the Participant or Beneficiary is not entitled to a distribution and substantiates that assertion with objective evidence directly relevant to the provisions of the applicable Plan, the direction and certification of CBI or the request and certification of the Participant or Beneficiary or personal representative shall be deemed correct and the Trustee shall make or commence the requested distribution on behalf of CBI in accordance with the applicable Plan. If the Trustee or CBI objects to a distribution, the Trustee shall promptly make its best effort to verify the correctness of the certifications by consulting with CBI, the Participant, Beneficiary or personal representative, or such other persons as it chooses. If the Trustee finds that a distribution directed by CBI is in accordance with the applicable Plan, or finds that CBI has not substantiated its objections to a distribution requested -8- 9 by a Participant, Beneficiary or personal representative, it shall within 30 days after the Distribution Date, make or commence distributions in accordance with the applicable Plan. If by 30 days after the Distribution Date, the Trustee still has reason to believe that a distribution directed by CBI is not in accordance with the applicable Plan, or has been unable to ascertain the correctness of CBI's objections to a distribution requested by a Participant, Beneficiary or personal representative, there shall be no distribution, the Trustee shall so notify the Participant, Beneficiary or personal representative and CBI, and CBI shall pay benefits, if any, in accordance with the applicable Plan, to the Participant or Beneficiary entitled thereto. If the Trustee finds the objections of CBI to be valid and supported by pertinent facts, there shall be no distribution. 2.2 DISTRIBUTION TO PAY PREMIUMS UNDER THE INSURANCE PLAN. Distributions to pay premiums on insurance policies issued pursuant to the Insurance Plan shall be made either (i) by written direction to the Trustee by CBI certifying that such distribution is in accordance with the Insurance Plan, or (ii) at the sole discretion of the Trustee, reasonably exercised, provided such distribution is in accordance with the terms of the Insurance Plan and this Trust. 2.3 DISTRIBUTIONS TO OR FOR THE BENEFIT OF OTHER CREDITORS. At all times during the continuance of this Trust, as provided in Section 1.6 hereof, the Trust Fund shall be subject to claims of general creditors of CBI, but only as set forth in this Section 2.3. The Trustee shall cease payment of benefits to or in respect of Participants and their Designees and Beneficiaries if CBI is insolvent. CBI shall be considered "insolvent" for purposes of this Trust Agreement if (i) CBI is unable to pay its debts as they become due, or (ii) CBI is subject to a pending proceeding as a debtor under the United States Bankruptcy Code. The Board of Directors and the Chief Executive Officer of CBI shall have the duty to inform the Trustee in writing of CBI's insolvency. If a person claiming to be a creditor of CBI alleges in writing to the Trustee that CBI has become insolvent, the Trustee shall determine whether CBI is insolvent and, pending such determination, the Trustee shall discontinue payment of benefits to or on behalf of Participants or their Designees or Beneficiaries. Unless the Trustee has actual knowledge of CBI's insolvency, or has received notice from CBI or a person claiming to be a creditor alleging that CBI is insolvent, the Trustee shall have no -9- 10 duty to inquire whether CBI is insolvent. The Trustee may in all events rely on such evidence concerning CBI's solvency as may be furnished to the Trustee and that provides the Trustee with a reasonable basis for making a determination concerning CBI's solvency. If at any time the Trustee has determined that CBI is insolvent, the Trustee shall discontinue payments to or for the benefit of Participants or their Designees or Beneficiaries and shall hold the assets of the Trust for the benefit of CBI's general creditors. Nothing in this Trust Agreement shall in any way diminish any rights of Participants or their Designees and Beneficiaries to pursue their rights as general creditors of CBI with respect to benefits due under the Plan(s) or otherwise. The Trustee shall resume the payment of benefits to or for the benefit of Participants and their Designees and Beneficiaries in accordance with Sections 2.1 and 2.2 of this Trust Agreement only after Trustee has determined that CBI is not insolvent (or is no longer insolvent). Provided that there are sufficient assets, if the Trustee discontinues the payment of benefits from the Trust pursuant to this Section 2.3 and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to or for the benefit of Participants and their Designees and Beneficiaries under the terms of the Plan(s) for the period of such discontinuance, less the aggregate amount of any payments made to or for the benefit of Participants and their Designees and Beneficiaries by CBI in lieu of the payments provided for hereunder during any such period of discontinuance. 2.4 DISTRIBUTIONS IN REVERSION TO CBI. In the event an Agreement becomes void as provided in Section 1.4(b), or in the event CBI requests in writing the Trustee to determine and revert to CBI excess assets from the Trust Fund, the Trustee shall determine in its sole discretion reasonably exercised whether the life insurance policies, Assignments and other assets remaining in the Trust Fund, after such reserve for future premium payments as the Trustee in its sole discretion reasonably exercised shall deem necessary or appropriate, are more than adequate to insure payment to all Participants and Beneficiaries as determined under Section 1.2 above and to satisfy the obligations of the Trust under the Insurance Plan as provided in Section 1.2; and if so the Trustee (after converting to cash so much of any insurance policies as the Trustee in its sole discretion reasonably exercised deems appropriate) shall distribute such excess assets in reversion -10- 11 to CBI. In the event assets remain in the Trust Fund after all payments to Participants and Beneficiaries have been completed in accordance with the Restoration Plan and all Agreements, and all obligations of the Trust under the Insurance Plan are satisfied, the Trustee shall distribute such remaining assets in reversion to CBI. 2.5 DISTRIBUTION TO PAY TAXES. All taxes, including but not limited to income taxes, upon or in respect of the income or assets of the Trust Fund, or upon or in respect of distributions from the Trust Fund required by any federal or state revenue law to be withheld at the source, shall be reported and paid by CBI from assets other than the Trust Fund. To the extent not so paid by CBI, or to the extent the Trustee in its sole discretion reasonably exercised determines that it is necessary to protect the Trustee from any liability under any federal or state revenue law for failure to report and withhold taxes at the source, the Trustee may report and pay such taxes from the Trust Fund, provided, however, that CBI shall indemnify the Trustee and the Trust Fund and hold them harmless from and against any such taxes. ARTICLE III: ADMINISTRATION OF AND ACCOUNTING FOR TRUST FUND 3.1 MANAGEMENT AND CONTROL OF TRUST FUND. Subject to the provisions of this Trust Agreement, the Trustee shall have exclusive authority, discretion and responsibility to manage, control, assert, exercise and enforce rights or interests in the assets of the Trust Fund, in accordance with such instructions and directions consistent with this Trust Agreement as are communicated to the Trustee by CBI. All rights associated with assets of the Trust shall, to the extent of the ownership interest of the Trustee, be exercised by the Trustee or the person designated by the Trustee, and shall in no event be exercisable by or rest with Participants or their Designees and Beneficiaries; provided, however, that a Participant or his Designee or Beneficiary may exercise all rights of ownership respecting his or its interest in an insurance policy under the Insurance Plan, the ownership of which may be divided between the Trustee and the Participant or their Designee and Beneficiary during such time as the Trustee holds an Assignment on said insurance policy. 3.2 INVESTMENT OF FUNDS. During the term of this Trust, an income received by the Trust, net of expenses and taxes, shall be accumulated and reinvested. The Trustee may invest any portion of the Trust Fund not invested in life insurance policies in United States Government -11- 12 13 obligations, corporate or governmental bonds or other debt obligations of investment quality, annuity contracts, savings accounts, other bank accounts or deposits (including such an account or deposit in its own banking or trust department, any common trust fund, group trust, pooled fund or other commingled investment fund maintained by the Trustee for trust investment purposes or with a fiduciary or party in interest, other than such a Trust or fund maintained for tax-qualified plans or trusts) which bear a reasonable rate of interest, and in cash or accounts or deposits which do not bear interest for only such limited time as is necessary pending investment, reinvestment or payment of distributions. In no event may the Trustee invest in securities (including stock or rights to acquire stock) or obligations issued by CBI, other than a de minimis amount held in common investment vehicles in which the Trustee invests. 3.3 TRUSTEE'S ADMINISTRATIVE POWERS. Except as otherwise provided in the Trust Agreement, the Trustee shall exercise the following powers, rights and duties in addition to those provided elsewhere in the Trust Agreement or by law: (a) to retain any asset of the Trust Fund, including any dividends or other property received with respect to insurance policies or other property held in the Trust; (b) to borrow from any lender (including, to the extent permitted under federal or state law, CBI, any shareholder of CBI or the lending department of the Trustee), to acquire or maintain life insurance policies on the lives of Participants or to distribute benefits in accordance with the Plans; provided that the Trustee shall not make any borrowing (other than under a life insurance policy) from a lender other than CBI, if CBI is willing to make such loan; and further provided, however, that before a Change in Control (as defined in Section 5.3), CBI and the Trustee must jointly agree to the terms and conditions of any borrowing (other than under a life insurance policy) or any agreement with any lender (other than a life insurance company making loans pursuant to such life insurance policy). (c) to employ such accountants, actuaries, attorneys and agents, whether independent or not, as may be reasonably necessary in collecting, managing, administering, investing, distributing and protecting the Trust Fund or the assets thereof or any borrowings of the Trustee -12- 14 made in accordance with paragraph (b) above or computing the obligations herein or excess assets, if any, of the Trust Fund; (d) to settle, submit to arbitration, compromise, contest, prosecute or abandon claims and demands in favor of or against the Trust Fund; (e) to vote any securities either in person or by proxy for any purpose, to consent to, to dissent from and to oppose or take any action in connection with, and receive and retain any securities resulting from any reorganization, consolidation, merger, readjustment of the financial structure, sale, lease or other disposition of the assets of any corporation or other organization, the securities of which may be an asset of the Trust Fund; (f) to cause any asset of the Trust Fund to be issued, held or registered in its individual name or in the name of its nominee, or in such form that title will pass by delivery, provided that the records of the Trustee shall indicate the true ownership of such assets; (g) Pursuant to the Insurance Plan, to execute and hold the Assignments, and to exercise, assert and enforce the rights and interests of the Assignee thereunder, and to pay premiums for insurance policies issued under the Insurance Plan as set forth in the Insurance Plan, an Agreement or this Trust; (h) to exercise any of the powers and rights of an individual owner with respect to any asset of the Trust Fund and to perform any and all other acts in its judgment necessary or appropriate for the proper administration of the Trust Fund, even though such powers, rights and acts are not specifically enumerated in the Trust. Notwithstanding any powers granted to the Trustee pursuant to this Trust Agreement or by 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 Procedural and Administrative Regulations promulgated pursuant to the Code. -13- 15 3.4 TRUSTEE'S RELIANCE UPON COUNSEL, ACCOUNTANTS, INSURANCE CONSULTANTS OR ACTUARIES. The Trustee may consult with counsel, accountants, insurance consultants or actuaries (who may be counsel, accountants, insurance consultants or actuaries for CBI) with respect to any of its duties or obligations hereunder and the opinion of such counsel with respect to legal matters, of such accountants with respect to accounting matters, and of such actuaries or insurance consultants with respect to computing Trust obligations, shall be full and complete authorization with respect to any action taken by the Trustee in good faith and in accordance therewith. 3.5 INDEMNIFICATION OF TRUSTEE. (a) CBI agrees, to the extent permitted by applicable law to indemnify the Trustee and hold the Trustee harmless from and against any loss or expense incurred (including legal expenses) or any claim or liability that may be asserted against the Trustee by reason of its taking or refraining from taking, in either case based upon the Trustee's reasonable and good faith interpretation of the Trust Agreement, any action under this Trust Agreement (including, without limiting the generality of the foregoing, any claim brought against the Trustee by CBI), provided that in no event shall CBI's obligation to indemnify the Trustee and hold the Trustee harmless as provided herein apply in the event of the Trustee's negligence, bad faith or willful misconduct. (b) The Trustee shall be entitled to rely upon a certification of an authorized representative of CBI with respect to any instruction, direction or approval of CBI until a subsequent certification is filed with the Trustee. Notwithstanding any other provision to the contrary under this Trust Agreement, CBI agrees to fully indemnify the Trustee and hold the Trustee harmless from and against any loss or expense incurred (including legal expenses) or any claim or liability that may be asserted against the Trustee by reason of the Trustee taking or refraining from taking any action in compliance with or pursuant to CBI's instruction, direction or approval under this Trust Agreement. (c) The Trustee shall be entitled to rely upon any instrument, certificate or paper which the Trustee reasonably and in good faith believes to be genuine and to be signed or presented by the proper person or persons, and the Trustee shall not be under any duty to make any investigation or inquiry as to any statement contained in any such writing but may accept the same as conclusive evidence of the accuracy of the statements therein contained. -14- 16 (c) The Trustee shall not be liable for the proper application of any part of the Trust Fund if distributions are made in accordance with the terms of this Trust Agreement and information furnished to the Trustee by CBI. 3.6 RECORDS AND ACCOUNTS OF TRUSTEE. The Trustee shall maintain accurate and detailed records and accounts of all transactions of the Trust, which shall be available at all reasonable times for inspection or audit by any person designated by CBI and which shall be retained as required by applicable law. 3.7 FISCAL YEAR. The fiscal year of the Trust shall be the twelve-month period beginning on January 1 and ending on December 31. 3.8 REPORT OF TRUSTEE. The Trustee shall prepare and present to CBI, a report for the period ending on the last day of each fiscal year, and for such shorter periods as CBI may request, listing all policies, securities and other property acquired and disposed of and all receipts, disbursements, distributions and other transactions effected by it since the date of its last account, and further listing all cash, securities, and other property held by it, together with the fair market value thereof, as of the end of such period. In addition to the foregoing, the report shall contain such additional information regarding the Trust Fund's assets and transactions as CBI may request and as may be necessary to enable CBI to comply with the provisions of any Plan and applicable law. The Trustee shall forward promptly to CBI copies of premium notices, statements, and other reports received by the Trustee from any insurance company or agent thereof respecting any life insurance policies held in the Trust Fund, or under which the Trustee holds an Assignment. 3.9 FINAL REPORT. In the event of the resignation or removal of the Trustee hereunder, CBI may request and the Trustee shall then submit, for the period ending on the effective date of such resignation or removal, a report similar in form and purpose to that described in Section 3.8 above. 3.10 APPROVAL OR REPORTS. CBI may approve a report submitted by the Trustee pursuant to Section 3.8 or Section 3.9 by written notice of approval delivered to the Trustee or by failure to express objection to such report in writing delivered to the Trustee within six months from the date -15- 17 upon which the report was delivered to CBI. Upon the receipt of a written approval of a report, or upon the passage of the period of time within which objection may be filed without written objections having been delivered to the Trustee, such report shall be deemed to be approved, and the Trustee shall be released and discharged as to all items, matters and things set forth in such report, as fully as if such report had been settled and allowed by decree of a court of competent jurisdiction in an action or proceeding in which the Trustee, CBI and all persons having or claiming to have any interest in the Trust Fund or under any Plan or any Agreement were parties. If the Trustee and CBI cannot agree with respect to any act or transaction contained in any report, the Trustee shall have the right to have its accounts settled by judicial proceedings, in which event only the Trustee and CBI shall be necessary parties. 3.11 COMPENSATION AND EXPENSES. The Trustee shall be entitled to reasonable compensation for its services as may be agreed upon from time to time by the Trustee and CBI. Unless otherwise paid by CBI, the Trustee is authorized to reimburse itself from the Trust Fund for its reasonable compensation, expenses, taxes and charges (including fees and expenses of its accountants, attorneys, insurance consultants, actuaries and agents) incurred in connection with the administration, management, investment, protection, distribution and exercise of rights with respect to assets in the Trust Fund. In determining whether any excess assets currently exist in the Trust Fund, under Section 2.4, above, the Trustee may take into account recurring and reasonably anticipated expenses for such administration. 3.12 COOPERATION IN ADMINISTRATION. CBI shall provide to the Trustee upon request from the Trustee from time to time such information on a Participant's date of hire, age, years of service, compensation, death, elections, Designee, Beneficiary, and the form, payee, amount and commencement date of benefits under any Plan or Underlying Plan, as the Trustee may reasonably request to fulfill its obligations under this Trust Agreement. ARTICLE IV: SUCCESSION OF TRUSTEE 4.1 RESIGNATION OF TRUSTEE. The Trustee or any successor thereto may resign as Trustee hereunder at any time upon delivering a written notice of such resignation, to take effect thirty (30) days after the delivery thereof to CBI (unless CBI shall accept shorter notice). -16- 18 4.2 REMOVAL OF TRUSTEE. The Trustee or any successor thereto may be removed for good and sufficient cause by delivering to the Trustee so removed an instrument executed in the name of CBI by both (i) the Chairman of CBI, and (ii) any Executive Vice President or Senior Vice President of CBI. Such removal shall take effect at the date specified in such instrument, which shall not be less than thirty (30) days after delivery of the instrument (unless a successor Trustee shall have been earlier appointed by CBI). 4.3 APPOINTMENT OF SUCCESSOR TRUSTEE. Whenever the Trustee or successor Trustee shall resign or be removed or a vacancy in the position shall otherwise occur, CBI shall appoint a successor Trustee which shall be a bank or trust company authorized to exercise trust powers in Illinois and which is unaffiliated with CBI or any successor thereto, which may qualify by delivering its acceptance in writing to CBI. 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 expenses of the Trustee in connection with the proceeding shall be allowed as administrative expenses of the Trust. 4.4 SUCCESSION TO TRUST FUND ASSETS. The title to all property held hereunder shall vest in any successor Trustee acting pursuant to the provisions hereof without the execution or filing of further instrument, but a resigning or removed Trustee shall execute all instruments and do all acts necessary to vest title in the successor Trustee. Each successor Trustee shall have, exercise and enjoy all of the powers, both discretionary and ministerial, herein conferred upon its predecessors. A successor Trustee shall not be obligated to examine or review the accounts, records, and acts of or property delivered by any previous Trustee and shall not be responsible for any action or any failure to act on the part of any previous Trustee. 4.5 CONTINUATION OF TRUST. In no event shall the legal disability, resignation or removal of a Trustee terminate the Trust, but CBI shall have the duty of forthwith appointing a successor Trustee to carry out the terms of the Trust. 4.6 CHANGES IN ORGANIZATION OF TRUSTEE. In the event that any corporate Trustee hereunder shall be converted into, shall merge or consolidate with, or shall sell or transfer substantially all of its assets and business to another corporation, the corporation resulting from -17- 19 such conversion, merger or consolidation or the corporation to which such sale or transfer shall be made shall thereupon become and be the Trustee under the Trust with the same effect as though originally so named. 4.7 CONTINUANCE OF TRUSTEE'S POWERS IN EVENT OF TERMINATION OF THE TRUST. In the event of the termination of the Trust, as provided herein, the Trustee shall dispose of the Trust Fund as directed by CBI in accordance with the provisions hereof and of the Plans. Until the final distribution of the Trust Fund, the Trustee shall continue to have all powers provided hereunder as necessary or expedient for the orderly liquidation and distribution of the Trust Fund. Except as provided in Sections 2.3, 2.4 and 2.5, no part of the Trust Fund shall be used for or diverted to purposes other than the payment of expenses properly chargeable to the Trust Fund and payments of benefits or premiums to or on behalf of Participants, Designees and Beneficiaries. ARTICLE V: AMENDMENT, TERMINATION AND MISCELLANEOUS 5.1 AMENDMENT OF TRUST. CBI may amend this Trust by delivery to the Trustee of a written notice executed by CBI of the text and effective date of such amendment if but only if either (i) such notice is accompanied by the specific written consent to the proposed amendment by Participants and Beneficiaries whose actuarial interests under all of the Plans except the Insurance Plan represent at least 51% of the total of all actuarial interests under Plans computed as of the effective date of such amendment and, in the case of the Insurance Plan, specific written consent of the Executives then participating in the Insurance Plan and against whose insurance policies the Trustee holds Assignments whose scheduled death benefit amounts (as defined in the Insurance Plan) in the aggregate represent at least 51% of the total amount of scheduled death benefit amounts as of the effective date of such amendment; or (ii) such notice is accompanied by the opinion of counsel satisfactory to the Trustee that the amendment is necessary for the purpose of conforming the Trust to any present or future federal or state law (including revenue laws) relating to trusts of this or similar nature, as such laws may be amended from time to time, and a copy of such notice and opinion of counsel is delivered to each Participant or Designee; provided, however, that no amendment shall enlarge the duties or responsibilities of the Trustee without its written consent. -18- 20 5.2 REVOCATION OF TRUST. Subject to the rights of creditors of CBI in the event of Insolvency, this Trust shall be irrevocable. 5.3 AMENDMENT OF TRUST PRIOR TO CHANGE IN CONTROL. Notwithstanding Section 5.1, CBI may amend (but not revoke) this Trust Agreement prior to a Change in Control (as defined below) with respect to Participants, Designees, Beneficiaries and the Trustee without limitation and in any manner and effective as of any date, including a retroactive effective date, by delivery to the Trustee of a written notice executed by CBI of the substance and effective date of such amendment, accompanied by the written certification of the Secretary of CBI that no Change in Control has occurred; provided that no amendment may have the effect of revoking the Trust by returning to CBI or diverting to others any of the Trust Fund before all payment of benefits and premiums have been made to or for the benefit of Participants and their Designees and Beneficiaries pursuant to the terms of the Plan(s), except as provided in Section 13; and, provided further, that no amendment shall enlarge the duties or responsibilities of the Trustee without its written consent. For purposes of this Section 5.3, the term "Change in Control" shall mean the occurrence at any time of any of the following events: (a) An Acquiring Person (as defined below) has become such; or (b) Continuing Directors (as defined below) cease to comprise a majority of the board of directors of CBI. For purposes of this Section 5.3, the terms "Acquiring Person" and "Continuing Directors" shall have the respective meanings ascribed to such terms in that certain Amendment and Restatement of Rights Agreement dated as of March 4, 1986, between CBI and First Chicago Trust Company of New York, as Rights Agent, the relevant portions of which for convenience of reference are reproduced as Exhibit VII to this Trust Agreement. If a Change in Control occurs, CBI shall within five (5) days notify the Trustee in writing of that fact and the date thereof, and CBI shall upon the written request of the Trustee and may at any other time in its discretion notify the Trustee in writing whether a Change in Control is expected to occur; provided, however, that the Trustee shall have sole discretion to determine for purposes of this Trust Agreement whether a Change in -19- 21 Control has actually occurred, and such determination shall be conclusive and binding on all parties hereto. 5.4 AMENDMENT BY TRUSTEE IN EVENT CBI CEASES TO EXIST. In the event CBI shall cease to exist and its obligation to cooperate in the administration of the Trust is not assumed by any other person or corporation, the Trustee shall have the power to make by amendment such changes in, additions to, and substitutions for the provisions of the Trust, to take effect retroactively or otherwise, as may be necessary or advisable for the purpose of conforming the Trust to any present or future Federal or State law relating to trusts of this or similar nature, as amended from time to time. 5.5 TERMINATION OF TRUST. The Trust shall terminate at such time as all of the assets held for the benefit of Participants, Designees and their Beneficiaries have been disbursed to Participants or their Beneficiaries pursuant to Section 2.1, distributed to pay premiums under the Insurance Plan pursuant to Section 2.2, distributed to or for the payment of taxes pursuant to Section 2.5 or for the benefit of general creditors of CBI pursuant to Section 2.3, or distributed in reversion to CBI pursuant to Section 2.4. 5.6 NONALIENABILITY. No Participant, Designee or Beneficiary shall have any right to sell, assign, pledge, hypothecate, anticipate or in any way create a lien on any part of the Trust Fund. To the maximum extent permitted by law, no interest in the Trust shall be assignable in or by operation of law, or be liable in any way for the debts for defaults of a Participant, Designee, Beneficiary, spouse or heirs at law whether to CBI or to others. 5.7 COLLECTION. In the event CBI fails to pay over to the Trustee within 10 days of notice and demand from the Trustee any amount determined by the Trustee under Section 1.2 or Section 1.4(a) (relating to deposit of additional insurance policies or other assets to the Trust Fund), Section 2.1 (relating to distributions to Participants and Beneficiaries), Section 2.2 (relating to premiums under the Insurance Plan), or Section 2.5 (relating to taxes), the Trustee may bring an action against CBI in any court of competent jurisdiction and shall be entitled to recover from CBI such amount plus interest at five percentage points in excess of the Trustee's prime lending rate as publicly announced from time to time plus all costs of collection including reasonable attorneys fees -20- 22 and costs of litigation. During any period in which the Trustee determines it does not or will not have sufficient assets to carry out its obligations herein, pending any action against CBI as provided in this Section 5.7, the Trustee shall first pay any survivors' benefits due to Beneficiaries pursuant to the Survivors' Agreements and to any guarantee of death benefits under the Insurance Plan, next any other benefits due under the Restoration Plan or any Agreement on a pro rata basis to Beneficiaries also receiving benefits under Survivors' Agreements, next any other benefits due under the Restoration Plan, Service Agreements or Retirement Agreements on a pro rata basis, and last to pay premiums for insurance policies issued pursuant to the Insurance Plan. Upon any recovery from CBI pursuant to such action, proceeds shall first be used by the Trustee to pay previously due and unpaid benefits and premiums, in the order described above. 5.8 ARBITRATION OF DISPUTES. Except as otherwise provided in Section 5.7, in the event of any dispute between or among a Participant, a Designee, a Beneficiary, personal representative, CBI or the Trustee, such dispute shall be resolved by arbitration in the City of Chicago in accordance with the rules governing commercial arbitration established by the American Arbitration Association and a judgment upon the award may be entered in any court having jurisdiction thereof; provided, however, that a claim by any Participant, Designee, Beneficiary or personal representative against CBI shall be subject to arbitration only with the consent of such Participant, Designee, Beneficiary, or personal representative. 5.9 CONSTRUCTION OF UNDERLYING PLANS. The entitlement of a Participant or their Designee or Beneficiary to benefits under a Plan (or Underlying Plan) shall be determined in accordance with such Plan (or Underlying Plan). Notwithstanding anything in this Trust Agreement to the contrary, the determination by the plan administrator of a Plan or Underlying Plan as to the benefits provided by such Plan shall except as otherwise redetermined pursuant to the claims procedure of such Plan or as otherwise provided in Section 2.1, be conclusive and binding on the Trustees, CBI, Participants, Designees and their Beneficiaries and all other persons for all purposes of this Agreement. 5.10 CERTIFICATION OF PARTICIPANT DATA TO TRUSTEE. CBI shall, as promptly as practicable after the date hereof, certify to the Trustee such age, salary and other data concerning each Participant as the Trustee may reasonably request. The Trustee may rely and act upon such data. -21- 23 5.11 CONTROLLING LAW. The laws of the State of Illinois shall be controlling state laws in all matters relating to the Trust. 5.12 NOTICE. Any notice to the Trustee or to CBI required or permitted under this Trust shall be duly and properly given and delivered if sent by certified United States mail, return receipt requested, to the Trustee at: Gary-Wheaton Bank, N.A. 120 East Wesley Wheaton, Illinois 60187 Attention: Janice Lorenz, Trust Department and to CBI at CBI Industries, Inc. 800 Jorie Boulevard Oak Brook, Illinois 60522-7001 Attention: Vice-President of Administration or to such other address as the Trustee or CBI may specify by written notice to the other. 5.13 CORPORATE ACTION. Except as otherwise expressly provided in this Trust Agreement, any action or direction CBI is required or permitted to take or give under this Trust Agreement shall be duly and properly taken or given if done in writing over the signature of any of the following CBI officers: President and Chairman of the Board, Executive Vice President-Finance, Senior Vice President and General Counsel or Vice President and Treasurer (as their incumbency is certified to the Trustee from time to time by the Secretary of CBI) or such other officer of CBI as may be authorized by specific resolution of the board of directors of CBI to take actions with respect to this Trust Agreement. CBI shall be bound thereby and the Trustee and all other persons shall be protected in relying thereon. 5.14 GRANTORS AND AGENCY. In the event Liquid or other affiliates of CBI have contributed assets to the Trust Fund relating to Plans covering Participants employed by them, references in this Agreement to CBI shall be read as references to Liquid or such other affiliate as appropriate, but Liquid and each such other affiliate shall be deemed to have appointed CBI as its agent for purposes of this Trust Agreement to the end that the Trustee may deal with CBI as if CBI were the only settlor and grantor under the Trust. The Trustee shall nevertheless maintain accounts showing -22- 24 the respective assets attributable to CBI and each affiliate for the purpose of applying Section 2.3 separately to CBI and each such affiliate and enabling CBI and each such affiliate to comply with requirements of Section 671 et seq. of the Code as applicable to it. 5.15 COUNTERPARTS. The Trust may be executed in any number of counterparts, each of which shall be considered an original. IN WITNESS WHEREOF, the CBI and the Trustee have caused this Trust Agreement to be signed and their corporate seal affixed hereto by authorized officers, all as of the day and year first above written, the Trustee hereby evidencing its acceptance of the Trust including its agreement to perform the duties given to or required of it by the Trust. ATTEST: CBI INDUSTRIES, INC. /s/ Charlotte C. Toerber By: /s/ G.L. Scheuppert ----------------------------------- --------------------------- ATTEST: GARY-WHEATON BANK, N.A. as /s/ Thomas S. Palmer By: /s/ Gary-Wheaton Bank, N.A. ----------------------------------- --------------------------- -23- 25 SECRETARY'S CERTIFICATE I, C.C. Toerber, do hereby certify that I am the Secretary of CBI Industries, Inc., a Delaware corporation (hereinafter the "Corporation"), and that as such officer I am duly authorized to make this Certificate on behalf of the Corporation. I further certify: (1) that the Board of Corporation unanimously adopted the following resolutions at their meeting January 11, 1995 (hereinafter "January 11th Consent"), (2) that the January 11th Consent was adopted in accordance with the By-Laws of the Corporation; and (3) that the following is a true and complete extract of the January 11th Consent as adopted by the Board of Directors of the Corporation: FURTHER RESOLVED, that Section 5.3 of the CBI Industries, Inc. Supplemental Survivors' Benefit, Executive Life Insurance and Benefit Restoration Trust is hereby amended to read as follows: 5.3 AMENDMENT OF TRUST PRIOR TO CHANGE IN CONTROL. Notwithstanding Section 5.1, CBI may amend (but not revoke) this Trust Agreement prior to a Change in Control (as defined below) with respect to Participants, Designees, Beneficiaries and the Trustee without limitation and in any manner and effective as of any date, including a retroactive effective date, by delivery to the Trustee of a written notice executed by CBI of the substance and effective date of such amendment, accompanied by the written certification of the Secretary of CBI that no Change in Control has occurred; provided that no amendment may have the effect of revoking the Trust by returning to CBI or diverting to others any of the Trust Fund before all payment of benefits and premiums have been made to or for the benefit of Participants and their Designees and Beneficiaries pursuant to the terms of the Plan(s), except as provided in Section 1.3; and, provided further, that no amendment shall enlarge the duties or responsibilities of the Trustee without its written consent. For purposes of this Section 5.3, the term "Change in Control" shall mean the occurrence at any time of any of the following events: (a) An "Acquiring Person" (as defined below) has become such; or (b) "Continuing Directors" (as defined below) cease to comprise a majority of the Board of Directors of CBI. For purposes of this Section 5.3, the terms "Acquiring Person" and "Continuing Directors" shall have the respective meaning as ascribed to such terms in that certain Amendment and Restatement dated as of 26 August 8, 1989, of Rights Agreement dated as of March 4, 1986, between CBI and First Chicago Trust Company of New York, as Rights Agent, as has been or may be amended from to time. If a Change in Control occurs, CBI shall within five (5) days notify the Trustee in writing of that fact and the date thereof, and CBI shall upon the written request of the Trustee and may at any other time in its discretion notify the Trustee in writing whether a Change in Control is expected to occur; provided, however, that the Trustee shall have sole discretion to determine for purposes of this Trust Agreement whether a Change in Control has actually occurred, and such determination shall be conclusive and binding on all parties hereto. I certify that, as of January 11, 1995, no "Change in Control" of the Corporation has occurred, as that term is defined in Section 5.3 (either before or after the amendment made by the January 11th Consent) of that certain Trust Agreement entered into as of the 8th day of February, 1988, by and between CBI Industries, Inc. and the Gary-Wheaton Bank, an Illinois banking corporation, known as the "CBI Industries, Inc. Supplemental Survivors' Benefit and Benefit Restoration Trust". I further certify that the foregoing resolutions continue to be in full force and effect and have not been modified or otherwise superseded by further action of the Board of Directors or the shareholders of the Corporation. IN WITNESS WHEREOF, I have set my hand on behalf of CBI Industries, Inc. this 23rd day of January, 1995. /s/ CCT ------------------------------------ C.C. Toerber, Secretary EX-99.20 20 LETTER TO JOHN E. JONES 1 Exhibit 20 H. William Lichtenberger Praxair, Inc. Chairman and 19 Old Ridgebury Road Chief Executive Officer Danbury, CT 06810-5113 Tel (203) 837-2554 Fax (203) 837-2518 [PRAXAIR LETTERHEAD] October 27, 1995 Mr. John E. Jones Chairman, President and Chief Executive Officer CBI Industries, Inc. 800 Jorie Boulevard Oak Brook, IL 60522-7001 Dear John: As you know, over the past six months you and I have had several discussions regarding a possible transaction to effect a merger of our respective companies. Based on our conversations, I think we both realize that significant benefits could be realized by both our companies from such a transaction. Therefore, I was greatly disappointed when you told me on October 20 that you had decided not to continue our discussions. As I told you during that telephone conversation, in recent weeks we at Praxair have continued to carefully study the dynamics and potential advantages of a business combination of Praxair and CBI. As a result, we now feel even more strongly that such a business combination would result in significant strategic benefits for both our companies and our respective shareholders. In light of your current position which you communicated to me on October 20, and given what we continue to view as the compelling rationale for a business combination, we have decided that the best way to proceed is for Praxair to submit a specific proposal to your Board of Directors for its formal consideration. Accordingly, on behalf of the Board of Directors of Praxair, I am pleased to propose herewith the merger of Praxair and CBI pursuant to which your shareholders would receive $32.00 for each share of CBI common stock, which we would propose to pay in either cash or Praxair common stock. Our proposal to effect a merger of Praxair and CBI is subject to the negotiation of a mutually satisfactory definitive merger agreement containing customary terms and closing conditions. I hope that you will recognize the powerful business logic behind our proposal and that you will promptly submit it to your Board of Directors for its consideration with a favorable recommendation from you. It is our hope that, after appropriate consideration by your Board of Directors, your Board will authorize proceeding with the negotiation of the definitive merger agreement on the terms we have proposed. 2 Mr. John E. Jones CBI Industries, Inc. Page two The price per share in our merger proposal is based on our present knowledge of CBI, which is limited to public information. It is our view that the price we are proposing would be both fair and highly attractive to your shareholders. Our proposal offers your shareholders a significant premium over the current market value of CBI. The transaction we propose represents a clearly attractive opportunity for Praxair to combine the leading industrial gases supplier in North and South America and the premier world supplier of carbon dioxide. The combined enterprise will be strongly positioned to maximize our marketing, engineering and technological skills as it expands its operations further into major global markets. It will also be able to develop significant new applications for a wide range of products and advanced technologies to enable our customers to improve their productivity, product quality and environmental performance. Together, Praxair's and CBI's business portfolios and synergies will provide the enterprise with considerable opportunities to support strong future sales and earnings growth. We are prepared to move promptly in connection with our proposal. We would be happy to meet with you and other members of your Board of Directors and senior management as soon as practicable to discuss our proposal in detail and to answer any questions you or they may have. We realize that your Board of Directors will want to carefully consider our proposal, but we do ask that the Board respond to us as soon as possible, and in any event by noon, on November 1, 1995. While we would very much prefer that a business combination of our companies be effected pursuant to the negotiation of a merger on the terms we have proposed, you and your Board should appreciate that if your Board rejects our proposal to negotiate a merger, we reserve the right to propose directly to the shareholders of CBI a cash offer for CBI by Praxair. We look forward to hearing the response of your Board of Directors after it has reviewed our merger proposal. Sincerely, /s/ Bill H.W. Lichtenberger HWL/asr EX-99.21 21 LETTER TO STOCKHOLDERS OF THE COMPANY 1 Exhibit 21 [CBI INDUSTRIES, INC. LETTERHEAD] November 16, 1995 To Our Stockholders: On November 3, 1995, a subsidiary of Praxair, Inc. began a tender offer (the "Praxair Offer") for all of the Company's outstanding Common Stock (together with the associated Preferred Stock Purchase Rights) at a price of $32 per share in cash. YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY DETERMINED THAT THE PRAXAIR OFFER IS INADEQUATE AND NOT IN THE BEST INTERESTS OF THE COMPANY OR ITS STOCKHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU REJECT THE PRAXAIR OFFER AND NOT TENDER YOUR SHARES TO PRAXAIR. In reaching the determination that the Praxair Offer is inadequate and not in the best interests of CBI or its stockholders, your Board gave careful consideration to CBI's financial performance and future prospects, the opinions of the Company's financial advisors, Lehman Brothers Inc. and Merrill Lynch & Co., that as of such date the consideration offered to the Company's stockholders pursuant to the Praxair Offer is inadequate to such stockholders from a financial point of view, the significant conditions to consummation of the Praxair Offer, and the other factors described in the attached Schedule 14D-9. We urge you to read carefully the attached document in its entirety, including the opinions of Lehman Brothers Inc. and Merrill Lynch & Co. included as annexes, so that you will be fully informed as to the Board's recommendation. Your Board of Directors believes that the Praxair offer fails to recognize the current value of the Company. The Board concluded that the interests of the stockholders would be best served by the Company exploring alternatives to maximize stockholder value and the Company is actively engaged in that effort. In this regard, the Company has entered into confidentiality agreements with certain parties. If you have any questions or need any assistance in withdrawing your shares from the Praxair Offer please contact MacKenzie Partners, Inc. at (800) 322-2885 toll free. Your Directors thank you for your continued support. On behalf of the Board of Directors, /s/ John E. Jones ----------------------------------- John E. Jones Chairman, President and Chief Executive Officer EX-99.22 22 PRESS RELEASE 1 EXHIBIT 22 [CBI Industries, Inc. Press Release Letterhead] FOR FURTHER INFORMATION CONTACT: Joele Frank or Ann Hance Abernathy MacGregor Scanlon (212) 371-5999 FOR IMMEDIATE RELEASE: IND-393 CBI REJECTS PRAXAIR OFFER; AUTHORIZES EXPLORATION OF ALTERNATIVES OAK BROOK, ILLINOIS, November 16, 1995 -- The Board of Directors of CBI Industries, Inc. (NYSE: CBI) has unanimously voted to reject the offer of a subsidiary of Praxair, Inc. (NYSE: PX) to acquire all of the outstanding shares of Common Stock of the Company at a price of $32 per share. CBI's Board concluded that the interests of the Company's stockholders would be best served by the Company exploring alternatives to maximize stockholder value and the Company is actively engaged in that effort. In this regard, the Company has entered into confidentiality agreements with certain parties. After considering a variety of factors, including the opinion of its financial advisors, Lehman Brothers Inc. and Merrill Lynch & Co., that, from a financial point of view, the consideration offered to CBI stockholders in the Praxair offer is inadequate to such stockholders, the Board concluded that the Praxair offer is inadequate and not in the best interests of CBI or its stockholders. A letter mailed to stockholders states that "The Directors believe the Praxair offer fails to recognize the current value of the Company." The CBI Board recommends that CBI's stockholders not tender their shares to Praxair pursuant to the tender offer. The Board has also delayed the separation date of the Company's Preferred Stock Purchase Rights until such later date as may be determined by the Board. Accordingly, the Rights will continue to trade with the Company's Common Stock. CBI Industries has subsidiaries operating throughout the world in producing and distributing carbon dioxide and industrial gases; in designing, engineering, fabricating and erecting metal plate structures, and in executing other contracting services; and in providing oil and refined petroleum product storage and blending facilities. ### EX-99.23 23 LETTER TO HOLDERS OF SHARES 1 Exhibit 23 [CBI LOGO] CBI Industries, Inc. _______________________________________________________________________________ 800 Jorie Boulevard Oak Brook, Illinois 60521-2268 708 572 7000 FAX: 708 572 7405 November 16, 1995 Dear Restricted Stock Plan Participant: You have been awarded shares in one or more of the CBI Restricted Stock Award Plans ("Plans") on which the restrictions have not yet lapsed. You have the rights of a shareholder regarding shares awarded to you, except for the restrictions stated in the Plans. One restriction stated in the Plans is a prohibition against the sale or transfer, or attempted sale or transfer, by you of restricted shares prior to the lapse of restrictions. As you are undoubtedly aware, there is currently an outstanding tender offer by a subsidiary of Praxair, Inc. to purchase all outstanding shares of CBI Industries common stock. You may receive, or may already have received, materials from Praxair regarding the tender offer. As indicated above, attempting to tender restricted shares would be a prohibited attempt to transfer such shares, and could result in forfeiture of the shares. Accordingly, so that these shares will not be forfeited, the Company will not tender these shares on your behalf and you should take no action with respect to your restricted shares as regards the Praxair offer. Stephen M. Duffy Vice President of Human Resources EX-99.24 24 MOTION TO AMEND COMPLAINT IN STEINER VS. CBI 1 Exhibit 24 IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - --------------------------------------------X WILLIAM STEINER, : : Plaintiff, : : -against- : : CBI INDUSTRIES, INC., G.L. SCHUEPPERT, : C.A. No. 13940 H. CLARK, JR., E.J. MOONEY, JR., R.J. : DAY, L.E. AKIN, J.E. JONES, R.J. : DANIELS, W.N. CALDWELL, J.T. HORTON, : R.G. WALLACE, STEPHANIE P. MARSHALL, : G.E. MacDOUGAL, J.F. RIORDAN and : R.T. STEWART, : : Defendants. : - --------------------------------------------X NOTICE OF MOTION ---------------- TO: Jesse Finkelstein, Esquire Richards, Layton & Finger One Rodney Square Wilmington, DE 19801 PLEASE TAKE NOTICE that the within Motion will be presented at the earliest time convenient to the Court and counsel. ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A. By: /s/ JOSEPH A. ROSENTHAL ------------------------------------------ Joseph A. Rosenthal First Federal Plaza, Suite 214 P.O. Box 1070 Wilmington, DE 19899-1070 (302) 656-4433 Attorneys for Plaintiff 2 IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - --------------------------------------------X WILLIAM STEINER, : : Plaintiff, : : -against- : : CBI INDUSTRIES, INC., G.L. SCHUEPPERT, : C.A. No. 13940 H. CLARK, JR., E.J. MOONEY, JR., R.J. : DAY, L.E. AKIN, J.E. JONES, R.J. : DANIELS, W.N. CALDWELL, J.T. HORTON, : R.G. WALLACE, STEPHANIE P. MARSHALL, : G.E. MacDOUGAL, J.F. RIORDAN and : R.T. STEWART, : : Defendants. : - --------------------------------------------X MOTION ------ Plaintiff moves for leave to file an amended complaint in the form attached hereto as Exhibit A. The grounds for this motion are that the amended complaint contains allegations concerning events which have taken place since this action was filed in December 1994. In compliance with Rule 15(aa), plaintiff avers that the within amended complaint is in full substitution for the complaint heretofore filed on December 22, 1994. ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A. By: /s/ JOSEPH A. ROSENTHAL ------------------------------------------ Joseph A. Rosenthal First Federal Plaza, Suite 214 P.O. Box 1070 Wilmington, DE 19899-1070 (302) 656-4433 Attorneys for Plaintiff - 2 - 3 IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - --------------------------------------------X WILLIAM STEINER, on behalf of himself : and all others similarly situated, : : Civil Action Plaintiffs, : No. 13940 : -against- : AMENDED : CLASS ACTION CBI INDUSTRIES, INC., G.L. SCHUEPPERT, : COMPLAINT H. CLARK, JR., E.J. MOONEY, JR., R.J. : ------------ DAY, L.E. AKIN, J.E. JONES, R.J. : DANIELS, W.N. CALDWELL, J.T. HORTON, : R.G. WALLACE, STEPHANIE P. MARSHALL, : G.E. MacDOUGAL, J.F. RIORDAN and : R.T. STEWART, : : Defendants. : - --------------------------------------------X Plaintiff, by and through his attorneys, alleges as follows: 1. Plaintiff brings this action as a class action on behalf of himself and all other shareholders of CBI Industries, Inc. ("CBI" or the "Company") who are similarly situated, to void and enjoin defendants' efforts to entrench themselves and solidify their control of CBI and thwart any takeover of the Company by, among other things, increasing the Company's anti-takeover devices, such as its poison pill or shareholder rights plan, described below, and/or refusing to rescind such antitakeover devices despite the existence of a value maximizing offer. 2. Defendants' actions represent an effort by the individual defendants to entrench themselves in office so that they may continue to receive the substantial 4 salaries, compensation and other benefits and perquisites of their offices. 3. The individual defendants are abusing their fiduciary positions of control over CBI to thwart Praxair, Inc.'s ("Praxair") legitimate attempts to acquire the Company, to prevent CBI's shareholders from receiving and/or acting upon bona fide offers for the Company, and are seeking to use corporate resources to entrench themselves in the management of the Company. The actions of the individual defendants constitute a breach of their fiduciary duties to maximize shareholder value, to not consider their own interests over that of the public shareholders, and to respond reasonably to offers for CBI. PARTIES ------- 4. Plaintiff is the owner of CBI common stock, and has owned such stock at all times relevant herein. 5. CBI is a holding company which, through numerous operating subsidiaries, operates in three basic areas: contracting services, industrial gases and investments. In recent time, the Company's industrial gases area, organized under the Liquid Carbonic Industries Corporation ("Liquid Carbonic") subsidiary, has contributed nearly 90% of CBI's pre-tax income. - 2 - 5 6. The individually named defendants are members of the CBI Board of Directors. The following defendants are also officers and thus inside directors of CBI: (a) Defendant J.E. Jones ("Jones") is the chairman of CBI's Board of Directors, president, and chief executive officer. For the year ended December 31, 1993, Jones earned a salary of $530,000, a bonus of $77,000, and restricted stock awards of $515,250. (b) Defendant L.E. Akin ("Akin") is an executive vice president, and the president of CBI subsidiary, Chicago Bridge & Iron Company (the main corporation under which the Company's contracting services area is organized). For the year ended December 31, 1993, Akin earned a salary of $290,000, a bonus of $35,000, and restricted stock awards of $200,375. (c) Defendant R.J. Daniels ("Daniels") is an executive vice president, and president of Liquid Carbonic. For the year ended December 31, 1993, Daniels earned a salary of $265,000, a bonus of $43,515 and a restricted stock award of $171,750. (d) Defendant G.L. Schueppert ("Schueppert") is an executive vice president, and the Company's chief financial officer. For the year ended December 31, 1993, Schueppert earned a salary of $305,000, a bonus of $35,000, and a restricted stock award of $160,875. - 3 - 6 The remaining defendants are outside or non-officer directors of the Company. 7. By virtue of the individual defendants' positions as directors and/or officers of the Company, the defendants were and are in a fiduciary relationship with plaintiff and the other public stockholders of the Company and owe to plaintiff and the other members of the Class the highest obligations of good faith and fair dealing. CLASS ACTION ALLEGATIONS ------------------------ 8. Plaintiff brings this action for injunctive and other relief on his own behalf and as a class action, pursuant to Rule 23 of the Rules of the Court of Chancery and on behalf of all common stockholders of CBI (except defendants herein and any person, firm, trust, corporation or other entity related to or affiliated with any of the defendants) or their successors in interest, who are bring deprived of the opportunity to maximize the value of their CBI shares by the wrongful acts of the individual defendants described herein ("Class"). 9. This action is properly maintainable as a class action for the following reasons: (a) The Class for whose benefit this action is brought is so numerous that joinder of all class members is impracticable. There are more than 37 million common shares of CBI outstanding, owned by thousands of - 4 - 7 stockholders of record. Members of the class are disbursed throughout the United States. (b) There are questions of law and fact which are common to members of the Class and which predominate over all questions affecting only individual members, including whether the defendants have breached the fiduciary duties owned by them to plaintiff and members of the Class by reason of their efforts to entrench themselves in office, protect the interests of other firms with which they are affiliated and prevent CBI public stockholders from maximizing the value of their holdings. (c) The claims of plaintiff are typical of the claims of the other members of the Class and plaintiff has no interests that are adverse or antagonistic to the interests of the Class. (d) Plaintiff is committed to the vigorous prosecution of this action and has retained competent counsel experienced in litigation in this nature. Accordingly, plaintiff is an adequate representative of the Class and will fairly and adequately protect the interests of the Class. (e) The prosecution of separate actions by individual members of the Class would create a risk of inconsistent or varying adjudications with respect to individual members of the Class which would establish - 5 - 8 incompatible standards of conduct for the party opposing the Class. (f) Defendants have acted and are about to act on grounds generally applicable to the Class, thereby making appropriate final injunctive or other equitable relief with respect to the Class as a whole. FACTUAL BACKGROUND ------------------ 10. CBI is a company with operating subsidiaries in three areas: contracting services, industrial gases and investments. The Company's industrial gases segment, which is organized under Liquid Carbonic, is the world's largest supplier of carbon dioxide, and makes and markets other gases for industrial, medical and specialty applications. In 1993, it was the Company's most profitable division of the Company, and currently contributes approximately 90% of the Company's pre-tax revenue. 11. Liquid Carbonic will likely be the greatest contributor to CBI's revenues in the future as well. In November 1994, for instance, CBI announced that its contracting services area's gross profit and income from operation in the 1994 third quarter were hurt in the United States by narrowing margins, mainly due to the continuing slow pace of capital spending for new or replacement vessels for the refining, chemical, and pulp and paper industries. - 6 - 9 12. Nonetheless, the individual defendants have done nothing to maximize shareholder value, and to enable CBI's shareholders to realize the value of Liquid Carbonics. Instead, they have taken steps to entrench themselves and to maintain their control over all of the three areas of CBI's business. Airgas' 1994 Offer - ------------------ 13. Since as early as November, 1994 the individual defendants knew that, based on the value of Liquid Carbonics, as well as the other aspects of CBI's business, the Company presented itself as an outstanding merger target for potential bidders. It was confirmed that the Company was "in play" when, at or about that time, Airgas made an offer for the Company. 14. On December 20, 1994, CBI first publicly announced that sometime in early November, Airgas Inc. ("Airgas"), a fast growing distributor of industrial, medical and specialty gases, had made an unsolicited offer in which it proposed the spin-off, in the form of a dividend to CBI shareholders of the Contracting Segment and Investment Segment of its business, as new companies on a debt-free basis, and the merger of CBI, which would then just own Liquid Carbonic, with Airgas. In the merger, CBI shareholders would receive 19 million shares of Airgas, - 7 - 10 representing approximately 35% of the Airgas shares to be outstanding after the merger (the "Airgas Merger Proposal"). 15. The Airgas Merger Proposal was projected to enable CBI shareholders to realize the value inherent in their ownership of Liquid Carbonic, while still maintaining their shares and thus the ability to obtain any future accretion in the value of such shares. 16. As an alternative transaction, Airgas offered to purchase Liquid Carbonics outright for cash of $1.45 billion (which is greater than the total market capitalization of CBI), part of which would include the assumption of CBI's over $770 million in debt. This alternative would again enable CBI's shareholders to realize immediate value from their ownership of Liquid Carbonic, and would also increase the value of the Contracting and Investment segments by reducing CBI's debt. CBI's Rejection Of The Airgas Proposal and Amendment Of Its Shareholder Rights Plan 17. Despite the obvious advantages to CBI shareholders of either of these two proposals, CBI's Board of Directors, allegedly after consideration and consultation with its financial advisors, Lehman Brothers Inc. and Lynch & Co., and in a desire to keep CBI independent so that they could entrench themselves, rejected the offers as inadequate. - 8 - 11 18. Thereafter, Airgas filed under the Hart-Scott-Rodino Act for the purpose of allowing it to purchase up to 15% of CBI's common stock through open market or privately negotiated purchases. 19. In response to the obvious takeover attempts by Airgas, and the realization that CBI was now "in play", CBI's Board of Directors authorized an amendment to CBI's shareholders rights plan, which significantly lowers the ownership level required to trigger a distribution of the Rights under the Plan from 20% to 10%, making a hostile bid for the Company prohibitively expensive. 20. After giving effect to the amendment, the Plan provides that if a person or group acquires 10% or more of the outstanding CBI common shares, each Right will entitle its holder, other than the person or group which has acquired the share, to purchase common shares of CBI having a market value equal to twice the exercise price of each right. 21. In January, 1995, after its proposal was rejected, Airgas dropped its merger proposal to CBI. Praxair's October 29, 1995 Merger Proposal To CBI 22. Praxair is the largest supplier of industrial gases in North and South America and one of the three largest industrial gas suppliers in the world. Using air as - 9 - 12 its base raw material, Praxair produces oxygen, nitrogen and argon through several air separation processes. 23. In approximately June, 1995, Praxair approached CBI in connection with a potential combination of Praxair and CBI whereby the two companies would be merged together. After approximately six months of negotiations between Praxair and CBI, CBI, on October 20, 1995, broke off negotiations. 24. As a result of CBI's determination not to seek a combination with Praxair, on October 29, 1995 Praxair announced that it intended to commence a cash or stock tender offer for all the outstanding shares of CBI at $32 per share -- a transaction which has an estimated worth of approximately $2.1 billion. 25. Rather than negotiating in good faith with Praxair, to obatin the best possible price for CBI's shareholders, the Individual Defendants have stated that they will "review the Praxair proposal in due course." 26. They have not, however, rescinded the poison pill. CBI's poison pill has the effect of entrenching the Individual Defendants in control of CBI, but the Individual Defendants have refused to rescind, waive or otherwise abolish the terms of the CBI poison pill. 27. Praxair's tender offer will be for 100% of CBI's outstanding stock which, in turn, will invoke the poison pill. This will make Praxair's tender offer -10- 13 prohibitively expensive and may well discourage Praxair from continuing its tender offer. 28. Defendants' failure to rescind, waive or otherwise abolish the terms of the poison pill, the failure to ease CBI's anti-takeover provisions, or to otherwise negotiate with Praxair in good faith, constitutes a breach of defendants' fiduciary duties owed to plaintiff and other members of the Class. It will have the effect of making the Praxair proposal cost-prohibitive, and therefore may discourage Praxair from going forward with a tender offer -- the primary alternative which would enable CBI shareholderss to maximize the value of their equity holdings. 29. At all times herein, defendants were and are obligated to adequately consider, in a timely fashion and on an informed basis, any reasonable proposal from any party, not to place their own self-interests and personal considerations ahead of the interests of the stockholders and to make corporate decisions in good faith. The actions of the Individual Defendants in maintaining and refusing to waive or otherwise rescind the poison pill or to negotiate in good faith were fundamentally motivated to further their own self-interests and objectives, and correspondingly preserve and protect their emoluments and positions in the Company, all in violation of their fiduciary duties and to the detriment of the shareholders of the Company. -11- 14 30. The Individual Defendants' entrenchment motives are evidenced by, inter alia, the following: (a) Through the maintenance of the poison pill, and defendants' failure to waive its terms, defendants have erected a virtually insurmountable barrier to persons who may wish to acquire CBI, obtain control or take steps to maximize shareholder value, and are thereby attempting to entrench themselves in their positions of control and improperly advance their own personal agenda at the expense of CBI's public stockholders; (b) In reality, the poison pill provisions are designed to prevent unsolicited takeovers from succeeding. Defendants' inaction concerning the waiver or rescission of the poison pill is indicative of their true motives and objectives; and (c) Defendants' efforts to increase CBI's anti-takeover devices when confronted with the Airgas Merger Proposal and to continue the anti-takeover devices knowing that the Company was the target of a potential offer by Praxair. 31. In increasing CBI's anti-takeover devices, and failing to waive or rescind the poison pill, the Individual Defendants have acted to manipulate the corporate machinery of CBI, thereby impairing the corporate democratic process within the Company at the expense and to the detriment of the Company's common stockholders. By -12- 15 maintaining the poison pill and increasing the Company's anti-takeover devices, the Individual Defendants have restrained and impaired the ability of CBI's stockholders to affect corporate policy, and freely structure the directorial constituency of the Company. The poison pill, inter alia, impedes shareholder ability to accumulate shares and associate together to replace incumbent management, oppose any management initiative, or otherwise affect corporate policy through stockholder resolutions. 32. As a result of the foregoing, the Individual Defendants have breached and/or aided and abetted breaches and/or aided and abetted breaches of fiduciary duties owed to CBI and its stockholders. 33. Unless enjoined by this Court, defendants will breach their fiduciary duties owed to plaintiff and the other members of the Class and may benefit themselves in their corporate offices, all to the irreparable harm of the Class, as aforesaid. 34. Plaintiff and the other members of the Class have no adequate remedy at law. WHEREFORE, plaintiff demands judgment as follows: (a) declaring this to be a proper class action; (b) ordering the Individual Defendants to carry out their fiduciary duties to plaintiff and the other members of the Class by announcing their intention to: - 13 - 16 (i) rescind the "poison pill" and any other takeover devices which would hinder Praxair's hostile offer; (ii) negotiate in good faith with Praxair to obtain the greatest possible value for CBI's shareholders; (iii) undertake an appropriate evaluation of alternatives designed to maximize value for CBI's public stockholders; (iv) adequately ensure that no conflicts of interests exist between defendants' own interests and their fiduciary obligations to public stockholders or, if such conflicts exist, ensure that all the conflicts would be resolved in the best interests of CBI's public stockholders; and (c) ordering defendants, jointly and severally, to account to plaintiff and the other members of the Class for all damages suffered and to be suffered by them as a result of the acts and transactions alleged herein; (d) awarding plaintiff the costs and disbursements of the action, including a reasonable allowance for plaintiff's attorney's fees and experts' fees; and - 14 - 17 (e) granting such other and further relief as this Court may deem to be just and proper. Dated: October 30, 1995 ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A. By: ----------------------------- First Federal Plaza P.O. Box 1070 Wilmington, Delaware 19899 (302) 656-4433 Attorneys for Plaintiff OF COUNSEL: GOODKIND LABATON RUDOFF & SUCHAROW, LLP 100 Park Avenue New York, NY 10017-5563 (212) 907-0700 - 15 - 18 CERTIFICATE OF SERVICE I, Joseph A. Rosenthal, do hereby certify on this 30th day of October, 1995, that I caused two copies of the foregoing Notice of Motion and Motion to be served by hand delivery upon: JESSE FINKELSTEIN, ESQUIRE RICHARDS, LAYTON & FINGER ONE RODNEY SQUARE WILMINGTON, DE 19801 /s/ JOSEPH A. ROSENTHAL ------------------------------- Joseph A. Rosenthal - 3 - EX-99.25 25 COMPLAINT IN STEINER VS. CBI INDUSTRIES, INC. 1 EXHIBIT 25 IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - ---------------------------------------- x : WILLIAM STEINER, on behalf of himself : and all others similarly situated, : : : Civil Action : Plaintiffs, : No. 14654 : -against- : : CBI INDUSTRIES, INC., G.L. SCHUEPPERT, : CLASS ACTION H. CLARK, JR., E.J. MOONEY, JR., R.J. : COMPLAINT DAY, L.E. AKIN, J.E. JONES, R.J. : DANIELS, W.N. CALDWELL, J.T. HORTON, : R.G. WALLACE, STEPHANIE P. MARSHALL, : G.E. MacDOUGAL, J.F. RIORDAN and : R.T. STEWART, : : Defendants. : - ---------------------------------------- x Plaintiff, by and through his attorneys, alleges as follows: 1. Plaintiff brings this action as a class action on behalf of himself and all other shareholders of CBI Industries, Inc. ("CBI" or the "Company") who are similarly situated, to void and enjoin defendants' efforts to entrench themselves and solidify their control of CBI and thwart any takeover of the Company by, among other things, increasing the Company's anti-takeover devices, such as its poison pill or shareholder rights plan, described below, and/or refusing to rescind such antitakeover devices despite the existence of a value maximizing offer. 2. Defendants' actions represent an effort by the individual defendants to entrench themselves in office so that they may continue to receive the substantial 2 salaries, compensation and other benefits and perquisites of their offices. 3. The individual defendants are abusing their fiduciary positions of control over CBI to thwart Praxair, Inc.'s ("Praxair") legitimate attempts to acquire the Company, to prevent CBI's shareholders from receiving and/or acting upon bona fide offers for the Company, and are seeking to use corporate resources to entrench themselves in the management of the Company. The actions of the individual defendants constitute a breach of their fiduciary duties to maximize shareholder value, to not consider their own interests over that of the public shareholders, and to respond reasonably to offers for CBI. PARTIES 4. Plaintiff is the owner of CBI common stock, and has owned such stock at all times relevant herein. 5. CBI is a holding company which, through numerous operating subsidiaries, operates in three basic areas: contracting services, industrial gases and investments. In recent time, the Company's industrial gases area, organized under the Liquid Carbonic Industries Corporation ("Liquid Carbonic") subsidiary, has contributed nearly 90% of CBI's pre-tax income. - 2 - 3 6. The individually named defendants are members of the CBI Board of Directors. The following defendants are also officers and thus inside directors of CBI: (a) Defendant J.E. Jones ("Jones") is the chairman of CBI's Board of Directors, president, and chief executive officer. For the year ended December 31, 1993, Jones earned a salary of $530,000, a bonus of $77,000, and restricted stock awards of $515,250. (b) Defendant L.E. Akin ("Akin") is an executive vice president, and the president of CBI subsidiary, Chicago Bridge & Iron Company (the main corporation under which the Company's contracting services area is organized). For the year ended December 31, 1993, Akin earned a salary of $290,000, a bonus of $35,000, and restricted stock awards of $200,375. (c) Defendant R.J. Daniels ("Daniels") is an executive vice president, and president of Liquid Carbonic. For the year ended December 31, 1993, Daniels earned a salary of $265,000, a bonus of $43,515 and a restricted stock award of $171,750. (d) Defendant G.L. Schueppert ("Schueppert") is an executive vice president, and the Company's chief financial officer. For the year ended December 31, 1993, Schueppert earned a salary of $305,000, a bonus of $35,000, and a restricted stock award of $160,875. -3- 4 The remaining defendants are outside or non-officer directors of the Company. 7. By virtue of the individual defendants' positions as directors and/or officers of the Company, the defendants were and are in a fiduciary relationship with plaintiff and the other public stockholders of the Company and owe to plaintiff and the other members of the Class the highest obligations of good faith and fair dealing. CLASS ACTION ALLEGATIONS 8. Plaintiff brings this action for injunctive and other relief on his own behalf and as a class action, pursuant to Rule 23 of the Rules of the Court of Chancery and on behalf of all common stockholders of CBI (except defendants herein and any person, firm, trust, corporation or other entity related to or affiliated with any of the defendants) or their successors in interest, who are being deprived of the opportunity to maximize the value of their CBI shares by the wrongful acts of the individual defendants described herein ("Class"). 9. This action is properly maintainable as a class action for the following reasons: (a) The Class for whose benefit this action is brought is so numerous that joinder of all class members is impracticable. There are more than 37 million common shares of CBI outstanding, owned by thousands of -4- 5 stockholders of record. Members of the class are disbursed throughout the United States. (b) There are questions of law and fact which are common to members of the Class and which predominate over all questions affecting only individual members, including whether the defendants have breached the fiduciary duties owned by them to plaintiff and members of the Class by reason of their efforts to entrench themselves in office, protect the interests of other firms with which they are affiliated and prevent CBI public stockholders from maximizing the value of their holdings. (c) The claims of plaintiff are typical of the claims of the other members of the Class and plaintiff has no interests that are adverse or antagonistic to the interests of the Class. (d) Plaintiff is committed to the vigorous prosecution of this action and has retained competent counsel experienced in litigation in this nature. Accordingly, plaintiff is an adequate representative of the Class and will fairly and adequately protect the interests of the Class. (e) The prosecution of separate actions by individual members of the Class would create a risk of inconsistent or varying adjudications with respect to individual members of the Class which would establish -5- 6 incompatible standards of conduct for the party opposing the Class. (f) Defendants have acted and are about to act on grounds generally applicable to the Class, thereby making appropriate final injunctive or other equitable relief with respect to the Class as a whole. FACTUAL BACKGROUND 10. CBI is a company with operating subsidiaries in three areas: contracting services, industrial gases and investments. The Company's industrial gases segment, which is organized under Liquid Carbonic, is the world's largest supplier of carbon dioxide, and makes and markets other gases for industrial, medical and specialty applications. In 1993, it was the Company's most profitable division of the Company, and currently contributes approximately 90% of the Company's pre-tax revenue. 11. Liquid Carbonic will likely be the greatest contributor to CBI's revenues in the future as well. In November 1994, for instance, CBI announced that its contracting services area's gross profit and income from operation in the 1994 third quarter were hurt in the United States by narrowing margins, mainly due to the continuing slow pace of capital spending for new or replacement vessels for the refining, chemical, and pulp and paper industries. -6- 7 12. Nonetheless, the individual defendants have done nothing to maximize shareholder value, and to enable CBI's shareholders to realize the value of Liquid Carbonics. Instead, they have taken steps to entrench themselves and to maintain their control over all of the three areas of CBI's business. Airgas' 1994 Offer 13. Since as early as November, 1994 the individual defendants knew that, based on the value of Liquid Carbonics, as well as the other aspects of CBI's business, the Company presented itself as an outstanding merger target for potential bidders. It was confirmed that the Company was "in play" when, at or about that time, Airgas made an offer for the Company. 14. On December 20, 1994, CBI first publicly announced that sometime in early November, Airgas Inc. ("Airgas"), a fast growing distributor of industrial, medical and specialty gases, had made an unsolicited offer in which it proposed the spin-off, in the form of a dividend to CBI shareholders of the Contracting Segment and Investment Segment of its business, as new companies on a debt-free basis, and the merger of CBI, which would then just own Liquid Carbonic, with Airgas. In the merger, CBI shareholders would receive 19 million shares of Airgas, -7- 8 representing approximately 35% of the Airgas shares to be outstanding after the merger (the "Airgas Merger Proposal"). 15. The Airgas Merger Proposal was projected to enable CBI shareholders to realize the value inherent in their ownership of Liquid Carbonic, while still maintaining their shares and thus the ability to obtain any future accretion in the value of such shares. 16. As an alternative transaction, Airgas offered to purchase Liquid Carbonics outright for cash of $1.45 billion (which is greater than the total market capitalization of CBI), part of which would include the assumption of CBI's over $770 million in debt. This alternative would again enable CBI's shareholders to realize immediate value from their ownership of Liquid Carbonic, and would also increase the value of the Contracting and Investment segments by reducing CBI's debt. CBI's Rejection Of The Airgas Proposal And Amendment Of Its Shareholder Rights Plan 17. Despite the obvious advantages to CBI shareholders of either of these two proposals, CBI's Board of Directors, allegedly after consideration and consultation with its financial advisors, Lehman Brothers Inc. and Lynch & Co., and in a desire to keep CBI independent so that they could entrench themselves, rejected the offers as inadequate. -8- 9 18. Thereafter, Airgas filed under the Hart-Scott-Rodino Act for the purpose of allowing it to purchase up to 15% of CBI's common stock through open market or privately negotiated purchases. 19. In response to the obvious takeover attempts by Airgas, and the realization that CBI was now "in play", CBI's Board of Directors authorized an amendment to CBI's shareholders rights plan, which significantly lowers the ownership level required to trigger a distribution of the Rights under the Plan from 20% to 10%, making a hostile bid for the Company prohibitively expensive. 20. After giving effect to the amendment, the Plan provides that if a person or group acquires 10% or more of the outstanding CBI common shares, each Right will entitle its holder, other than the person or group which has acquired the share, to purchase common shares of CBI having a market value equal to twice the exercise price of each right. 21. In January, 1995, after its proposal was rejected, Airgas dropped its merger proposal to CBI. Praxair's October 29, 1995 Merger Proposal To CBI 22. Praxair is the largest supplier of industrial gases in North and South America and one of the three largest industrial gas suppliers in the world. Using air as -9- 10 its base raw material, Praxair produces oxygen, nitrogen and argon through several air separation processes. 23. In approximately June, 1995, Praxair approached CBI in connection with a potential combination of Praxair and CBI whereby the two companies would be merged together. After approximately six months of negotiations between Praxair and CBI, CBI, on October 20, 1995, broke off negotiations. 24. As a result of CBI's determination not to seek a combination with Praxair, on October 29, 1995 Praxair announced that it intended to commence a cash or stock tender offer for all the outstanding shares of CBI at $32 per share -- a transaction which has an estimated worth of approximately $2.1 billion. 25. Rather than negotiating in good faith with Praxair, to obtain the best possible price for CBI's shareholders, the Individual Defendants have stated that they will "review the Praxair proposal in due course." 26. They have not, however, rescinded the poison pill. CBI's poison pill has the effect of entrenching the Individual Defendants in control of CBI, but the Individual Defendants have refused to rescind, waive or otherwise abolish the terms of the CBI poison pill. 27. Praxair's tender offer will be for 100% of CBI's outstanding stock which, in turn, will invoke the poison pill. This will make Praxair's tender offer - 10 - 11 prohibitively expensive and may well discourage Praxair from continuing its tender offer. 28. Defendants' failure to rescind, waive or otherwise abolish the terms of the poison pill, the failure to ease CBI's anti-takeover provisions, or to otherwise negotiate with Praxair in good faith, constitutes a breach of defendants' fiduciary duties owed to plaintiff and other members of the Class. It will have the effect of making the Praxair proposal cost-prohibitive, and therefore may discourage Praxair from going forward with a tender offer -- the primary alternative which would enable CBI shareholders to maximize the value of their equity holdings. 29. At all times herein, defendants were and are obligated to adequately consider, in a timely fashion and on an informed basis, any reasonable proposal from any party, not to place their own self-interests and personal considerations ahead of the interests of the stockholders and to make corporate decisions in good faith. The actions of the Individual Defendants in maintaining and refusing to waive or otherwise rescind the poison pill or to negotiate in good faith were fundamentally motivated to further their own self-interests and objectives, and correspondingly preserve and protect their emoluments and positions in the Company, all in violation of their fiduciary duties and to the detriment of the shareholders of the Company. - 11 - 12 30. The Individual Defendants' entrenchment motives are evidenced by, inter alia, the following: (a) Through the maintenance of the poison pill, and defendants' failure to waive its terms, defendants have erected a virtually insurmountable barrier to persons who may wish to acquire CBI, obtain control or take steps to maximize shareholder value, and are thereby attempting to entrench themselves in their positions of control and improperly advance their own personal agenda at the expense of CBI's public stockholders; (b) In reality, the poison pill provisions are designed to prevent unsolicited takeovers from succeeding. Defendants' inaction concerning the waiver or rescission of the poison pill is indicative of their true motives and objectives; and (c) Defendants' efforts to increase CBI's anti-takeover devices when confronted with the Airgas Merger Proposal and to continue the anti-takeover devices knowing that the Company was the target of a potential offer by Praxair. 31. In increasing CBI's anti-takeover devices, and failing to waive or rescind the poison pill, the Individual Defendants have acted to manipulate the corporate machinery of CBI, thereby impairing the corporate democratic process within the Company at the expense and to the detriment of the Company's common stockholders. By - 12 - 13 maintaining the poison pill and increasing the Company's anti-takeover devices, the Individual Defendants have restrained and impaired the ability of CBI's stockholders to affect corporate policy, and freely structure the directorial constituency of the Company. The poison pill, inter alia, impedes shareholder ability to accumulate shares and associate together to replace incumbent management, oppose any management initiative, or otherwise affect corporate policy through stockholder resolutions. 32. As a result of the foregoing, the Individual Defendants have breached and/or aided and abetted breaches of fiduciary duties owed to CBI and its stockholders. 33. Unless enjoined by this Court, defendants will breach their fiduciary duties owed to plaintiff and the other members of the Class and may benefit themselves in their corporate offices, all to the irreparable harm of the Class, as aforesaid. 34. Plaintiff and the other members of the Class have no adequate remedy at law. WHEREFORE, plaintiff demands judgment as follows: (a) declaring this to be a proper class action; (b) ordering the Individual Defendants to carry out their fiduciary duties to plaintiff and the other members of the Class by announcing their intention to: - 13 - 14 (i) rescind the "poison pill" and any other takeover devices which would hinder Praxair's hostile offer; (ii) negotiate in good faith with Praxair to obtain the greatest possible value for CBI's shareholders; (iii) undertake an appropriate evaluation of alternatives designed to maximize value for CBI's public stockholders; (iv) adequately ensure that no conflicts of interests exist between defendants' own interests and their fiduciary obligations to public stockholders or, if such conflicts exist, ensure that all the conflicts would be resolved in the best interests of CBI's public stockholders; and (c) ordering defendants, jointly and severally, to account to plaintiff and the other members of the Class for all damages suffered and to be suffered by them as a result of the acts and transactions alleged herein; (d) awarding plaintiff the costs and disbursements of the action, including a reasonable allowance for plaintiff's attorney's fees and experts' fees; and - 14 - 15 (f) granting such other and further relief as this Court may deem to be just and proper. Dated: October 30, 1995 ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A. By: /s/ Joseph A. Rosenthal ------------------------------- First Federal Plaza P.O. Box 1070 Wilmington, Delaware 19899 (302) 656-4433 Attorneys for Plaintiff OF COUNSEL: GOODKIND LABATON RUDOFF & SUCHAROW, LLP 100 Park Avenue New York, NY 10017-5563 (212) 907-0700 -15- EX-99.26 26 COMPLAINT IN KREISBERG V. JONES 1 EXHIBIT 26 IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - --------------------------------------------------x SANDRA KREISBERG, on behalf of herself : and all others similarly situated, : : Plaintiff, : : v. : : JOHN E. JONES, HUBERT E. CLARK, JR., : C.A. No. 14656 JOHN T. HORTON, STEPHANIE PACE MARSHALL, : -------- GEORGE L. SCHUEPPERT, ROBERT T. STEWART, : ROBERT J. DANIELS, EDWARD J. MOONEY, JR. : ROBERT G. WALLACE, LEWIS E. AKIN, : WILEY N. CALDWELL, ROBERT J. DAY, : GARY E. MAC DOUGAL, JOHN F. RIORDAN, : and CBI INDUSTRIES, INC. : : Defendants. : - --------------------------------------------------x CLASS ACTION COMPLAINT Plaintiff, by her attorneys, alleges upon information and belief, except as to the allegations of paragraph 2 which are made on personal knowledge, as follows: NATURE OF THE ACTION 1. This is a stockholders' class action brought on behalf of the public stockholders of CBI Industries, Inc. ("CBI Industries" or the "Company") who have been, and continue to be, deprived of the opportunity to realize fully the benefits of their investment in the Company. The named defendants have wrongfully refused to take the steps necessary to maximize stockholder value, including properly considering a bona fide offer for the Company (the "Offer") from Praxair Inc. ("Praxair"). By failing and refusing to take such steps, including adequately considering the Offer, defendants have breached their fiduciary duties to plaintiff 2 and the class. The individual defendants are using their fiduciary positions of control over CBI Industries to thwart others in their legitimate attempts to acquire CBI Industries, and the individual defendants are trying to entrench themselves in their positions with the Company. PARTIES 2. Plaintiff Sandra Kreisberg is and, at all relevant times has been, the owner of shares of CBI Industries common stock. 3. CBI Industries is a corporation duly organized and existing under the laws of Delaware. CBI Industries is in the business of producing, processing and marketing industrial, medical, and specialty gases. It also, inter alia, is engaged in the business of providing contracting services and providing services for hydrocarbon products. CBI Industries maintains its principal executive offices at 800 Jorie Boulevard, Oak Brook, Illinois 60521. CBI Industries has approximately 38 million shares of common stock outstanding and approximately 8000 stockholders of record. CBI Industries' stock trades on the New York Stock Exchange. 4. Defendant John E. Jones ("Jones") is Chairman of CBI Industries' Board of Directors and its President and Chief Executive Officer. In 1994, Jones received $1,334,537 in compensation from CBI Industries. 5. Defendant Lewis E. Akin ("Akin") is an Executive Vice President of CBI Industries. In 1994, Akin received $644,254 in compensation from CBI Industries. 2 3 6. Defendant George L. Schueppert ("Schueppert") is an Executive Vice President and the Chief Financial Officer of CBI Industries. In 1994, Schueppert received $720,459 in compensation from CBI Industries. 7. Defendants Hubert E. Clark, Jr., John T. Horton, Stephanie Pace Marshall, Robert T. Stewart, Robert J. Daniels, Edward J. Mooney, Jr., Robert G. Wallace, Wiley N. Caldwell, Robert J. Day, Gary E. MacDougal, and John F. Riordan are directors of CBI Industries. 8. The defendants named in paragraphs 4, 5, 6 and 7 are hereinafter referred to as the "Individual Defendants." 9. Because of their positions as officers/directors of the Company, the Individual Defendants owe fiduciary duties of loyalty and due care to plaintiff and the other members of the class. 10. Each defendant herein is sued individually as a conspirator and aider and abettor, as well as in his/her capacity as an officer and/or director of the Company, and the liability of each arises from the fact that he or she has engaged in all or part of the unlawful acts, plans, schemes, or transactions complained of herein. CLASS ACTION ALLEGATIONS 11. Plaintiff brings this case on her own behalf and as a class action, pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf of all stockholders of the Company, except defendants herein and any person, firm, trust, corporation, or 3 4 other entity related to or affiliated with any of the defendants, who will be threatened with injury arising from defendants' actions as is described more fully below (the "Class"). 12. This action is properly maintainable as a class action. 13. The Class is so numerous that joinder of all members is impracticable. The Company has thousands of stockholders who are scattered throughout the United States. 14. There are questions of law and fact common to the Class that predominate over questions affecting any individual class member. The common questions include, inter alia, whether: a. defendants have breached their fiduciary duties owed by them to plaintiff and other members of the Class by failing and refusing to attempt in good faith to maximize stockholder value, including, inter alia, by considering the sale of CBI Industries; b. defendants have breached or aided and abetted the breach of the fiduciary duties owed by them to plaintiff and other members of the Class; c. defendants have engaged in a plan and scheme to thwart and reject offers and proposals from third parties, including the one made by Praxair; and d. plaintiff and the other members of the Class are being and will continue to be injured by the wrongful conduct alleged herein and, if so, what is the proper remedy and/or measure of damages. 4 5 15. Plaintiff is committed to prosecuting this action and has retained competent counsel experienced in litigation of this nature. Plaintiff's claims are typical of the claims of the other members of the Class and plaintiff has the same interests as the other members of the Class. Plaintiff is an adequate representative of the Class. 16. The prosecution of separate actions by individual members of the Class would create the risk of inconsistent or varying adjudications with respect to individual members of the Class which would establish incompatible standards of conduct for defendants, or adjudications with respect to individual members of the Class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests. 17. The defendants have acted, or refused to act, on grounds generally applicable to, and causing injury to, the Class and, therefore, preliminary and final injunctive relief on behalf of the Class as a whole are appropriate. SUBSTANTIVE ALLEGATIONS 18. By the acts, transactions, and courses of conduct alleged herein, defendants, individually and as part of a common plan and scheme and/or aiding and abetting one another in total disregard of their fiduciary duties, are attempting to unfairly deprive plaintiff and the Class of their right to maximize the value of their investment in CBI Industries. 5 6 19. On October 27, 1995, following six months in which it attempted to hold discussions with CBI Industries Chairman Jones -- discussions that Jones terminated on or about October 20 -- Praxair sent a letter to CBI Industries' Board of Directors making a bid for CBI Industries at a price of $32 a share in either cash or Praxair common stock, for a total of approximately $1.5 billion (plus the assumption of about $700 million of liabilities). Praxair gave CBI Industries until noon on November 1 to respond. 20. This offer was reported in The New York Times and The Wall Street Journal on October 30, 1995. Both newspapers reported that the offer constituted a nearly 60% premium over CBI Industries' then current stock price. Both newspapers also reported that analysts believed that the companies had synergies, making the combination a good one for both businesses. 21. Praxair is a substantial company with the financial wherewithal to follow through on its offer. Praxair, based in Danbury, Connecticut, is the country's leading producer of such industrial gases as oxygen, hydrogen and helium. Last year Praxair earned $203 million on sales of $2.7 billion. 22. Praxair's offer comes at a particularly opportune time for CBI Industries shareholders, because it comes amid a slide in CBI Industries stock this year. CBI Industries' stock is down over 21% according to Baseline, a New York financial data service. Indeed, The New York Times reported on October 30, 1995 that CBI Industries shares have "recently fallen from a 52 week high of $27.75 to flirt with a five year low of $19. 6 7 23. Despite the significant interest of CBI Industries stockholders, defendants have acted without regard to the fiduciary duties they owe them by, inter alia, failing to take the steps necessary to maximize stockholder value, including, but not limited to, hold meetings and negotiations with Praxair regarding its offer. Defendants have done so without business justification. 24. Defendants' failure to act promptly upon Praxair's offer has no valid business purpose, and simply evidences their disregard for the premium being offered to CBI Industries stockholders. By failing to meet promptly and negotiate, or offer to meet and negotiate, with Praxair regarding its offer, defendants are depriving plaintiff and the Class of their right to receive the maximum value for their CBI Industries shares. 25. CBI Industries represents a highly attractive acquisition candidate. Defendants' conduct is depriving CBI Industries' public stockholders of the substantial control premium that Praxair is prepared to pay, or of the enhanced premium that further negotiation or exposure of CBI Industries to the market could provide. 26. Defendants owe fundamental fiduciary obligations to CBI industries' stockholders to take all necessary and appropriate steps to maximize the value of their shares. In addition, the Individual Defendants have the responsibility to act independently so that the interests of CBI Industries' public stockholders will be protected, to seriously consider all bona fide offers for the Company, and to conduct fair and active bidding procedures or other 7 8 mechanisms for checking the market to assure that the highest possible price is achieved. Further, the directors of CBI Industries have a duty to adequately ensure that no conflict of interest exists between the Individual Defendants' own interests and their fiduciary obligations to maximize stockholder value or, if such conflicts exist, ensure that all such conflicts will be resolved in the best interests of the Company's stockholders; 27. Because defendants dominate and control the business and corporate affairs of CBI Industries and because they are in possession of private corporate information concerning CBI Industries' assets, businesses and future prospects, there exists an imbalance and disparity of knowledge between defendants and the public shareholders of CBI Industries. This discrepancy makes it grossly and inherently unfair for defendants to refrain from taking those steps necessary to maximize stockholder value. Defendants have refused to seriously consider Praxair's offer, and have failed to announce any active auction or open bidding procedures that would maximize stockholder value by entertaining offers to purchase the Company. 28. The Individual Defendants are acting to entrench themselves in their offices and positions and maintain their substantial salaries and perquisites, all at the expense and to the detriment of the public stockholders of CBI Industries. 29. As a result of the actions of the Individual Defendants, plaintiff and the other members of the Class have been and will be damaged in that they have not and will not receive 8 9 their fair proportion of the value at CBI Industries' assets and businesses and/or have been and will be prevented from obtaining a fair and adequate price for their shares of CBI Industries' common stock. 30. Plaintiff seeks preliminary and permanent injunctive relief preventing defendants from inequitably and unlawfully depriving plaintiff and the Class of their rights to realize a full and fair value for their stock at a premium over the market price, by unlawfully entrenching themselves in their positions of control, and to compel defendants to carry out their fiduciary duties to maximize stockholder value. 31. Only through the exercise of this Court's equitable powers can plaintiff and the Class be fully protected from the immediate and irreparable injury that defendants' actions threaten to inflict. Defendants are precluding the enjoyment by CBI Industries' stockholders of the full economic value of their investment by failing to proceed expeditiously and in good faith to evaluate and pursue a premium acquisition proposal that would provide consideration for all shares at a premium price. 32. Unless enjoined by the Court, defendants will continue to breach their fiduciary duties owed to plaintiff and the members of the Class, and/or aid and abet and participate in such breaches of duty, and will prevent the sale of CBI Industries at a substantial premium, all to the irreparable harm of plaintiff and other members of the Class. 33. Plaintiff and the Class have no adequate remedy at 9 10 law. WHEREFORE, plaintiff demands judgment as follows: (a) Declaring this to be a proper class action and certifying plaintiff as a class representative; (b) Ordering the Individual Defendants to carry out their fiduciary duties to plaintiff and the other members of the Class by announcing their intention to: (i) cooperate fully with any entity or person, including Praxair, having a bona fide interest in proposing any transaction that would maximize stockholder value including, but not limited to, a merger or acquisition of CBI Industries; (ii) immediately undertake an appropriate evaluation of CBI Industries' worth as a merger/acquisition candidate; (iii) take all appropriate steps to enhance CBI Industries' value and attractiveness as a merger/acquisition candidate; (iv) take all appropriate steps to effectively expose CBI Industries to the marketplace in an effort to create an active auction of the Company; (v) act independently so that the interests of the Company's public stockholders will be protected; and (vi) adequately ensure that no conflicts of interest exist between the Individual Defendants' own interest and their fiduciary obligation to maximize stockholder value or, in the event such conflicts exist, ensure that all conflicts of interest 10 11 are resolved in the beet interests of the public stockholders of CBI Industries; (c) Ordering the Individual Defendants, jointly and severally to account to plaintiff and the Class for all damages suffered and to be suffered by them as a result of the acts and transactions alleged herein; (d) Awarding plaintiff the costs and disbursements of this action, including a reasonable allowance for plaintiff's attorneys' and experts' fees; and (e) Granting such other and further relief as may be just and proper. Dated: October 30, 1995 ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A. By: /s/ JOSEPH A. ROSENTHAL -------------------------------- Joseph A. Rosenthal First Federal Plaza, Suite 214 P.O. Box 1070 Wilmington, DE 19899-1070 (302) 656-4433 Attorneys for Plaintiff Of Counsel: WECHSLER HARWOOD HALEBIAN & FEFFER LLP 805 Third Avenue New York, New York 10022 (212) 935-7400 11 EX-99.27 27 COMPLAINT IN LASKER V. CBI INDUSTRIES, INC. 1 EXHIBIT 27 IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - ----------------------------------------x HOWARD LASKER, on behalf of : himself and all others similarly : situated, : : Civil Action No. 14659 Plaintiff, : : : CLASS ACTION COMPLAINT -against- : ---------------------- : CBI INDUSTRIES, INC. E. HUBERT : CLARK. JR., JOHN T. HORTON, : STEPHANIE PACE MARSHALL, GEORGE L. : SCHUEPPERT, ROBERT T. STEWART, : ROBERT J. DANIELS, JOHN E. JONES : EDWARD J. MOONEY, JR., ROBERT G. : WALLACE, LEWIS E. AKIN, WILEY N. : CALDWELL, ROBERT J. DAY, GARY E. : MACDOUGAL, and JOHN F. RIORDAN, : : Defendants : - ----------------------------------------x Plaintiff, by his undersigned attorneys, for his complaint against defendants (the "Complaint"), alleges the following upon information and belief, except as to Paragraph 2 hereof, which is alleged upon personal knowledge: 1. This is a shareholder's class action lawsuit on behalf of the public shareholders of defendant CBI Industries, Inc. ("CBI" or the "Company") These shareholders are currently being deprived of the opportunity to realize the full benefits of their investment in CBI. Among other things, the director- defendants have failed and refused and continue to refuse adequately to consider a premium offer to acquire control of CBI by Praxair Inc. ("Praxair"). The director-defendants are 2 utilizing their fiduciary positions of control over CBI to thwart Praxair and others in their legitimate attempts to acquire CBI, and the director-defendants are trying to entrench themselves in their positions with the Company. 2. Plaintiff, Howard Lasker, is the owner of CBI common stock and has owned such stock at all relevant times. 3. Defendant CBI is a Delaware corporation with its principal executive offices located at 800 Jorie Boulevard, Oak Brook, Illinois 60521-2268. CBI is a holding company comprised of Liquid Carbonic Industries Corporation, the world's largest supplier of commercial carbon dioxide and a major producer of other gas products; CBI's Contracting Services, which includes the Chicago Bridge & Iron Company, a major construction and engineering firm; and CBI Investments, Inc., which is the parent company for an operating business in the shipment, storage and marketing of hydrocarbon products in the Western Hemisphere. 4. The following individual defendants (the "director-defendants") constitute the entire board of directors of CBI: E. Hubert Clark, Jr., John T. Horton, Stephanie Pace Marshall, George L. Schueppert, Robert T. Stewart, Robert J. Daniels, John E. Jones, Edward J. Mooney, Jr., Robert G. Wallace, Lewis E. Akin, Wiley N. Caldwell, Robert J. Day, Gary E. Macdougal and John F. Riordan (the "Board"). Director-defendant Jones also serves as the Company's Chairman of the Board, President and Chief Executive Officer; defendant Akin also serves as Executive Vice President; defendant Daniels also serves as Executive Vice President; and defendant Schueppert also serves as 2 3 Executive Vice President and Chief Financial Officer. All director-defendants receive substantial financial compensation as well as enjoying the perquisites of office. 5. By virtue of their positions as directors and/or officers of CBI and their exercise of control over the business and corporate affairs of CBI, the director-defendants have, and at all relevant times had, the power to control and influence, and did control and influence and cause CBI to engage in the practices complained of herein. The director-defendants owed and owe CBI and its stockholders fiduciary obligations and were and are required to: use their powers to control and manage CBI in a fair, just and equitable manner; act in furtherance of the best interests of CBI and its stockholders to maximize stockholder value; govern CBI in such a manner as to heed the expressed views of its public shareholders; refrain from abusing their positions of control; and refrain from advancing their own interests at the expense of CBI and its stockholders. 6. By virtue of the acts and conduct alleged herein, the director-defendants, who control the actions of CBI, are breaching their fiduciary duties to the public shareholders of the Company. CLASS ACTION ALLEGATIONS 7. Plaintiff brings this action for declaratory, injunctive and other relief on his own behalf and as a class action, pursuant to Rule 23 of the Rules of the Court of Chancery and on behalf of all common stockholders of CBI (except 3 4 defendants herein and any person, firm, trust, corporation or other entity related to or affiliated with any of the defendants) and their successors-in-interest, who are being specially injured and deprived of the opportunity to maximize the value of their CBI shares by the wrongful acts of the director-defendants described herein (the "Class"). 8. This action is properly maintainable as a class action for the following reasons: (a) The class of stockholders for whose benefit this action is brought is so numerous that joinder of all Class members is impracticable. As of May 11, 1995, there were in excess of 35 million shares of CBI common stock outstanding, held by hundreds, or thousands of shareholders scattered throughout the United States. (b) There are questions of law and fact which are common to members of the Class and which predominate over any questions affecting only individual members. The common questions include, inter alia, the following: i) whether the director-defendants are unlawfully impeding a potential acquisition of CBI to the detriment of the shareholders of the Company, and have breached their fiduciary obligations to plaintiff and other members of the Class by failing and refusing to attempt in good faith to maximize value for CBI's public shareholders by adopting strategies, policies, and plans designed to thwart offers for CBI and entrench defendants in their positions of control and failing to act with complete candor; 4 5 ii) whether the director-defendants have engaged and are continuing to engage in an unlawful plan and scheme to perpetuate their control over and enjoyment of the perquisites of office at the expense of CBI's public shareholders; iii) whether the director-defendants have breached the fiduciary and other common law duties owed by them to plaintiff and the other members of the Class; and iv) whether plaintiff and the other members of the Class are being or will continue to be injured by the wrongful conduct alleged herein and, if so, what is the proper remedy and/or measure of damages. (c) The claims of plaintiff are typical of the claims of the other members of the Class and plaintiff has no interests that are adverse or antagonistic to the interests of the Class. (d) Plaintiff is committed to the vigorous prosecution of this action and has retained competent counsel experienced in litigation of this nature. Plaintiff is an adequate representative of the Class and will fairly and adequately protect the interests of the Class. (e) The prosecution of separate actions by individual members of the Class would create a risk of inconsistent or varying adjudications with respect to individual members of the Class which would establish incompatible standards of conduct for the party opposing the Class. 5 6 (f) Defendants have acted and are about to act on grounds generally applicable to the Class, thereby making appropriate final injunctive or corresponding declaratory relief with respect to the Class as a whole. SUBSTANTIVE ALLEGATIONS 9. The director-defendants, by virtue of the acts and conduct alleged herein, are carrying out, in gross disregard of their fiduciary duties to plaintiff and the other members of the Class, a preconceived plan and scheme to entrench themselves in office to thwart the offer of Praxair to acquire CBI, regardless of the benefit to the public shareholders of CBI. 10. On or about October 29, 1995, Praxair announced its bid to acquire CBI. The Praxair offer will pay $32 per share, or about $1.5 billion, a nearly 60% premium over the October 27, 1995 closing price for CBI, demonstrating Praxair's good faith. Praxair, which is based in Danbury, Connecticut, is the leading producer of industrial gases such as oxygen, hydrogen and helium and last year earned $203 million on sales of $2.7 billion. Praxair is, therefore, fully capable of financing and consummating the acquisition of CBI. 11. Praxair stated it would pay in stock or cash in a friendly deal, but if the Board rejects the offer it might buy the shares directly in the open market. 12. Earlier this year Airgas Inc. attempted to buy CBI's crown-jewel Liquid Carbonics unit through an unsolicited 6 7 bid for that division. The Board rejected the $680 million bid and Airgas Inc. withdrew its offer. 13. As reported in The Wall Street Journal on October 30, 1995, Praxair Chairman H. William Lichtenberger stated in an interview that he attempted discussions with defendant-director Jones for six months, most recently on October 20. Lichtenberger said Jones terminated the discussions. 14. As a result, in a letter delivered on Friday, October 27, 1995, Praxair forwarded to defendant-director Jones a formal written offer stating that "the best way to proceed is for Praxair to submit a specific proposal to your Board of Directors for its formal consideration." 15. In response to the announcement of the Praxair offer, the price of CBI common stock immediately jumped $10.75 per share to $30.875 per share in intra-day trading. 16. CBI has in place a shareholder rights plan or "poison pill" (the "Rights Plan"). The Rights Plan is designed to make an unfriendly takeover of CBI prohibitively expensive and it, therefore, can be used to thwart legitimate third-party offers for CBI. 17. The director-defendants have taken no action in response to the Praxair offer and thus far have been content to remain behind the protection of the preexisting Rights Plan. To act consistent with their fiduciary duties, the director-defendants should evaluate all available alternatives, including negotiating with Praxair, which they have failed to do. 7 8 18. The Company's Rights Plan is designed to inflict a substantial financial penalty on any person who "swallows the pill" and engages in any transaction without first receiving the approval of CBI's management and directors. 19. By adopting the Rights Plan, the Company's directors caused a fundamental shift of power from its shareholders to themselves. The Rights Plan permits the director-defendants to act as the prime negotiators of -- and, in effect, totally to preclude -- any and all acquisition offers through their power to redeem or to refuse to redeem the rights. 20. This fundamental shift of control of the Company's destiny from the bands of its shareholders to the hands of the director-defendants results in a heightened fiduciary duty of the director-defendants to consider, in good faith, a third-party bid, and further requires the director-defendants to pursue a third-party's interest in acquiring the Company and to negotiate in good faith with a bidder on behalf of the Company's shareholders. 21. Rather than moving with dispatch to secure a definitive agreement with Praxair or to negotiate for a superior price or engage in an auction or market check designed to secure maximum value for the shareholders, defendants have instead indefinitely delayed making any response and have failed to state that they will not seek to frustrate or defeat the outside premium bid and have failed to declare their willingness to deactivate takeover defenses designed to and which will frustrate 8 9 any acquisition proposal that the Board has neither solicited or approved. 22. The preliminary and permanent injunctive relief requested herein is therefore necessary to prevent the Company's stockholders from suffering irreparable injury as a result of the director-defendants' intransigence. There is no adequate remedy at law for the following injuries with which CBI's shareholders are currently threatened: (a) CBI's stockholders may be deprived of any opportunity to receive the benefits of Praxair's premium offer; (b) CBI's stockholders may be deprived of the opportunity to choose for themselves whether to receive the benefits of Praxair's offer or to remain stockholders of an independent CBI; and (c) CBI's stockholders will be deprived of the opportunity to receive the maximum value possible for their CBI stock as a result of the director-defendants' refusal to negotiate with Praxair or seek alternatives in order to maximize short-term and long-term value. 23. The director-defendants owe fundamental fiduciary obligations to the Company's shareholders to take all necessary and appropriate steps to maximize the value of CBI common stock. In addition, the director-defendants are obligated to act independently so that the interests of CBI public stockholders will be protected, to consider seriously all bona fide offers for the Company, and to conduct fair and active bidding procedures or other mechanisms for checking the market to assure that the 9 10 highest value available to CBI shareholders is achieved. Further, the directors of the Company must adequately ensure that no conflict of interest exists between defendants' own interests and their fiduciary obligations to maximize stockholder value or, if such conflicts exist, ensure that all such conflicts are resolved in the best interests of the Company's public stockholders. 24. CBI represents a highly attractive acquisition candidate. Defendants' conduct has deprived and will continue to deprive the Company's public shareholders of the very substantial control premium now being offered and which further exposure of the Company to the market could provide. 25. The director-defendants have refused to take those steps necessary to ensure that the Company's shareholders will receive maximum value for their shares of CBI stock. Defendants have refused to consider seriously the Praxair offer and have failed to announce any active auction or open bidding procedures best calculated to maximize shareholder value in selling the Company. 26. By virtue of the acts and conduct alleged herein, the director-defendants, who control the actions of the Company, have carried out a preconceived plan and scheme to place their own personal interests ahead of the interests of the shareholders of CBI and thereby entrench themselves in their offices and positions within the Company. The director-defendants have violated their fiduciary duties owed to plaintiff and the Class in that they have not and are not exercising independent business 10 11 judgment and have acted and are acting to the detriment of the Company's public shareholders for their own personal benefit. 27. As the directors of a corporation faced with a bona fide offer for the sale of control of the corporation, the director-defendants have a duty to act on an informed basis to secure the best value reasonably available to CBI's public stockholders and their conduct in that regard is subject to enhanced scrutiny. 28. As a result of the acts and conduct described above, the director-defendants are not fully informing themselves, are not acting in good faith and have deliberately and/or recklessly breached their fiduciary and other common law duties which they owe to plaintiff and the other members of the Class, have engaged in unfair dealing for their own benefit and to the detriment of the Class, and have pursued a course of conduct designed to prevent an acquisition of the Company. 29. To the extent that the conduct of the director-defendants is based upon what they perceive to be a threat that Praxair or any other third party will acquire control over CBI, the director-defendants have a heightened fiduciary duty to act in the best interest of the Company's public stockholders and to act reasonably with regard to any perceived threat. They have recklessly and in bad faith violated such duties. 30. By reason of the foregoing, the director-defendants have violated their fiduciary duties to plaintiff and the Class by failing to ensure that the defensive tactics they 11 12 utilize are reasonable under the circumstances and are not contrary to the interests of the public shareholders. 31. As a result of the actions of the director-defendants, plaintiff and other members of the Class have been and will be damaged in that they have not and will not receive their fair proportion of the value of CBI's assets and businesses and/or have been and will be prevented from obtaining a fair and adequate price for their shares of CBI common stock. Defendants are unlawfully manipulating the corporate machinery of CBI for their own benefit. 32. Plaintiff seeks preliminary and permanent injunctive relief and declaratory relief preventing defendants from inequitably and unlawfully depriving plaintiff and the Class of their rights to realize a full and fair value for their stock at a substantial premium over the market price and to compel defendants to carry out their fiduciary duties to maximize shareholder value and not adopt or employ draconian anti-takeover measures. 33. Only through the exercise of this Court's equitable powers can plaintiff and class members be fully protected from the immediate and irreparable injury which the defendants' actions threaten to inflict. 34. Unless enjoined by the Court, defendants will continue to breach the fiduciary duties they owe to plaintiff and the members of the Class, and/or to aid and abet and participate in such breaches of duty, and will continue to entrench themselves in office, all to the irreparable harm of plaintiff 12 13 and the other members of the Class, and in defiance of the wishes of CBI shareholders. 35. Plaintiff and the Class have no adequate remedy at law. WHEREFORE, plaintiff demands judgment as follows: (a) Declaring this to be a proper class action and certifying plaintiff as the class representative; (b) Ordering the director-defendants to carry out their fiduciary duties to plaintiff and the other members of the Class by announcing their intention to: i) cooperate fully with any entity or person, including Praxair, having a bona fide interest in proposing any transaction which would maximize shareholder value, including but not limited to, a buy-out or takeover of the Company; ii) immediately undertake an appropriate evaluation of CBI's worth as a merger or acquisition candidate; iii) take all appropriate steps necessary to enhance the Company's value and attractiveness as a merger/acquisition candidate; iv) take all appropriate steps necessary to effectively expose CBI to the marketplace in an effort to create an active auction for control of the Company; v) act independently so that the interests of the Company's public shareholders will be protected; and vi) adequately ensure that no conflicts of interest exist between the director-defendants' own interests and 13 14 their fiduciary obligation to maximize shareholder value or, in the event such conflicts exist, to ensure that all conflicts of interest are resolved in the best interests of the public shareholders of CBI; (c) Declaring that the director-defendants and each of them have violated their fiduciary duties to the Class; (d) Enjoining defendants from erecting any unlawful barriers to the acquisition of the Company by any third party which would make CBI less attractive as an acquisition candidate; (e) Enjoining defendants from abusing the corporate machinery of the Company for the purpose of entrenching themselves in office; (f) Ordering the director-defendants to take steps to facilitate a premium acquisition by utilizing the Rights Plan exclusively in a manner designed to maximize shareholder value; (g) Ordering the director-defendants, jointly and severally, to account to plaintiff and the Class for all damages suffered and to be suffered by them as a result of the acts and transactions alleged herein; (h) Alternatively, awarding plaintiff and the Class compensatory damages; (i) Awarding plaintiff the costs and disbursements of this action, including a reasonable allowance for plaintiff's attorneys' and experts' fees; and 14 15 (j) Granting such other and further relief as may be just and proper. Dated: October 30, 1995 ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A. By: /s/ Joseph A. Rosenthal ------------------------------ Joseph A. Rosenthal First Federal Plaza Suite 214 Wilmington, Delaware 19801 (302) 656-4433 Attorneys for Plaintiff OF COUNSEL: David J. Bershad Steven G. Schulman Lori G. Feldman MILBERG WEISS BERSHAD HYNES & LERACH One Pennsylvania Plaza New York, New York 10119 (212) 594-5300 STULL STULL & BRODY Jules Brody 6 East 45th Street New York, New York 10017 (212) 687-7230 WEISS & YOURMAN Joseph Weiss 319 Fifth Avenue New York, New York 10016 (212) 532-4171 15 EX-99.28 28 COMPLAINT IN POLIKOFF V. CBI INDUSTRIES, INC. 1 EXHIBIT 28 IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - ---------------------------------------x : HARRY POLIKOFF, as Trustee u/w/o : Marjorie L. Polikoff, on behalf of : himself and all others similarly : situated, : : Civil Action Plaintiff, : No. 14662 : -against- : : CBI INDUSTRIES, INC., G.L. SCHUEPPERT, : CLASS ACTION H. CLARK, JR., E.J. MOONEY, JR., R.J. : COMPLAINT DAY, L.E. AKIN, J.E. JONES, R.J. : DANIELS, W.N. CALDWELL, J.T. HORTON, : R.G. WALLACE, STEPHANIE P. MARSHALL, : G.E. MacDOUGAL, J.F. RIORDAN and : R.T. STEWART, : : Defendants. : - ---------------------------------------x Plaintiff, by and through his attorneys, alleges as follows: 1. Plaintiff brings this action as a class action on behalf of himself and all other shareholders of CBI Industries, Inc. ("CBI" or the "Company") who are similarly situated, to void and enjoin defendants' efforts to entrench themselves and solidify their control of CBI and thwart any takeover of the Company by, among other things, increasing the Company's anti-takeover devices, such as its poison pill or shareholder rights plan, described below, and/or refusing to rescind such antitakeover devices despite the existence of a value maximizing offer. 2. Defendants' actions represent an effort by the individual defendants to entrench themselves in office 2 so that they may continue to receive the substantial salaries, compensation and other benefits and perquisites of their offices. 3. The individual defendants are abusing their fiduciary positions of control over CBI to thwart Praxair, Inc.'s ("Praxair") legitimate attempts to acquire the Company, to prevent CBI's shareholders from receiving and/or acting upon bona fide offers for the Company, and are seeking to use corporate resources to entrench themselves in the management of the Company. The actions of the individual defendants constitute a breach of their fiduciary duties to maximize shareholder value, to not consider their own interests over that of the public shareholders, and to respond reasonably to offers for CBI. PARTIES 4. Plaintiff is the owner of CBI common stock, and has owned such stock at all times relevant herein. 5. CBI is a holding company which, through numerous operating subsidiaries, operates in three basic areas: contracting services, industrial gases and investments. In recent time, the Company's industrial gases area, organized under the Liquid Carbonic Industries Corporation ("Liquid Carbonic") subsidiary, has contributed nearly 90% of CBI's pre-tax income. - 2 - 3 6. The individually named defendants are members of the CBI Board of Directors. The following defendants are also officers and thus inside directors of CBI: (a) Defendant J.E. Jones ("Jones") is the chairman of CBI's Board of Directors, president, and chief executive officer. For the year ended December 31, 1993, Jones earned a salary of $530,000, a bonus of $77,000, and restricted stock awards of $515,250. (b) Defendant L.E. Akin ("Akin") is an executive vice president, and the president of CBI subsidiary, Chicago Bridge & Iron Company (the main corporation under which the Company's contracting services area is organized). For the year ended December 31, 1993, Akin earned a salary of $290,000, a bonus of $35,000, and restricted stock awards of $200,375. (c) Defendant R.J. Daniels ("Daniels") is an executive vice president, and president of Liquid Carbonic. For the year ended December 31, 1993, Daniels earned a salary of $265,000, a bonus of $43,515 and a restricted stock award of $171,750. (d) Defendant G.L. Schueppert ("Schueppert") is an executive vice president, and the Company's chief financial officer. For the year ended December 31, 1993, Schueppert earned a salary of $305,000, a bonus of $35,000, and a restricted stock award of $160,875. - 3 - 4 The remaining defendants are outside or non-officer directors of the Company. 7. By virtue of the individual defendants' positions as directors and/or officers of the Company, the defendants were and are in a fiduciary relationship with plaintiff and the other public stockholders of the Company and owe to plaintiff and the other members of the Class the highest obligations of good faith and fair dealing. CLASS ACTION ALLEGATIONS 8. Plaintiff brings this action for injunctive and other relief on his own behalf and as a class action, pursuant to Rule 23 of the Rules of the Court of Chancery and on behalf of all common stockholders of CBI (except defendants herein and any person, firm, trust, corporation or other entity related to or affiliated with any of the defendants) or their successors in interest, who are being deprived of the opportunity to maximize the value of their CBI shares by the wrongful acts of the individual defendants described herein ("Class"). 9. This action is properly maintainable as a class action for the following reasons: (a) The Class for whose benefit this action is brought is so numerous that joinder of all class members is impracticable. There are more than 37 million common shares of CBI outstanding, owned by thousands of - 4 - 5 stockholders of record. Members of the class are disbursed throughout the United States. (b) There are questions of law and fact which are common to members of the Class and which predominate over all questions affecting only individual members, including whether the defendants have breached the fiduciary duties owned by them to plaintiff and members of the Class by reason of their efforts to entrench themselves in office, protect the interests of other firms with which they are affiliated and prevent CBI public stockholders from maximizing the value of their holdings. (c) The claims of plaintiff are typical of the claims of the other members of the Class and plaintiff has no interests that are adverse or antagonistic to the interests of the Class. (d) Plaintiff is committed to the vigorous prosecution of this action and has retained competent counsel experienced in litigation in this nature. Accordingly, plaintiff is an adequate representative of the Class and will fairly and adequately protect the interests of the Class. (e) The prosecution of separate actions by individual members of the Class would create a risk of inconsistent or varying adjudications with respect to individual members of the Class which would establish - 5 - 6 incompatible standards of conduct for the party opposing the Class. (f) Defendants have acted and are about to act on grounds generally applicable to the Class, thereby making appropriate final injunctive or other equitable relief with respect to the Class as a whole. FACTUAL BACKGROUND 10. CBI is a company with operating subsidiaries in three areas: contracting services, industrial gases and investments. The Company's industrial gases segment, which is organized under Liquid Carbonic, is the world's largest supplier of carbon dioxide, and makes and markets other gases for industrial, medical and specialty applications. In 1993, it was the Company's most profitable division of the Company, and currently contributes approximately 90% of the Company's pre-tax revenue. 11. Liquid Carbonic will likely be the greatest contributor to CBI's revenues in the future as well. In November 1994, for instance, CBI announced that its contracting services area's gross profit and income from operation in the 1994 third quarter were hurt in the United States by narrowing margins, mainly due to the continuing slow pace of capital spending for new or replacement vessels for the refining, chemical, and pulp and paper industries. - 6 - 7 12. Nonetheless, the individual defendants have done nothing to maximize shareholder value, and to enable CBI's shareholders to realize the value of Liquid Carbonics. Instead, they have taken steps to entrench themselves and to maintain their control over all of the three areas of CBI's business. Airgas' 1994 Offer 13. Since as early as November, 1994 the individual defendants knew that, based on the value of Liquid Carbonics, as well as the other aspects of CBI's business, the Company presented itself as an outstanding merger target for potential bidders. It was confirmed that the Company was "in play" when, at or about that time, Airgas made an offer for the Company. 14. On December 20, 1994, CBI first publicly announced that sometime in early November, Airgas Inc. ("Airgas"), a fast growing distributor of industrial, medical and specialty gases, had made an unsolicited offer in which it proposed the spin-off, in the form of a dividend to CBI shareholders of the Contracting Segment and Investment Segment of its business, as new companies on a debt-free basis, and the merger of CBI, which would then just own Liquid Carbonic, with Airgas. In the merger, CBI shareholders would receive 19 million shares of Airgas, - 7 - 8 representing approximately 35% of the Airgas shares to be outstanding after the merger (the "Airgas Merger Proposal"). 15. The Airgas Merger Proposal was projected to enable CBI shareholders to realize the value inherent in their ownership of Liquid Carbonic, while still maintaining their shares and thus the ability to obtain any future accretion in the value of such shares. 16. As an alternative transaction, Airgas offered to purchase Liquid Carbonics outright for cash of $1.45 billion (which is greater than the total market capitalization of CBI), part of which would include the assumption of CBI's over $770 million in debt. This alternative would again enable CBI's shareholders to realize immediate value from their ownership of Liquid Carbonic, and would also increase the value of the Contracting and Investment segments by reducing CBI's debt. CBI's Rejection Of The Airgas Proposal And Amendment Of Its Shareholder Rights Plan 17. Despite the obvious advantages to CBI shareholders of either of these two proposals, CBI's Board of Directors, allegedly after consideration and consultation with its financial advisors, Lehman Brothers Inc. and Lynch & Co., and in a desire to keep CBI independent so that they could entrench themselves, rejected the offers as inadequate. - 8 - 9 18. Thereafter, Airgas filed under the Hart-Scott-Rodino Act for the Purpose of allowing it to purchase up to 15% of CBI's common stock through open market or privately negotiated purchases. 19. In response to the obvious takeover attempts by Airgas, and the realization that CBI was now "in play", CBI's Board of Directors authorized an amendment to CBI's shareholders rights plan, which significantly lowers the ownership level required to trigger a distribution of the Rights under the Plan from 20% to 10%, making a hostile bid for the Company prohibitively expensive. 20. After giving effect to the amendment, the Plan provides that if a person or group acquires 10% or more of the outstanding CBI common shares, each Right will entitle its holder, other than the person or group which has acquired the share, to purchase common shares of CBI having a market value equal to twice the exercise price of each right. 21. In January, 1995, after its proposal was rejected, Airgas dropped its merger proposal to CBI. Praxair's October 29, 1995 Merger Proposal To CBI 22. Praxair is the largest supplier of industrial gases in North and South America and one of the three largest industrial gas suppliers in the world. Using air as - 9 - 10 its base raw material, Praxair produces oxygen, nitrogen and argon through several air separation processes. 23. In approximately June, 1995, Praxair approached CBI in connection with a potential combination of Praxair and CBI whereby the two companies would be merged together. After approximately six months of negotiations between Praxair and CBI, CBI, on October 20, 1995, broke off negotiations. 24. As a result of CBI's determination not to seek a combination with Praxair, on October 29, 1995 Praxair announced that it intended to commence a cash or stock tender offer for all the outstanding shares of CBI at $32 per share -- a transaction which has an estimated worth of approximately $2.1 billion. 25. Rather than negotiating in good faith with Praxair, to obtain the best possible price for CBI's shareholders, the Individual Defendants have stated that they will "review the Praxair proposal in due course." 26. They have not, however, rescinded the poison pill. CBI's poison pill has the effect of entrenching the Individual Defendants in control of CBI, but the Individual Defendants have refused to rescind, waive or otherwise abolish the terms of the CBI poison pill. 27. Praxair's tender offer will be for 100% of CBI's outstanding stock which, in turn, will invoke the poison pill. This will make Praxair's tender offer - 10 - 11 prohibitively expensive and may well discourage Praxair from continuing its tender offer. 28. Defendants' failure to rescind, waive or otherwise abolish the terms of the poison pill, the failure to ease CBI's anti-takeover provisions, or to otherwise negotiate with Praxair in good faith, constitutes a breach of defendants' fiduciary duties owed to plaintiff and other members of the Class. It will have the effect of making the Praxair proposal cost-prohibitive, and therefore may discourage Praxair from going forward with a tender offer -- the primary alternative which would enable CBI shareholders to maximize the value of their equity holdings. 29. At all times herein, defendants were and are obligated to adequately consider, in a timely fashion and on an informed basis, any reasonable proposal from any party, not to place their own self-interests and personal considerations ahead of the interests of the stockholders and to make corporate decisions in good faith. The actions of the Individual Defendants in maintaining and refusing to waive or otherwise rescind the poison pill or to negotiate in good faith were fundamentally motivated to further their own self-interests and objectives, and correspondingly preserve and protect their emoluments and positions in the Company, all in violation of their fiduciary duties and to the detriment of the shareholders of the Company. - 11 - 12 30. The Individual Defendants' entrenchment motives are evidenced by, inter alia, the following: (a) Through the maintenance of the poison pill, and defendants' failure to waive its terms, defendants have erected a virtually insurmountable barrier to persons who may wish to acquire CBI, obtain control or take steps to maximize shareholder value, and are thereby attempting to entrench themselves in their positions of control and improperly advance their own personal agenda at the expense of CBI's public stockholders; (b) In reality, the poison pill provisions are designed to prevent unsolicited takeovers from succeeding. Defendants' inaction concerning the waiver or rescission of the poison pill is indicative of their true motives and objectives; and (c) Defendants' efforts to increase CBI's anti-takeover devices when confronted with the Airgas Merger Proposal and to continue the anti-takeover devices knowing that the Company was the target of a potential offer by Praxair. 31. In increasing CBI's anti-takeover devices, and failing to waive or rescind the poison pill, the Individual Defendants have acted to manipulate the corporate machinery of CBI, thereby impairing the corporate democratic process within the Company at the expense and to the detriment of the Company's common stockholders. By - 12 - 13 maintaining the poison pill and increasing the Company's anti-takeover devices, the Individual Defendants have restrained and impaired the ability of CBI's stockholders to affect corporate policy, and freely structure the directorial constituency of the Company. The poison pill, inter alia, impedes shareholder ability to accumulate shares and associate together to replace incumbent management, oppose any management initiative, or otherwise affect corporate policy through stockholder resolutions. 32. As a result of the foregoing, the Individual Defendants have breached and/or aided and abetted breaches of fiduciary duties owed to CBI and its stockholders. 33. Unless enjoined by this Court, defendants will breach their fiduciary duties owed to plaintiff and the other members of the Class and may benefit themselves in their corporate offices, all to the irreparable harm of the Class, as aforesaid. 34. Plaintiff and the other members of the Class have no adequate remedy at law. WHEREFORE, plaintiff demands judgment as follows: (a) declaring this to be a proper class action; (b) ordering the Individual Defendants to carry out their fiduciary duties to plaintiff and the other members of the Class by announcing their intention to: - 13 - 14 (i) rescind the "poison pill" and any other takeover devices which would hinder Praxair's hostile offer; (ii) negotiate in good faith with Praxair to obtain the greatest possible value for CBI's shareholders; (iii) undertake an appropriate evaluation of alternatives designed to maximize value for CBI's public stockholders; (iv) adequately ensure that no conflicts of interests exist between defendants' own interests and their fiduciary obligations to public stockholders or, if such conflicts exist, ensure that all the conflicts would be resolved in the best interests of CBI's public stockholders; and (c) ordering defendants, jointly and severally, to account to plaintiff and the other members of the Class for all damages suffered and to be suffered by them as a result of the acts and transactions alleged herein; (d) awarding plaintiff the costs and disbursements of the action, including a reasonable allowance for plaintiff's attorney's fees and experts' fees; and - 14 - 15 (e) granting such other and further relief as this Court may deem to be just and proper. Dated: October 31, 1995 ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A. By: /s/ Joseph A. Rosenthal ----------------------------------- First Federal Plaza P.O. Box 1070 Wilmington, Delaware 19899 (302) 656-4433 Attorneys for Plaintiff OF COUNSEL: LOWEY DANNENBERG BEMPORAD & SELINGER, P.C. 747 Third Avenue New York, NY 10017 (212) 759-1504 - 15 - EX-99.29 29 COMPLAINT IN ROSENBERG V. CLARK 1 EXHIBIT 29 IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - -----------------------------------------x David Rosenberg, : : Plaintiff, : : - against - : : E. HUBERT CLARK, JR., JOHN T. HORTON, : ROBERT T. STEWART, STEPHANIE PACE : C.A. No. 14652 MARSHALL, GEORGE L. SCHUEPPERT, ROBERT : J. DANIELS, JOHN E. JONES, EDWARD : J. MOONEY, JR. ,ROBERT G. WALLACE, : LEWIS E. AKIN, WILEYN. CALDWELL, ROBERT : J. DAY, GARY E. MACDOUGAL, JOHN F. : RIORDAN and CBI INDUSTRIES, INC., : : Defendants. : - -----------------------------------------x CLASS ACTION COMPLAINT Plaintiff, by his attorneys, Rosenthal, Monhait, Gross & Goddess, P.A., for his complaint against defendants, alleges upon information and belief, except for paragraph 2 hereof which is alleged upon knowledge, as follows: 1. Plaintiff brings this action on his own behalf and as a class action on behalf of all persons, other than defendants and those in privity with them, who own the common stock of CBI Industries, Inc. ("CBI" or the "Company"). 2. Plaintiff is and has been the owner of common stock of the Company since prior to the wrongs herein complained of and continuously to date. 3. Defendant CBI is a corporation duly organized and existing under the laws of the State of Delaware. The Company is 2 a holding company with subsidiaries which provide contracting services such as design, engineering, fabrication and project management. The Company also produces and markets industrial and specialty gases, such as carbon dioxide, oxygen, nitrogen and argon. Additionally, the Company assembles and sells gas-related equipment and invests in a variety of companies related to the oil industry. 4. The following individual defendants (the "Individual Defendants") constitute the entire Board of Directors of CBI: Name Position - ---- -------- E. Hubert Clark, Jr. Director John E. Jones Chairman, President and C.E.O. John T. Horton Director Stephanie Pace Marshall Director George L. Schueppert Director, C.F.O. Robert T. Stewart Director Robert J. Daniels Director Edward J. Mooney, Jr. Director Robert G. Wallace Director Lewis E. Akin Director Wiley N. Caldwell Director Robert J. Day Director Gary E. MacDougal Director John F. Riordan Director 5. The Individual Defendants named in paragraph 4 are in a fiduciary relationship with plaintiff and the other public 2 3 stockholders of CBI and owe them the highest obligations of loyalty, good faith, due care, candor and fair dealing. CLASS ACTION ALLEGATIONS 6. Plaintiff brings this action on his own behalf and as a class action, pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf of all holders of common stock of the Company (except defendants herein and any person, firm, trust, corporation, or other entity related to or affiliated with any of the defendants) and their successors in interest, who are or will be threatened with injury arising from defendants' actions as more fully described herein. 7. This action is properly maintainable as a class action. 8. The class is so numerous that joinder of all members is impracticable. There are approximately 32,206,403 shares of CBI common stock outstanding, owned by over 8,000 record shareholders scattered throughout the country. 9. There are questions of law and fact which are common to the class including, inter alia, the following: (a) whether defendants have breached their fiduciary and other common law duties owed by them to plaintiff and the members of the class; (b) whether defendants are unlawfully impeding a value maximizing acquisition of the Company; (c) whether defendants' actions hereinafter described, constitute a breach of the duty of fair dealing with respect to the plaintiff and the other members of the 3 4 class, a failure to maintain a level playing field and a failure to maximize shareholder value; and (d) whether the class is entitled to injunctive relief as a result of defendants' wrongful conduct. 10. Plaintiff is committed to prosecuting this action and has retained competent counsel experienced in litigation of this nature. The claims of plaintiff are typical of the claims of other members of the class and plaintiff has the same interests as the other members of the class. Plaintiff will fairly and adequately represent the class. 12. The prosecution of separate actions by individual members of the Class would create the risk of inconsistent or varying adjudications with respect to individual members of the Class which would establish incompatible standards of conduct for defendants, or adjudications with respect to individual members of the Class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests. 13. The defendants have acted, or refused to act, on grounds generally applicable to, and causing injury to, the Class and, therefore, preliminary and final injunctive relief on behalf of the Class as a whole is appropriate. SUBSTANTIVE ALLEGATIONS 14. Praxair, Inc. ("Praxair") has long been interested in acquiring CBI. For the past six months, H. William Lichtenberg, 4 5 Praxair's chairman and chief executive officer, has engaged in discussions with defendant John E. Jones regarding a possible merger of the two companies. On October 20, 1995 CBI terminated discussions concerning a possible merger. 15. On October 29, 1995, Praxair announced that it had made an unsolicited merger proposal to CBI providing for the acquisition of 100 percent of the common stock of CBI. Pursuant to the terms of the merger proposal, Praxair would pay $32.00 in cash or Praxair common stock for every share of CBI common stock. Praxair would also assume about $700 million of CBI's long term debt. The total value of the transaction is approximately $2.1 billion. 16. Praxair's offer represents a hefty premium of 59 percent to the $20.125 closing price of CBI common stock on Friday October 27, 1995. Praxair also invited the board of directors of CBI to immediately commence negotiations of a definitive merger agreement. 17. Defendants owe fundamental fiduciary obligations to the CBI shareholders to take all necessary and appropriate steps to maximize the value of their shares. In addition, the Individual Defendants have the responsibility to act independently so that the interests of CBI public stockholders will be protected, to seriously consider all bona fide offers for the company, and to conduct fair and active bidding procedures or other mechanisms for checking the market to assure that the highest possible price is achieved. Further, the directors of the Company must adequately 5 6 insure that no conflict of interest exists between defendants' own interests and their fiduciary obligations to maximize stockholder value or, if such conflicts exist, insure that all such conflicts will be resolved in the best interests of the company's public stockholders. 18. The individual Defendants have breached their fiduciary and other common law duties owed to Plaintiff and other members of the Class in that they have not exercised and are not exercising independent business judgement and have acted and are acting to the detriment of the Class. The defendants' rejection of Praxair's offer is an uninformed knee jerk reaction made without adequate information as to what Praxair would be prepared to offer in a fully negotiated transaction, so that defendants can maintain their positions in control of the company. 19. Moreover, Defendants have refused to take those steps necessary to ensure that the Company's public shareholders will receive maximum value for their shares of CBI common stock. Defendants' failure to accept Praxair's offer to enter into a definitive merger agreement is clearly the result of the desire by the individual Defendants to protect their own substantial salaries, perquisites and positions with the Company. 20. The Individual Defendants have breached their fiduciary duties by reason of the acts and transactions complained of herein, including their failure to negotiate a value maximizing acquisition of CBI. 6 7 21. Unless enjoined by this Court, the Individual Defendants will continue to breach their fiduciary duties owed to plaintiff and the other members of the class. 22. Plaintiff and the class have no adequate remedy at law. WHEREFORE, plaintiff demands judgment as follows: A. declaring this to be a proper class action; B. ordering the Individual Defendants to carry out their fiduciary duties to plaintiff and the other members of the class by announcing their intention to: 1) cooperate fully with any person or entity having a bona fide interest in proposing any transaction which would maximize shareholder value, including, but not limited to, a buyout or takeover of the Company by Praxair; 2) undertake an appropriate evaluation of CBI's worth as a merger/acquisition candidate; 3) take all appropriate steps to enhance CBI value and attractiveness as a merger/acquisition candidate; 4) take all appropriate steps to effectively expose CBI to the marketplace in an effort to create an active auction for CBI; 5) act independently so that the interests of CBI's public stockholders will be protected; and 6) adequately ensure that no conflicts of interest exist between the Individual Defendant's interests and their fiduciary obligation to maximize stockholder value or, if 7 8 such conflicts exist, ensure that all conflicts are resolved in the best interests of CBI's public stockholders; C. ordering the Individual Defendants, jointly and severally, to account to plaintiff and the class for all damages suffered and to be suffered by them as a result of the acts and transactions alleged herein; D. awarding plaintiff the costs and disbursements of this action, including a reasonable allowance for plaintiff's attorneys' and experts' fees; and E. granting such other and further relief as may be just and proper in the premises. Dated: October 30, 1995 ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A. By: /s/ Joseph A. Rosenthal ---------------------------------------- First Federal Plaza, Suite 214 P.O. Box 1070 Wilmington, DE 19899-1070 (302) 656-4433 Attorneys for Plaintiff OF COUNSEL: BERNSTEIN LIEBHARD & LIFSHITZ 274 Madison Avenue New York, NY 10016 8 EX-99.30 30 COMPLAINT IN LEWIS V. JONES 1 Exhibit 30 IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY - ----------------------------------------x HARRY LEWIS, : Plaintiff, : : v. : : JOHN E. JONES, HUBERT E. CLARK, JR., : C.A. No. 14664 JOHN T. HORTON, STEPHANIE PACE MARSHALL,: ------- GEORGE L. SCHUEPPERT, ROBERT T. STEWART,: ROBERT J. DANIELS, EDWARD J. MOONEY, JR.: ROBERT G. WALLACE, LEWIS E. AKIN, : WILEY N. CALDWELL, ROBERT J. DAY, : GARY E. MAC DOUGAL, JOHN F. RIORDAN, : and CBI INDUSTRIES, INC. : Defendants. : - ----------------------------------------x CLASS ACTION COMPLAINT Plaintiff, by his attorneys, alleges upon information and belief, except as to the allegations of paragraph 2 which are made on personal knowledge, as follows: NATURE OF THE ACTION 1. This is a stockholders' class action brought on behalf of the public stockholders of CBI Industries, Inc. ("CBI Industries" or the "Company") who have been, and continue to be, deprived of the opportunity to realize fully the benefits of their investment in the Company. The named defendants have wrongfully refused to take the steps necessary to maximize stockholder value, including properly considering a bona fide offer for the Company (the "Offer") from Praxair Inc. ("Praxair"). By failing and refusing to take such steps, including adequately considering the 2 Offer, defendants have breached their fiduciary duties to plaintiff and the class. The individual defendants are using their fiduciary positions of control over CBI Industries to thwart others in their legitimate attempts to acquire CBI Industries, and the individual defendants are trying to entrench themselves in their positions with the Company. PARTIES 2. Plaintiff is and, at all relevant times has been, the owner of shares of CBI Industries common stock. 3. CBI Industries is a corporation duly organized and existing under the laws of Delaware. CBI Industries is in the business of producing, processing and marketing industrial, medical, and specialty gases. It also, inter alia, is engaged in the business of providing contracting services and providing services for hydrocarbon products. CBI Industries maintains its principal executive offices at 800 Jorie Boulevard, Oak Brook, Illinois 60521. CBI Industries has approximately 38 million shares of common stock outstanding and approximately 8000 stockholders of record. CBI Industries' stock trades on the New York Stock Exchange. 4. Defendant John E. Jones ("Jones") is Chairman of CBI Industries' Board of Directors and its president and Chief Executive Officer. In 1994, Jones received $1,334,537 in compensation from CBI Industries. 2 3 5. Defendant Lewis E. Akin ("Akin") is an Executive Vice President of CBI Industries. In 1994, Akin received $644,254 in compensation from CBI Industries. 6. Defendant George L. Schueppert ("Schueppert") is an Executive Vice President and the Chief Financial Officer of CBI Industries. In 1994, Schueppert received $720,459 in compensation from CBI Industries. 7. Defendants Hubert E. Clark, Jr., John T. Horton, Stephanie Pace Marshall, Robert T. Stewart, Robert J. Daniels, Edward J. Mooney, Jr., Robert G. Wallace, Wiley N. Caldwell, Robert J. Day, Gary E. MacDougal, and John F. Riordan are directors of CBI Industries. 8. The defendants named in paragraphs 4, 5, 6 and 7 are hereinafter referred to as the "Individual Defendants." 9. Because of their positions as officers/directors of the Company, the Individual Defendants owe fiduciary duties of loyalty and due care to plaintiff and the other members of the class. 10. Each defendant herein is sued individually as a conspirator and aider and abettor, as well as in his/her capacity as an officer and/or director of the Company, and the liability of each arises from the fact that he or she has engaged in all or part of the unlawful acts, plans, schemes, or transactions complained of herein. 3 4 CLASS ACTION ALLEGATIONS 11. Plaintiff brings this case on his own behalf and as a class action, pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf of all stockholders of the Company, except defendants herein and any person, firm, trust, corporation, or other entity related to or affiliated with any of the defendants, who will be threatened with injury arising from defendants' actions as is described more fully below (the "Class"). 12. This action is properly maintainable as a class action. 13. The Class is so numerous that joinder of all members is impracticable. The Company has thousands of stockholders who are scattered throughout the United States. 14. There are questions of law and fact common to the Class that predominate over questions affecting any individual class member. The common questions include, inter alia, whether: a. defendants have breached their fiduciary duties owed by them to plaintiff and other members of the Class by failing and refusing to attempt in good faith to maximize stockholder value, including, inter alia, by considering the sale of CBI Industries; b. defendants have breached or aided and abetted the breach of the fiduciary duties owed by them to plaintiff and other members of the Class; 4 5 c. defendants have engaged in a plan and scheme to thwart and reject offers and proposals from third parties, including the one made by Praxair; and d. plaintiff and the other members of the Class are being and will continue to be injured by the wrongful conduct alleged herein and, if so, what is the proper remedy and/or measure of damages. 15. Plaintiff is committed to prosecuting this action and has retained competent counsel experienced in litigation of this nature. Plaintiff's claims are typical of the claims of the other members of the Class and plaintiff has the same interests as the other members of the Class. Plaintiff is an adequate representative of the Class. 16. The prosecution of separate actions by individual members of the Class would create the risk of inconsistent or varying adjudications with respect to individual members of the Class which would establish incompatible standards of conduct for defendants, or adjudications with respect to individual members of the Class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests. 17. The defendants have acted, or refused to act, on grounds generally applicable to, and causing injury to, the Class and, therefore, preliminary and final injunctive relief on behalf of the Class as a whole are appropriate. 5 6 SUBSTANTIVE ALLEGATIONS 18. By the acts, transactions, and courses of conduct alleged herein, defendants, individually and as part of a common plan and scheme and/or aiding and abetting one another in total disregard of their fiduciary duties, are attempting to unfairly deprive plaintiff and the Class of their right to maximize the value of their investment in CBI Industries. 19. On October 27, 1995, following six months in which it attempted to hold discussions with CBI Industries Chairman Jones -- discussions that Jones terminated on or about October 20 -- Praxair sent a letter to CBI Industries' Board of Directors making a bid for CBI Industries at a price of $32 a share in either cash or Praxair common stock, for a total of approximately $1.5 billion (plus the assumption of about $700 million of liabilities). Praxair gave CBI Industries until noon on November 1 to respond. 20. This offer was reported in The New York Times and The Wall Street Journal on October 30, 1995. Both newspapers reported that the offer constituted a nearly 60% premium over CBI Industries' then current stock price. Both newspapers also reported that analysts believed that the companies had synergies, making the combination a good one for both businesses. 21. Praxair is a substantial company with the financial wherewithal to follow through on its offer. Praxair, based in Danbury, Connecticut, is the country's leading producer of such industrial gases as oxygen, hydrogen and helium. Last year Praxair earned $203 million on sales of $2.7 billion. 6 7 22. Praxair's offer comes at a particularly opportune time for CBI Industries shareholders, because it comes amid a slide in CBI Industries stock this year. CBI Industries' stock is down over 21% according to Baseline, a New York financial data service. Indeed, The New York Times reported on October 30, 1995 that CBI Industries shares have "recently fallen from a 52 week high of $27.75 to flirt with a five year low of $19. 23. Despite the significant interest of CBI Industries stockholders, defendants have acted without regard to the fiduciary duties they owe them by, inter alia, failing to take the steps necessary to maximize stockholder value, including, but not limited to, hold meetings and negotiations with Praxair regarding its offer. Defendants have done so without business justification. 24. Defendants' failure to act promptly upon Praxair's offer has no valid business purpose, and simply evidences their disregard for the premium being offered to CBI Industries stockholders. By failing to meet promptly and negotiate, or offer to meet and negotiate, with Praxair regarding its offer, defendants are depriving plaintiff and the Class of their right to receive the maximum value for their CBI Industries shares. 25. CBI Industries represents a highly attractive acquisition candidate. Defendants' conduct is depriving CBI Industries' public stockholders of the substantial control premium that Praxair is prepared to pay, or of the enhanced premium that further negotiation or exposure of CBI Industries to the market could provide. 7 8 26. Defendants owe fundamental fiduciary obligations to CBI Industries' stockholders to take all necessary and appropriate steps to maximize the value of their shares. In addition, the Individual Defendants have the responsibility to act independently so that the interests of CBI Industries' public stockholders will be protected, to seriously consider all bona fide offers for the Company, and to conduct fair and active bidding procedures or other mechanisms for checking the market to assure that the highest possible price is achieved. Further, the directors of CBI Industries have a duty to adequately ensure that no conflict of interest exists between the Individual Defendants' own interests and their fiduciary obligations to maximize stockholder value or, if such conflicts exist, ensure that all such conflicts will be resolved in the best interests of the Company's stockholders. 27. Because defendants dominate and control the business and corporate affairs of CBI Industries and because they are in possession of private corporate information concerning CBI Industries' assets, businesses and future prospects, there exists an imbalance and disparity of knowledge between defendants and the public shareholders of CBI Industries. This discrepancy makes it grossly and inherently unfair for defendants to refrain from taking those steps necessary to maximize stockholder value. Defendants have refused to seriously consider Praxair's offer, and have failed to announce any active auction or open bidding procedures that would maximize stockholder value by entertaining offers to purchase the Company. 8 9 28. The Individual Defendants are acting to entrench themselves in their offices and positions and maintain their substantial salaries and perquisites, all at the expense and to the detriment of the public stockholders of CBI Industries. 29. As a result of the actions of the Individual Defendants, plaintiff and the other members of the Class have been and will be damaged in that they have not and will not receive their fair proportion of the value of CBI Industries' assets and businesses and/or have been and will be prevented from obtaining a fair and adequate price for their shares of CBI Industries' common stock. 30. Plaintiff seeks preliminary and permanent injunctive relief preventing defendants from inequitably and unlawfully depriving plaintiff and the Class of their rights to realize a full and fair value for their stock at a premium over the market price, by unlawfully entrenching themselves in their positions of control, and to compel defendants to carry out their fiduciary duties to maximize stockholder value. 31. Only through the exercise of this Court's equitable powers can plaintiff and the Class be fully protected from the immediate and irreparable injury that defendants' actions threaten to inflict. Defendants are precluding the enjoyment by CBI Industries' stockholders of the full economic value of their investment by failing to proceed expeditiously and in good faith to evaluate and pursue a premium acquisition proposal that would provide consideration for all shares at a premium price. 9 10 32. Unless enjoined by the Court, defendants will continue to breach their fiduciary duties owed to plaintiff and the members of the Class, and/or aid and abet and participate in such breaches of duty, and will prevent the sale of CBI Industries at a substantial premium, all to the irreparable harm of plaintiff and other members of the Class. 33. Plaintiff and the Class have no adequate remedy at law. WHEREFORE, plaintiff demands judgment as follows: (a) Declaring this to be a proper class action and certifying plaintiff as a class representative; (b) Ordering the Individual Defendants to carry out their fiduciary duties to plaintiff and the other members of the Class by announcing their intention to: (i) cooperate fully with any entity or person, including Praxair, having a bona fide interest in proposing any transaction that would maximize stockholder value including, but not limited to, a merger or acquisition of CBI Industries; (ii) immediately undertake an appropriate evaluation of CBI Industries' worth as a merger/acquisition candidate; (iii) take all appropriate steps to enhance CBI Industries' value and attractiveness as a merger/acquisition candidate; 10 11 (iv) take all appropriate steps to effectively expose CBI Industries to the marketplace in an effort to create an active auction of the Company; (v) act independently so that the interests of the Company's public stockholders will be protected; and (vi) adequately ensure that no conflicts of interest exist between the Individual Defendants' own interest and their fiduciary obligation to maximize stockholder value or, in the event such conflicts exist, ensure that all conflicts of interest are resolved in the best interests of the public stockholders of CBI Industries; (c) Ordering the Individual Defendants, jointly and severally to account to plaintiff and the Class for all damages suffered and to be suffered by them as a result of the acts and transactions alleged herein; (d) Awarding plaintiff the costs and disbursements of this action, including a reasonable allowance for plaintiff's attorneys' and experts' fees; and (e) Granting such other and further relief as may be just and proper. ROSENTHAL, MONHATT, GROSS & GODDESS, P.A. By: /s/ JOSEPH A. ROSENTHAL ----------------------------- Joseph A. Rosenthal First Federal Plaza, Suite 214 P.O. Box 1870 Wilmington, DE 19899-1070 (302) 656-4433 Attorneys for Plaintiff Of Counsel: GARWIN BRONZAFT GERSTEIN & FISHER LLP 1501 Broadway, Suite 1416 New York, NY 10036-5601 11 -----END PRIVACY-ENHANCED MESSAGE-----