-----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, NSGg+/XkYdfzcJwvUKu5VRLHC/q+fEXsd1CwcreIlRzagWTtru9Z74LnLNuPltSr KArE+2Jhyy13BAq0e3qDCQ== 0000065201-03-000004.txt : 20030428 0000065201-03-000004.hdr.sgml : 20030428 20030428130908 ACCESSION NUMBER: 0000065201-03-000004 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 14 CONFORMED PERIOD OF REPORT: 20030131 FILED AS OF DATE: 20030428 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MET PRO CORP CENTRAL INDEX KEY: 0000065201 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL & COMMERCIAL FANS & BLOWERS & AIR PURIFYING EQUIP [3564] IRS NUMBER: 231683282 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07763 FILM NUMBER: 03666272 BUSINESS ADDRESS: STREET 1: 160 CASSELL ROAD CITY: HARLEYSVILLE STATE: PA ZIP: 19438 BUSINESS PHONE: 2157236751 MAIL ADDRESS: STREET 1: 160 CASSELL ROAD STREET 2: BOX 144 CITY: HARLEYSVILLE STATE: PA ZIP: 19438 FORMER COMPANY: FORMER CONFORMED NAME: MET PRO INC DATE OF NAME CHANGE: 19661026 FORMER COMPANY: FORMER CONFORMED NAME: MET PRO WATER TREATMENT CORP DATE OF NAME CHANGE: 19740924 10-K 1 fye03-10k.txt 10K - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For fiscal year ended: January 31, 2003 Commission file number 001-07763 MET-PRO CORPORATION (Exact name of registrant as specified in its charter) Delaware 23-1683282 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 160 Cassell Road, P. O. Box 144 Harleysville, Pennsylvania 19438 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (215) 723-6751 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered ------------------- ---------------- Common Stock, par value $0.10 per share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.10 per share (Title of Class) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of the Form 10-K or any amendment to this Form 10-K. X --- Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Act). Yes X No --- --- State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average of the bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter: $78,291,983 The number of shares outstanding of the Registrant's Common Stock was 6,216,369 as of April 18, 2003. DOCUMENTS INCORPORATED BY REFERENCE Form 10-K Part Number ----------- Portions of Registrant's Definitive Proxy Statement filed pursuant to Regulation 14A in connection with Registrant's Annual Meeting ofStockholders to be held on June 11, 2003.......................III - --------------------------------------------------------------------------------
INDEX Page PART I ---- Item 1. Business................................................................................................. 1 Item 2. Properties............................................................................................... 8 Item 3. Legal Proceedings........................................................................................ 9 Item 4. Submission of Matters to a Vote of Security Holders...................................................... 9 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.................................... 10 Item 6. Selected Financial Data.................................................................................. 11 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.................... 12 Item 7A. Quantitative and Qualitative Disclosure About Market Risks............................................... 16 Item 8. Financial Statements and Supplementary Data.............................................................. 16 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure..................... 37 PART III Item 10. Directors and Executive Officers of the Registrant....................................................... 37 Item 11. Executive Compensation................................................................................... 37 Item 12. Security Ownership of Certain Beneficial Owners and Management........................................... 37 Item 13. Certain Relationships and Related Transactions........................................................... 37 PART IV Item 14. Controls and Procedures.................................................................................. 38 Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K.......................................... 38 SIGNATURES................................................................................................................. 39
- -------------------------------------------------------------------------------- FACTORS THAT MAY AFFECT FUTURE RESULTS Met-Pro's prospects are subject to certain uncertainties and risks. This Annual Report on Form 10-K also contains certain forward-looking statements within the meaning of the Federal securities laws. Met-Pro's future results may differ materially from its current results and actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors. Readers should pay particular attention to the considerations described in the section of this report entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations - Factors that May Affect Future Results." Readers should also carefully review the risk factors described in the other documents Met-Pro files from time to time with the Securities and Exchange Commission. - -------------------------------------------------------------------------------- PART I Item 1. Business: General: Met-Pro Corporation ("Met-Pro" or the "Company"), incorporated in the State of Delaware on March 30, 1966, manufactures and sells product recovery/pollution control equipment for purification of air and liquids, and fluid handling equipment for corrosive, abrasive and high temperature liquids. The Company, which operates through ten divisions and five wholly-owned subsidiaries, markets and sells its products through its own personnel, distributors, representatives and agents based on the division or subsidiary involved. The Company's products are sold worldwide primarily in industrial markets. The Company was taken public on April 6, 1967 and traded on the American Stock Exchange from July 25, 1978 until June 18, 1998, at which time the Company's Common Stock began trading on the New York Stock Exchange, where it currently trades under the symbol "MPR". The Company's principal executive offices are located at 160 Cassell Road, Harleysville, Pennsylvania and the telephone number at that location is (215) 723-6751. Our web site address is www.met-pro.com. We will endeavor to make available on our web site our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, and our Current Reports on Form 8-K, as soon as reasonably practicable after we electronically file these reports with the Securities and Exchange Commission ("SEC"), beginning with this Annual Report on Form 10-K, which is being filed on April 28, 2003. Other reports that we filed during our fiscal year ended January 31, 2003 with SEC under the Securities Exchange Act of 1934 may at present be accessed through our web site. Except where otherwise indicated by the context used herein, references to the "Company", "we", "our" and "us" refer to Met-Pro Corporation, its divisions and its wholly-owned subsidiaries. Products, Services and Markets: The Company operates in two segments, the Product Recovery/Pollution Control Equipment Segment and the Fluid Handling Equipment Segment. For financial information concerning the Company's industry segments, reference is made to "Consolidated Business Segment Data" contained within the Company's Consolidated Financial Statements that form a part of this Report on Form 10-K. A narrative description of the Company's operations within these two segments is as follows: Product Recovery/Pollution Control Equipment Segment This segment is composed of the following seven divisions and/or subsidiaries of the Company: Flex-Kleen Division; Stiles-Kem Division; Pristine Hydrochemical Inc.; Sethco Division; Strobic Air Corporation; Duall Division; and Systems Division. Flex-Kleen Division, located in Itasca, Illinois, operating with the Company's wholly-owned subsidiary, Flex-Kleen Canada Inc., is a leading supplier of product recovery and dry particulate collectors that are used primarily in the process of manufacturing food products and pharmaceuticals. While some of Flex-Kleen's products are also used for nuisance collection of particulates to conform to environmental concerns, the overwhelming portion of its sales activity is for product collection and is process driven. At present, Flex-Kleen's products are sold through 77 manufacturer's representatives in 37 offices located across the United States and 12 manufacturer's representatives located in four offices throughout Canada. 1 Stiles-Kem Division, located in Waukegan, Illinois, is a leading manufacturer of safe and reliable water treatment compounds which have been used in the public drinking water industry for 48 years. Stiles-Kem products are designed to eliminate problems created by high iron and manganese levels in municipal water systems and to reduce scaling and general corrosion tendencies within water distribution piping systems. These food grade products are NSF/ANSI approved for health considerations in municipal drinking water supplies and are certified to meet existing state and federal guidelines. The products are sold both directly through regional sales representatives and through a network of distributors located in the United States and Canada. Pristine Hydrochemical Inc., located in Williston, North Dakota, sells the Pristine Polymer product line with its patented chlorine dioxide treatment program. This product line improves water clarity, reduces sludge volume and also helps customers reduce trihalomethane, as required by the EPA. In addition, Pristine sells boiler and water cooling chemicals and services to industrial and commercial markets allowing customers to maximize their heat transfer efficiency and save operating revenues through energy conservation. The products are sold directly through regional sales representatives located in the United States. The business of Pristine was acquired by the Company in May 2002. Sethco Division, located on Long Island, New York, designs, manufactures and sells corrosion resistant pumps, filter chambers and filter systems with flow rates to about 200 gallons per minute. These products are used in wastewater treatment systems and fume scrubbers for pollution control. They are also widely used in the metal finishing, electronics and chemical processing industries. Sethco's products are sold through a network of non-exclusive distributors, as well as to catalog houses and original equipment manufacturers. Our products are sold internationally through our Mefiag B.V. subsidiary. Strobic Air Corporation, located in Harleysville, Pennsylvania, designs, manufactures and holds patents on specialty blowers and industrial fans for industrial applications including university laboratories, hospitals, semiconductor manufacturers, government laboratories, pharmaceutical, chemical, petrochemical plants and other testing laboratory facilities. Sales, engineering and customer service are provided through a network of 225 manufacturer's representatives located throughout the United States and Canada. Duall Division, located in Owosso, Michigan, is a leading manufacturer of industrial and municipal air and water quality control systems. The Division's major products include odor control systems, fume and emergency gas scrubbers, particulate collectors, air strippers, ducting and exhaust fans. All equipment is fabricated from corrosion resistant materials. Duall's support services include pilot studies, engineering, installation and performance testing. Duall products are sold both domestically and internationally to the metal finishing, wastewater treatment, composting, food processing, chemical, printed circuit, semiconductor, steel pickling, pharmaceutical, battery manufacturing and groundwater remediation markets. At present, 90 factory trained manufacturer's representatives sell Duall's engineered systems to industrial and municipal clients. Systems Division, located in Kulpsville, Pennsylvania, is a leader in the supply of custom designed and manufactured air and water pollution control equipment. Systems Division's air pollution control capabilities include: carbon adsorption systems for the concentration and recovery of volatile solvents, thermal and catalytic oxidation systems and the supply of abatement catalysts. These systems are custom engineered for clients in the automotive, aerospace and furniture industries. Additional applications include painting, pharmaceutical, chemical, electronics, food processing and printing industries. Systems Division also offers a full range of catalyst products for the oxidation of pollutants, which include catalysts for the oxidation of chlorinated solvents, low temperature oxidation catalysts and a catalyst specially designed for regenerative catalytic oxidizer applications. Fluid Handling Equipment Segment This segment is composed of the following four divisions and/or subsidiaries of the Company: Mefiag; Keystone Filter Division; Dean Pump Division; and Fybroc Division. Mefiag(R), operating with the Company's wholly-owned subsidiary, Mefiag B.V., located in Heerenveen, Holland, and the Mefiag Division, located in Harleysville, Pennsylvania, designs and manufactures filter systems utilizing horizontal disc technology for superior performance, particularly in high efficiency and high-flow applications. Mefiag(R) filters are used in tough, corrosive applications in the plating, metal finishing and printing industries. Worldwide sales are accomplished through qualified, market-based distributors and original equipment manufacturers located throughout Europe, the United States, Asia and other major markets throughout the world. Keystone Filter Division, located in Hatfield, Pennsylvania, is an established custom pleater and cartridge manufacturer in the United States. The Division provides custom designed and engineered products which are currently used in a diversity of applications such as the nuclear power industry, components in medical equipment and in indoor air quality equipment. Keystone Filter also provides standard filters for water purification and industrial applications. Sales and customer service are provided through a non-exclusive distributor network. 2 Dean Pump Division, located in Indianapolis, Indiana, designs and manufactures high quality pumps that handle a broad range of industrial applications. Users such as the chemical, petrochemical, refinery, pharmaceutical, plastics, pulp and paper, and food processing industries choose Dean Pump products particularly for their high temperature applications. The Division's products are sold worldwide through an extensive network of distributors. Fybroc Division, located in Telford, Pennsylvania, is a world leader in the manufacture of fiberglass reinforced plastic ("FRP") centrifugal pumps. These pumps provide excellent corrosion resistance for tough applications including pumping of acids, brines, caustics, bleaches, seawater and a wide variety of waste liquids. Fybroc's second generation epoxy resin, EY-2, allows the Company to offer the first corrosion resistant and high temperature FRP thermoset pumps suitable for solvent applications. The EY-2 material also expands Fybroc's pumping capabilities to include certain acid applications such as high concentration sulfuric acid (75-98%). During the year, Fybroc continued to expand the FRP centrifugal magnetic drive pump line which now offers five sizes available in both our standard vinyl ester resin and our EY-2 epoxy resin. We have also added three additional sizes to the metric version of this pump in order to attract and expand our international product coverage. Fybroc pumps are sold to many markets including the chemical, steel, pulp and paper, electric utility, aquaculture, aquarium, and industrial and municipal waste treatment industries. Fybroc's EY-2 material is expected to allow it to enter new markets such as pharmaceutical, petrochemical, fertilizer and pesticides. A worldwide distributor network provides sales, engineering and customer service. United States Sales versus Foreign Sales: The following table sets forth certain data concerning total net sales to customers by geographic area in the past three years: Percentage of Net Sales Fiscal Year Ended January 31, 2003 2002 2001 --------------------------------- United States 84.7% 84.3% 79.5% Foreign 15.3% 15.7% 20.5% --------------------------------- Net Sales 100.0% 100.0% 100.0% ================================= Customers: During each of the past three fiscal years, no single customer accounted for 10% or more of the total net sales of the Company in any year. The Company does not believe that it would be materially adversely affected by the loss of any single customer. Seasonality: The Company does not consider its business to be seasonal in nature. Competition: The Company experiences competition from a variety of sources with respect to virtually all of its products. The Company knows of no single entity that competes with it across the full range of its products and systems. The lines of business in which the Company is engaged are highly competitive. Competition in the markets served is based on a number of considerations, which may include price, technology, applications experience, know-how, reputation, product warranties, service and distribution. With respect to the Fluid Handling Equipment segment, specifically the pump manufacturing operations, several companies, including Ingersoll-Dresser Pumps Co. (a subsidiary of Flowserve Corporation), Goulds Industrial Pumps, Inc. (a subsidiary of ITT Industries), and Durco Pumps, Inc. (a subsidiary of Flowserve Corporation), dominate the industry with several smaller companies, including Met-Pro, competing in selected product lines and niche markets. With respect to the Product Recovery/Pollution Control Equipment segment, there are numerous competitors of both comparable and larger size which may have greater resources than the Company, but there are no companies that dominate the market. 3 The Company is unable to state with certainty its relative market position in all aspects of its businesses. Research and Development: The Company engages in research and development on an operational basis. Due to the wide range of the Company's products, the research and development effort is not centralized. Research is directed towards the development of new products related to current product lines, and the improvement and enhancement of existing products. The principal goals of the Company's research programs are maintaining the Company's technological capabilities in the production of product recovery/pollution control equipment, and fluid handling equipment; developing new products; and providing technological support to the manufacturing operations. Research and development expenses were $0.6 million, $1.0 million and $0.8 million for each of the years ended January 31, 2003, 2002 and 2001, respectively. Patents and Trademarks: The Company has a small number of patents and trademarks. The Company considers these rights important to its business, although it considers no individual right material to its business. Regulatory Matters: The Company is subject to environmental laws and regulations concerning air emissions, discharges to water processing facilities, and the generation, handling, storage and disposal of waste materials in all operations. All of the Company's production and manufacturing facilities are controlled under permits issued by federal, state and local regulatory agencies. The Company believes it is presently in compliance in all material respects with these laws and regulations. To date, compliance with federal, state and local provisions relating to protection of the environment has had no material effect upon capital expenditures, earnings or the competitive position of the Company. Backlog: Generally, the Company's customers do not enter into long-term contracts, but rather issue purchase orders that are accepted by the Company. The rate of booking new orders varies from month to month. In addition, the orders have varying delivery schedules, and the Company's backlog as of any particular date may not be representative of actual revenues for any succeeding period. The dollar amount of the Company's backlog of orders, considered to be firm, totalled $7,375,383 and $9,931,016 as of January 31, 2003 and 2002, respectively. This does not include an additional $8,422,701 and $4,319,024 of orders in-house as of January 31, 2003 and 2002, respectively, which, according to our longstanding policy, are not included in the backlog until completed drawings have been approved. The Company expects that substantially all of the backlog that existed as of January 31, 2003 will be shipped during the ensuing fiscal year. Raw Materials: The Company procures its raw materials and supplies from various sources. The Company believes it could secure substitutes for the raw materials and supplies should they become unavailable, but there are no assurances that the substitutes would perform as well or be priced competitively. The Company has not experienced any significant difficulty in securing raw materials and supplies, and does not anticipate any significant difficulty in procurement in the coming year or foreseeable future. Employees: As of January 31, 2003, the Company employed 328 people, of whom 129 were involved in manufacturing, and 199 were engaged in administration, sales, engineering, supervision and clerical work. The Company has had no work stoppages during the past 20 years and considers its employee relations to be good. 4 Foreign Operations: Most of the Company's operations and assets are located in the United States. The Company also owns a manufacturing operation in Heerenveen, Holland through its wholly-owned subsidiary, Mefiag B.V., and operates a sales office and warehouse in Markham, Ontario, Canada through its wholly-owned subsidiary, Flex-Kleen Canada Inc. Large export sales are typically made on the basis of confirmed irrevocable letters of credit or time drafts to selected customers in U.S. dollars. The Company believes that currency fluctuation and political and economic instability do not constitute substantial risks to its business. For information concerning foreign net sales on a segment basis, reference is made to the Consolidated Business Segment Data contained on page 22. 5 Executive Officers of the Company: The following table sets forth certain information regarding the Executive Officers of the Company: William L. Kacin, age 71, is Chairman of the Board of Directors of the Company, a position he has held since June 1999. Mr. Kacin served as President and Chief Executive Officer of the Company and from February 1993 to March 2003. Prior to that, he was Vice President and General Manager of the Company's Sethco Division for seventeen years. Raymond J. De Hont, age 49, is President, Chief Executive Officer and Director of the Company. He was elected President and Chief Executive Officer in March 2003 and a Director of the Company in February 2003. Mr. De Hont served as the Chief Operating Officer of the Company from June 2000 to March 2003 and Vice President and General Manager of the Company's Fybroc Division from June 1995 to June 2000. In October 1999, he also assumed the responsibilities of General Manager for the Company's Dean Pump Division. Prior to joining Met-Pro Corporation, Mr. De Hont's management positions at Air and Water Technologies included Vice President and General Manager of Flex-Kleen Corporation, which is now a division of Met-Pro Corporation. Gary J. Morgan, CPA, age 48, is Vice President-Finance, Chief Financial Officer, Secretary, Treasurer and a Director of the Company. He was elected Vice President-Finance, Chief Financial Officer, Secretary and Treasurer in October 1997, and a Director of the Company in February 1998. Mr. Morgan joined the Company in 1980 and served as the Company's Corporate Controller immediately prior to October 1997. Mark A. Betchaver, age 53, is Vice President of the Company and General Manager of the Sethco Division, to which offices he was elected in June 1993. He joined the Company in 1972. James G. Board, age 49, is Vice President of the Company and General Manager of Dean Pump and Fybroc Divisions, to which offices he was elected in December 2000. For more than five years prior thereto, Mr. Board was employed by Tuthill Energy Systems since September 1997, as Director of Sales and prior to joining Tuthill Energy Systems held the position as Salesman for Oliver and Laughten Equipment Company, Inc. since September 1982. Thomas V. Edwards, age 49, is Vice President of the Company and General Manager of the Systems Division, to which offices he was elected in December 1998. Mr. Edwards joined the Company in June 1995 and prior to his present position, held the position of Assistant to the President. For more than five years prior thereto, Mr. Edwards was employed by Lockheed Martin as Engineering Manager. Sonja M. Haggert, age 49, is Vice President of the Company and General Manager of the Keystone Filter Division, to which offices she was elected in February 1993. She joined the Company in 1978, and prior to her present position, held the position of Distributor Sales Manager of the Division. Hans J. D. Huizinga, age 52, is the Managing Director of Mefiag B.V., a wholly-owned subsidiary of the Company, located in Heerenveen, Holland, an office to which he was elected in August 1993. He was employed by Mefiag B.V. for over five years as Managing Director for the predecessor of Mefiag B.V. prior to becoming an employee of the Company's subsidiary on June 30, 1993, when we acquired that company. Gregory C. Kimmer, age 48, is Vice President of the Company and General Manager of the Duall Division, to which offices he was elected in October 1989. For more than five years prior thereto, Mr. Kimmer was employed by Duall Industries, Inc. in various capacities. William F. Mersch, age 49, is Vice President of the Company and General Manager of the Stiles-Kem Division and Vice President and General Manager of Pristine Hydrochemical Inc. to which offices he was elected in October 1996 and May 2002, respectively. He joined the Company in June 1995 as National Sales Manager. For more than five years prior thereto, Mr. Mersch was employed by ANCO Corporation, in which his last position was Vice President Sales and Marketing. Robert P. Replogle, age 62, is Vice President of the Company and Director of the International Sales Division and the Mefiag Division, to which offices he was elected in December 1995. He joined the Company in December 1973 and prior to his present position, held the position of Director of the International Sales Division and the Mefiag Division. Paul A. Tetley, age 44, is Vice President of the Company and General Manager of Strobic Air Corporation, to which offices he was elected in December 1999. Mr. Tetley joined the Company in 1996 in connection with the Company's acquisition of Strobic Air Corporation and prior to his present position held the position of Director of Operations. For more than five years prior thereto, Mr. Tetley was employed by the predecessor entity as a Plant Manager. 6 Dennis M. Wierzbicki, age 45, is Vice President of the Company, General Manager of the Flex-Kleen Division and Vice President and General Manager of Flex-Kleen Canada Inc., to which offices he was elected in February 2003. For more than five years prior thereto, Mr. Wierzbicki was employed by American Air Filter, as Vice President and General Manager of its Air Quality Equipment Division since October 2000 and as Vice President of Marketing and Sales of its Global Air Filtration Division since April 1996. There are no family relationships between any of the Directors or Executive Officers of the Company. Each officer serves at the pleasure of the Board of Directors. 7 Item 2. Properties: The following manufacturing and production facilities were owned or leased by the Company at January 31, 2003:
Name Structure Property/Location Status Executive Offices, 73,000 square feet, cement 17 acres in Harleysville, Owned International Division, building, with finestone facing, Pennsylvania Mefiag Division and built 1976 Strobic Air Corporation Sethco Division 30,000 square feet, cement 4 acres in Hauppauge, Owned block with brick facing Long Island, New York built 1982 Fybroc Division 47,500 square feet, cement 8 acres in Telford, Owned building with brick facing, Pennsylvania built 1991 Keystone Filter Division 31,000 square feet, cement 2.3 acres in Hatfield, Owned block, built 1978 Pennsylvania Systems Division 3,375 square feet, Kulpsville, Pennsylvania Leased(1) brick building Dean Pump Division 66,000 square feet, metal 17.1 acres in Owned building Indianapolis, Indiana Duall Division 63,000 square feet, metal 7 acres in Owosso, Owned and masonry building Michigan Stiles-Kem Division 22,000 square feet, cement 2.55 acres in Owned block building, built 1996 Waukegan, Illinois Pristine Hydrochemical Inc. 1,500 square feet office and Williston, North Dakota Leased warehouse facility Flex-Kleen Division 13,760 square feet, brick Itasca, Illinois Leased(2) building 37,320 square feet, metal Sharpsburg, North Carolina Leased(3) building Mefiag B.V. 17,200 square feet, metal 1.1 acres in Owned and masonry building Heerenveen, Holland Vacant land 3 acres in Heerenveen, Holland Owned Flex-Kleen Canada Inc. 5,880 square feet, masonry Markham, Ontario, Canada Leased(4) building
(1) Systems Division's lease for the Sales and Engineering facility in Kulpsville, Pennsylvania expi res on February 9, 2005. (2) Flex-Kleen Division's lease for the operation in Itasca, Illinois expires on December 31, 2007. (3) Flex-Kleen Division's lease for the warehouse in Sharpsburg, North Carolina expires on October 29, 2004. (4) Flex-Kleen Canada Inc.'s lease for the sales and warehouse facility in Markham, Ontario, Canada expires on March 31, 2005. 8 Item 3. Legal Proceedings: Recently there appears to have been a significant increase, in certain states, in asbestos-related litigation claims against numerous industrial companies, particularly companies in the pump and fluid handling industries. During the last year, the Company was named as one of many defendants in a number of such cases filed in one of these states, Mississippi. The Company, along with the other defendants, is alleged to have sold products containing asbestos, although as of January 31, 2003, none of the Company's products have been specifically identified by any plaintiff in any case as a cause of the alleged injuries. The Company believes that it has defenses to the claims that have been asserted. Although the Company is vigorously defending all of the cases, the amount expended by the Company to date in responding to these cases has not been material, as most of the costs have been paid by insurance. Given the current status of these cases, it is not possible to determine the Company's potential liability, if any, and no provision has been made in the Company's financial statements for any such claims. In addition, the Company is party in a small number of legal proceedings arising out of the ordinary course of business. Management does not currently believe that these proceedings will materially impact the Company's results of operations, liquidity or financial condition. Item 4. Submission of Matters to a Vote of Security Holders: No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year ended January 31, 2003. 9 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters: (a) Market Information. The Company's Common Stock is traded on the New York Stock Exchange under the symbol "MPR". The high and low selling prices of the Common Stock for each quarterly period for the last two fiscal years, as reported on the New York Stock Exchange, are shown below.
Quarter ended Year ended January 31, 2003 April July October January - ------------------------------------------------------------------------------------------------------- Price range of common stock: High $15.55 $16.02 $14.30 $14.50 Low 13.05 12.45 12.50 13.00 Cash dividend paid .085 .085 .085 .09 Year ended January 31, 2002 April July October January - ------------------------------------------------------------------------------------------------------- Price range of common stock: High $13.17 $15.25 $14.08 $13.44 Low 11.00 12.65 9.90 11.17 Cash dividend paid .085 .085 .085 .085
(b) Holders. There were 527 registered stockholders at January 31, 2003, and the Company estimates that there are approximately 2,000 additional stockholders with stock held in street name. (c) Dividends. The Board of Directors declared quarterly dividends of $.085 per share payable on March 8, 2002, June 7, 2002, and September 6, 2002 to stockholders of record at the close of business on February 22, 2002, May 24, 2002 and August 23, 2002, respectively. The Board of Directors declared quarterly dividends of $.09 per share payable on December 9, 2002 and March 10, 2003 to stockholders of record as of November 29, 2002 and February 21, 2003, respectively. We expect to continue to pay comparable dividends during at least the next fiscal year. (d) Securities Authorized For Issuance under Equity Compensation Plans. Set forth below is information aggregated as of January 31, 2003 with respect to two equity compensation plans previously approved by the Company's stockholders, being the 1997 Stock Option Plan and 2001 Equity Incentive Plan. Also shown is information with respect to the Company's Year 2000 Employee Stock Purchase Plan. The data does not include any options under the 1992 Stock Option Plan, insofar as there were no options issued and outstanding as of January 31, 2003 nor were any options available for issuance as of such date.
Number of Securities Remaining Available Number of Securities For Future Issuance to be Issued Upon Weighted-Average Under Equity Exercise of Exercise Price of Compensation Plans Outstanding Options, Outstanding Options, (Excluding Securities Plan Category Warrants and Rights Warrants and Rights Reflected in Column (A)) - ------------------------------------------------------------------------------------------------------------------------------------ (A) (B) (C) Equity compensation plans approved by security holders 260,550 $11.97 559,425 Equity compensation plans not approved by security holders - - -
10 (e) Recent Sales of Unregistered Securities. In May 2002, the Company issued to one person an aggregate of 113,475 shares of Common Stock valued at $1,600,000 as part of the purchase price for the stock of Pristine Hydrochemical, Inc. These shares were not registered under the Securities Act of 1933 and were issued in reliance upon the exemption from registration afforded by Section 4(2) of the Securities Act. The purchaser of these shares represented to his investment intent in connection with such acquisition. (f) Stock Repurchases. During the fiscal year ended January 31, 2003, the Company repurchased an aggregate of 19,941 shares, at a total cost of $0.3 million, pursuant to a 300,000 share stock repurchase program authorized on December 15, 2000. To date, an aggregate of 69,032 shares have been repurchased through such repurchase program. Item 6. Selected Financial Data:
Years ended January 31, 2003 2002 2001 2000 1999 - ------------------------------------------------------------------------------------------------------------------------------ Selected Operating Statement Data Net sales $69,619,382 $70,088,446 $81,203,550 $78,449,992 $67,390,488 Income from operations 9,154,986 9,451,925 12,513,886 11,410,679 11,199,867 Net income 5,888,379 6,189,317 7,773,720 7,072,642 7,151,052 EBITDA (a) 10,714,343 11,497,932 14,736,541 13,826,535 13,287,878 Earnings per share, basic .95 1.01 1.26 1.08 1.04 Earnings per share, diluted .95 1.01 1.26 1.08 1.03 Selected Balance Sheet Data Current assets $40,631,745 $37,411,679 $37,412,259 $35,722,971 $38,683,453 Current liabilities 9,750,309 10,151,149 12,957,995 13,681,578 14,387,868 Working capital 30,881,436 27,260,530 24,454,264 22,041,393 24,295,585 Current ratio 4.2 3.7 2.9 2.6 2.7 Total assets 73,754,671 68,070,192 69,151,341 68,641,983 72,888,641 Long-term obligations 7,111,995 7,125,195 8,100,000 9,933,014 11,941,954 Total stockholders' equity 56,045,885 50,279,394 47,061,366 44,206,333 45,925,107 Total capitalization 63,157,880 57,404,589 55,161,366 54,139,347 57,867,061 Return on average total assets, % 8.3 9.0 11.3 10.0 10.9 Return on average stockholders' equity, % 11.1 12.7 17.0 15.7 15.9 Other Financial Data Net cash flows from operating activities $5,831,186 $8,301,567 $10,047,845 $10,204,749 $7,990,115 Capital expenditures 752,125 1,631,356 1,023,682 1,193,559 1,191,616 Stockholders' equity per share 9.02 8.27 7.73 6.92 6.76 Cash dividends paid per share (b) .345 .34 .32 .48 .30 Average common shares, basic 6,179,618 6,109,141 6,152,325 6,542,210 6,907,654 Average common shares, diluted 6,221,496 6,143,837 6,173,437 6,576,820 6,955,892 Shares of common stock outstanding 6,216,369 6,083,172 6,090,155 6,391,242 6,794,898 ==============================================================================================================================
(a) EBITDA represents income from operations before taxes, interest expense, interest income, and depreciation and amortization expenses. (b) Fiscal year ended January 31, 2000 included an annual dividend of $.32 per share payable on April 23, 1999 and quarterly dividends of $.08 per share payable on September 10, 1999 and December 10, 1999, resulting from the Company's change from an annual to a quarterly dividend. 11 Item7. Management's Discussion and Analysis of Financial Condition and Results of Operations: The following discussion should be read in conjunction with the Company's Consolidated Financial Statements and Notes thereto included elsewhere in this Form 10-K together with "Factors that May Affect Future Results" elsewhere in this Management's Discussion and Analysis of Financial Condition and Result of Operations. Results of Operations: The following table sets forth for the periods indicated the percentage of total net sales that such items represent in the Consolidated Statement of Operations.
Years ended January 31, 2003 2002 2001 - ------------------------------------------------------------------------------------------- Net sales 100.0% 100.0% 100.0% Cost of goods sold 65.3% 65.7% 65.6% - ------------------------------------------------------------------------------------------- Gross profit 34.7% 34.3% 34.4% Selling, general and administrative expense 21.6% 20.8% 19.0% - ------------------------------------------------------------------------------------------- Income from operations 13.1% 13.5% 15.4% Interest expense (.7%) (.8%) (.8%) Other income, net .4% 1.2% .6% - ------------------------------------------------------------------------------------------- Income before taxes 12.8% 13.9% 15.2% Provision for taxes 4.4% 5.1% 5.6% - ------------------------------------------------------------------------------------------- Net income 8.4% 8.8% 9.6% ===========================================================================================
FYE 2003 vs FYE 2002: Net sales for the fiscal year ended January 31, 2003 were $69.6 million compared to $70.1 million for the fiscal year ended January 31, 2002, a decrease of $0.5 million. Sales in the Product Recovery/Pollution Control Equipment segment increased to $46.1 million, 3.6% higher than the prior year due primarily to increased demand for our fume and odor control equipment. Sales in the Fluid Handling Equipment segment were $23.5 million, 8.1% lower than the prior fiscal year due to decreased demand for our specialty pump equipment. Foreign sales decreased to $10.7 million for the fiscal year ended January 31, 2003, compared to $11.0 million for the same period last year, a 3.2% decrease. Foreign sales decreased 10.5% in the Fluid Handling Equipment segment from the prior fiscal year, and the Product Recovery/Pollution Control Equipment segment foreign sales were 7.7% higher than the prior fiscal year due to higher demand for our fume and odor control equipment. Net income for the fiscal year ended January 31, 2003 was $5.9 million compared to $6.2 million for the fiscal year ended January 31, 2002, a decrease of $0.3 million. The decrease in net income is principally related to a $0.4 million net gain on the sale of property and equipment associated with the Systems Division's operations during the fiscal year ended January 31, 2002, combined with lower sales in the Company's Fluid Handling Equipment segment during the current fiscal year. The gross margin for the fiscal year ended January 31, 2003 increased to 34.7% versus 34.3% for the prior year. This increase can be attributed to higher gross margins experienced in the Product Recovery/Pollution Control Equipment segment. Selling expense was $7.1 million for the fiscal year ended January 31, 2003 or an increase of $0.1 million over the prior year. Selling expense as a percentage of net sales was 10.3% compared to 10.0% for the prior fiscal year. 12 General and administrative expense was $7.9 million for the fiscal year ended January 31, 2003 compared to $7.6 million in the prior fiscal year. General and administrative expense as a percentage of net sales was 11.3% for the fiscal year ended January 31, 2003 compared to 10.8% for the prior fiscal year. This increase, in dollars, is principally related to increased pension and health care costs, offset by the reduction in amortization expense for goodwill that is no longer being amortized per Statement of Financial Accounting Standards ("SFAS") No. 142. Interest expense was $0.5 million for the fiscal year ended January 31, 2003 compared to $0.6 million in the prior fiscal year. Other income, net was $0.3 million for the fiscal year ended January 31, 2003 compared to $0.9 million for the same period in the prior year, a decrease of $0.6 million. The reduction is the result of recording a $0.4 million net gain on the sale of property and equipment associated with the Systems Division's operations in West Chester, Pennsylvania during the fiscal year ended January 31, 2002, combined with the reduction in interest rates on our short-term investments during the current fiscal year. The effective tax rate decreased to 34.0% for the fiscal year ended January 31, 2003 from 36.5% for the prior year. FYE 2002 vs FYE 2001: Net sales for the fiscal year ended January 31, 2002 were $70.1 million compared to $81.2 million for the fiscal year ended January 31, 2001, a decrease of $11.1 million. Sales in the Product Recovery/Pollution Control Equipment segment were $44.5 million, $7.2 million lower than the same period last year. Sales in the Fluid Handling Equipment segment were $25.6 million, $4.0 million lower compared to the fiscal year ended January 31, 2001. We believe that the decreased demand in both business segments is attributed to a slowing economy. Foreign sales decreased to $11.0 million for the fiscal year ended January 31, 2002, compared to $16.6 million for the same period last year. Foreign sales decreased 25.4% in the Fluid Handling Equipment segment from the prior fiscal year, and the Product Recovery/Pollution Control Equipment segment foreign sales were 43.0% lower than the prior fiscal year due to lower demand for our fume and odor control equipment. Net income for the fiscal year ended January 31, 2002 was $6.2 million compared to $7.8 million for the fiscal year ended January 31, 2001, a decrease of $1.6 million. The decrease in net income is principally related to lower sales in both business segments during the period. The gross margin for the fiscal year ended January 31, 2002 decreased slightly to 34.3% versus 34.4% for the prior year. Selling expense was $7.0 million for the fiscal year ended January 31, 2002 or a slight decrease from the prior fiscal year. Selling expense as a percentage of net sales was 10.0% compared to 8.7% for the prior fiscal year. General and administrative expense was $7.6 million for the fiscal year ended January 31, 2002 compared to $8.4 million for the same period last year. General and administrative expense as a percentage of net sales was 10.8% for the fiscal year ended January 31, 2002 compared to 10.3% for the prior fiscal year. This reduction, in dollars, is related to the overall reduction in compensation expense and amortization expenses for certain intangible assets which are fully amortized. Interest expense was $0.6 million for the fiscal year ended January 31, 2002 compared to $0.7 million in the prior fiscal year. During the fiscal year ended January 31, 2002, the Company reduced its long-term debt by $1.7 million. Other income totaling $0.9 million for the fiscal year ended January 31, 2002 consisted of interest income on short-term investments and a $0.5 million gain on the sale of property and equipment. In September 2001, the Company sold property and equipment associated with the Systems Division's operations in West Chester, Pennsylvania resulting in the majority of this gain. These operations were relocated to a leased facility in Kulpsville, Pennsylvania. Other income of $0.5 million for the fiscal year ended January 31, 2001 consisted primarily of interest income on short-term investments. The effective tax rate decreased to 36.5% for the fiscal year ended January 31, 2002 from 37.0% for the prior year. 13 Liquidity: Cash and cash equivalents were $13.4 million on January 31, 2003, an increase of $1.6 million over the previous year. This increase is the net result of positive cash flows provided by operating activities of $5.8 million, proceeds from the exercise of stock options amounting to $0.4 million, offset by the payment of cash dividends amounting to $2.0 million (net of $0.1 million of dividends returned to the Company in the form of stock purchases under the Company's Dividend Reinvestment Plan), payments of scheduled debt totalling $1.2 million, purchase of treasury stock amounting to $0.3 million, a cash payment of $0.4 million as part of the purchase price for Pristine Hydrochemical, and investment in property and equipment amounting to $0.8 million. Accounts receivable were $12.2 million at January 31, 2003, an increase of $1.8 million compared to the prior year. The timing and size of shipments and retainage on contracts, especially in the Product Recovery/Pollution Control Equipment segment, will influence accounts receivable balances at any point in time. Inventories totalled $13.4 million at January 31, 2003, a decrease of $0.3 million compared to the prior year. Inventory balances will fluctuate depending on the size and timing of orders and market demand, especially when major systems and contracts are involved. Current liabilities decreased from $10.2 million at January 31, 2002 to $9.8 million at January 31, 2003, or $0.4 million. A reduction in accounts payable and customer advances, offset by an increase in the current portion of long-term debt and accrued expenses, accounted for the decrease. The Company has consistently maintained a high current ratio and has not utilized either the domestic line of credit or the foreign line of credit totalling $5.0 million which are available for working capital purposes. Cash flows, in general, have exceeded the current needs of the Company. The Company presently foresees no change in this situation in the immediate future. As of January 31, 2003 and January 31, 2002, working capital was $30.9 million and $27.3 million, respectively, and the current ratio was 4.2 and 3.7, respectively. Capital Resources and Requirements: Cash flows provided by operating activities during the fiscal year ended January 31, 2003 amounted to $5.8 million compared to $8.3 million during the prior fiscal year. This decrease in cash flows from operating activities was due principally to an increase in accounts receivable and a decrease in net income (of which $0.4 million in the fiscal year ended January 31, 2002 was due to the net gain on the sale of property and equipment associated with the Systems Division's operations) and customer advances for the fiscal year ended January 31, 2003, offset by a reduction in inventory balances. Per share, our cash flows from operating activities decreased to $.94 per share compared to $1.35 per share for the prior year. Cash flows used in investing activities during the fiscal year ended January 31, 2003 amounted to $1.2 million compared to $0.5 million during the fiscal year ended January 31, 2002. The Company's investing activities for the fiscal year ended January 31, 2003, principally represent the acquisition of a business during the fiscal year ended January 31, 2003 and the purchase of property, plant and equipment in the two operating segments during both years. The Company continues to invest in machinery and equipment, tooling, patterns and molds to improve efficiency and maintain our position as leaders in the markets that we serve. Financing activities during the fiscal year ended January 31, 2003 used $3.2 million of available resources compared to $4.4 million during the prior fiscal year. The 2003 activity is the result of the payment of quarterly cash dividends amounting to $2.0 million (net of $0.1 million of dividends returned to the Company in the form of stock purchases under the Company's Dividend Reinvestment Plan), reduction of long-term debt totalling $1.2 million, and the purchase of treasury stock totalling $0.3 million, offset by proceeds received by the exercise of stock options amounting to $0.4 million. The Company paid $1.2 million of scheduled debt during the current fiscal year. The percentage of long-term debt to equity at January 31, 2003 decreased to 12.7% compared to 14.2% at January 31, 2002. During the fiscal year ended January 31, 2003, the Company repurchased an aggregate of 19,941 shares at a cost of $0.3 million under the 300,000 share stock repurchase program authorized on December 15, 2000. 14 The Board of Directors declared quarterly dividends of $.085 per share payable on March 8, 2002, June 7, 2002 and September 6, 2002 to stockholders of record at the close of business on February 22, 2002, May 24, 2002 and August 23, 2002, respectively, and a quarterly dividend of $.09 per share payable on December 9, 2002 to stockholders of record as of November 29, 2002. On December 19, 2002, the Board of Directors declared a quarterly dividend of $.09 per share, which was paid on March 10, 2003 to stockholders of record at the close of business on February 21, 2003. The Company accounts for its defined benefit plans in accordance with Statement of Financial Accounting Standards ("SFAS") No. 87, "Employers' Accounting for Pensions". SFAS No. 87 requires a liability ("minimum pension liability") be recorded when the accumulated benefit obligation exceeds the fair value of plan assets. The Company has recently experienced a decline in the fair market value of assets in the Company's non-contributory defined benefit pension plan trust. This decline is due, in large part, to the generally weak economy and general declines in the market value of investments. In connection with the decline in the fair market value of these assets, at January 31, 2003, the Company recorded an after-tax charge to stockholders' equity of $0.1 million. As part of our commitment to the future, the Company expended $0.6 million and $1.0 million on research and development for the fiscal years ended January 31, 2003 and 2002, respectively. The Company will continue to invest in new product development to maintain and enhance its competitive position in the markets in which we participate. Capital expenditures will be made to support operations and expand our capacity to meet market demands. The Company intends to finance capital expenditures in the coming year through cash flows from operations and will secure third party financing, when deemed appropriate. Recent Accounting Pronouncements: In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure", which provides alternative methods of transition for a voluntary change to fair value based method of accounting for stock-based employee compensation as prescribed in SFAS No. 123. Additionally, SFAS No. 148 requires more prominent and more frequent disclosures in financial statements about the effects of stock-based compensation. The provisions of this Statement are effective for fiscal years ending after December 15, 2002. Management does not expect the adoption of this Statement to have a material impact on the Company's financial condition or results of operations. Critical Accounting Policies and Estimates: Management's discussion and analysis of its financial position and results of operations are based upon the Company's consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosure of contingent assets and liabilities. The significant accounting policies which we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following: The Company's revenues are recognized when products are shipped to unaffiliated customers. The Securities and Exchange Commission's Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition", provides guidance on the application of generally accepted accounting principles to selected revenue recognition issues. The Company has concluded that its revenue recognition policy is appropriate and in accordance with generally accepted accounting principles and SAB No. 101. Property, plant and equipment, intangible and certain other long-lived assets are depreciated and amortized over their useful lives. Useful lives are based on management's estimates of the period that the assets will generate revenue. Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In accordance with SFAS No.142, "Goodwill and Other Intangible Assets", which supersedes Accounting Principles Board ("APB") No.17, "Intangible Assets", effective February 1, 2002, the Company's unamortized goodwill balance is not being amortized over its estimated useful life; rather, it is being assessed at least annually for impairment. The determination of our obligation and expense for pension benefits is dependent on our selection of certain assumptions used by actuaries in calculating such amounts. Those assumptions are described in Note 10 to the consolidated financial statements and include, among others, the discount rate, expected long-term rate of return on plan assets and rates of increase in compensation. In accordance with generally accepted accounting principles, actual results that differ from our assumptions are accumulated and amortized over future periods and therefore, generally affect our recognized expense and recorded obligation in such future periods. 15 While we believe that our assumptions are appropriate, significant differences in our actual experience or significant changes in our assumptions may materially affect our pension obligations and our future expense. Factors that May Affect Future Results: Met-Pro's prospects are subject to certain uncertainties and risk. This Annual Report on Form 10-K also contains certain forward-looking statements within the meaning of the Federal securities laws. Met-Pro's results may differ materially from its current results and actual results could differ materially from those suggested in the forward-looking statements as a result of certain risk factors, including but not limited to those set forth below, other one time events, other important factors disclosed previously and from time to time in Met-Pro's other filings with the Securities and Exchange Commission. The following important factors, along with those discussed elsewhere in this Annual Report, could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: o materially adverse changes in economic conditions in the markets served by us or in significant customers of ours; o material changes in available technology; o changes in our accounting rules promulgated by regulatory agencies, including the SEC, which could result in an impact on earnings; o the write-down of costs in excess of net assets of businesses acquired (goodwill), as a result of the determination that the acquired business is impaired; o unexpected results in our product development activities; o loss of key customers; o changes in product mix; o changes in our existing management; o exchange rate fluctuations; o changes in federal, state laws and regulations; o lower than anticipated return on investments, which could affect the amount of the Company's pension liabilities; o the assertion of litigation claims that the Company's products, including products produced by companies acquired by the Company, infringe third party patents or have caused injury, loss or damage; o adverse developments in the asbestos cases that have been filed against the Company, including without limitations adverse developments in the availability of insurance coverage in these cases; o the effect of acquisitions and other strategic ventures; o failure to properly quote and/or execute customer orders, including misspecifications, design, engineering or production errors; o losses related to international sales; and/or o failure in execution of acquisition strategy. Item 7A. Quantitative and Qualitative Disclosure About Market Risks: We have no disclosure to make with respect to this Item. Item 8. Financial Statements and Supplementary Data: Index to Consolidated Financial Statements and Supplementary Data:
Page Consolidated Financial Statements: ---- Independent Auditor's Report ............................................................................... 17 Consolidated Statement of Operations........................................................................ 18 Consolidated Balance Sheet.................................................................................. 19 Consolidated Statement of Cash Flows........................................................................ 20 Consolidated Statement of Stockholders' Equity.............................................................. 21 Consolidated Business Segment Data ......................................................................... 22 Notes to Consolidated Financial Statements ................................................................. 23 Supplementary Data: Quarterly Financial Data ................................................................................... 37
16 INDEPENDENT AUDITOR'S REPORT To the Board of Directors and Stockholders Met-Pro Corporation Harleysville, Pennsylvania We have audited the accompanying consolidated balance sheet of Met-Pro Corporation and its wholly-owned subsidiaries as of January 31, 2003 and 2002, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended January 31, 2003. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Met-Pro Corporation and its wholly-owned subsidiaries as of January 31, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended January 31, 2003 in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 1 to the consolidated financial statements, effective February 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets". /s/ Margolis & Company P.C. --------------------------- Bala Cynwyd, Pennsylvania February 21, 2003 17
MET-PRO CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS Years ended January 31, 2003 2002 2001 - ------------------------------------------------------------------------------------------------------------- Net sales $69,619,382 $70,088,446 $81,203,550 Cost of goods sold 45,439,557 46,060,214 53,242,396 - ------------------------------------------------------------------------------------------------------------- Gross profit 24,179,825 24,028,232 27,961,154 - ------------------------------------------------------------------------------------------------------------- Operating expenses Selling 7,139,082 6,998,234 7,043,540 General and administrative 7,885,757 7,578,073 8,403,728 - ------------------------------------------------------------------------------------------------------------- 15,024,839 14,576,307 15,447,268 - ------------------------------------------------------------------------------------------------------------- Income from operations 9,154,986 9,451,925 12,513,886 Interest expense (505,394) (557,855) (694,112) Other income, net 278,126 852,885 524,729 - ------------------------------------------------------------------------------------------------------------- Income before taxes 8,927,718 9,746,955 12,344,503 Provision for taxes 3,039,339 3,557,638 4,570,783 - ------------------------------------------------------------------------------------------------------------- Net income $5,888,379 $6,189,317 $7,773,720 ============================================================================================================= Earnings per share Basic $.95 $1.01 $1.26 Diluted $.95 $1.01 $1.26 ============================================================================================================= Average number of common and common equivalent shares outstanding Basic 6,179,618 6,109,141 6,152,325 Diluted 6,221,496 6,143,837 6,173,437 =============================================================================================================
The notes to consolidated financial statements are an integral part of the above statement. 18 MET-PRO CORPORATION CONSOLIDATED BALANCE SHEET
January 31, ASSETS 2003 2002 - -------------------------------------------------------------------------------------------------------------- Current assets Cash and cash equivalents $13,429,367 $11,832,260 Accounts receivable, net of allowance for doubtful accounts of approximately $263,000 and $229,000, respectively 12,217,315 10,465,069 Inventories 13,374,128 13,701,676 Prepaid expenses, deposits and other current assets 979,714 911,457 Deferred income taxes 631,221 501,217 - -------------------------------------------------------------------------------------------------------------- Total current assets 40,631,745 37,411,679 Property, plant and equipment, net 11,950,422 12,505,114 Costs in excess of net assets of businesses acquired, net 20,798,913 17,780,767 Other assets 373,591 372,632 - -------------------------------------------------------------------------------------------------------------- Total assets $73,754,671 $68,070,192 ============================================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY - -------------------------------------------------------------------------------------------------------------- Current liabilities Current portion of long-term debt $1,536,926 $1,231,469 Accounts payable 2,810,002 3,094,300 Accrued salaries, wages and expenses 4,827,241 4,558,576 Dividend payable 559,167 517,070 Customers' advances 16,973 749,734 - -------------------------------------------------------------------------------------------------------------- Total current liabilities 9,750,309 10,151,149 Long-term debt 7,111,995 7,125,195 Other non-current liabilities 36,621 34,424 Deferred income taxes 809,861 480,030 - -------------------------------------------------------------------------------------------------------------- Total liabilities 17,708,786 17,790,798 - -------------------------------------------------------------------------------------------------------------- Commitments Stockholders' equity Common stock, $.10 par value; 18,000,000 shares authorized, 7,226,303 and 7,219,165 shares issued, of which 1,009,934 and 1,135,993 shares were reacquired and held in treasury at the respective dates 722,630 721,916 Additional paid-in capital 8,196,782 7,879,368 Retained earnings 59,705,267 55,990,079 Accumulated other comprehensive loss (541,959) (827,737) Treasury stock, at cost (12,036,835) (13,484,232) - -------------------------------------------------------------------------------------------------------------- Total stockholders' equity 56,045,885 50,279,394 - -------------------------------------------------------------------------------------------------------------- Total liabilities and stockholders' equity $73,754,671 $68,070,192 ==============================================================================================================
The notes to consolidated financial statements are an integral part of the above statement. 19
MET-PRO CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS Years ended January 31, 2003 2002 2001 - ----------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS Cash flows from operating activities Net income $5,888,379 $6,189,317 $7,773,720 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,559,357 2,046,007 2,222,655 Deferred income taxes 379,874 155,419 256,998 (Gain) loss on sales of property and equipment, net (5,247) (472,895) 12,656 Allowance for doubtful accounts 34,188 10,721 (6,576) (Increase) decrease in operating assets, net of acquisition Accounts receivable (1,420,024) 3,658,676 (515,006) Inventories 591,932 (687,317) 631,810 Prepaid expenses and other current assets (52,207) 115,808 92,357 Other assets (8,408) (8,092) (52,309) Increase (decrease) in operating liabilities, net of acquisition Accounts payable and accrued expenses (406,094) (2,933,944) (181,137) Customers' advances (732,761) 140,289 (270,987) Other non-current liabilities 2,197 87,578 83,664 - ----------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 5,831,186 8,301,567 10,047,845 - ----------------------------------------------------------------------------------------------------------- Cash flows from investing activities Proceeds from sales of property and equipment 19,347 1,095,456 2,000 Acquisitions of property and equipment (752,125) (1,631,356) (1,023,682) Payment for purchase of acquisition (465,673) - - - ----------------------------------------------------------------------------------------------------------- Net cash (used in) investing activities (1,198,451) (535,900) (1,021,682) - ----------------------------------------------------------------------------------------------------------- Cash flows from financing activities Proceeds from new borrowing 16,373 - - Reduction of debt (1,235,974) (1,741,711) (2,008,940) Exercise of stock options 353,229 1,092,253 - Payment of dividends (2,029,579) (1,934,132) (1,806,361) Purchase of treasury shares (289,218) (1,793,435) (3,018,786) - ----------------------------------------------------------------------------------------------------------- Net cash (used in) financing activities (3,185,169) (4,377,025) (6,834,087) - ----------------------------------------------------------------------------------------------------------- Effect of exchange rate changes on cash 149,541 (66,427) (13,587) - ----------------------------------------------------------------------------------------------------------- Net increase in cash and cash equivalents 1,597,107 3,322,215 2,178,489 Cash and cash equivalents at beginning of year 11,832,260 8,510,045 6,331,556 - ----------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of year $13,429,367 $11,832,260 $8,510,045 ===========================================================================================================
The notes to consolidated financial statements are an integral part of the above statement. 20
MET-PRO CORPORATION CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY Accumulated Additional Other Common Paid-in Retained Comprehensive Treasury Stock Capital Earnings Income/(Loss) Stock Total - ------------------------------------------------------------------------------------------------------------------------------------ Balances, January 31, 2000 $718,919 $7,973,873 $46,087,476 ($403,993) ($10,169,942) $44,206,333 Comprehensive income: Net income - - 7,773,720 - - Cumulative translation adjustment - - - (87,170) - Total comprehensive income 7,686,550 Dividends paid, $.32 per share - - (1,462,727) - - (1,462,727) Dividend declared, $.085 per share - - (517,669) - - (517,669) Proceeds from issuance of common stock under dividend reinvestment plan (17,389 shares) 1,739 165,926 - - - 167,665 Purchase of 318,476 shares of treasury stock - - - - (3,018,786) (3,018,786) - ------------------------------------------------------------------------------------------------------------------------------------ Balances, January 31, 2001 720,658 8,139,799 51,880,800 (491,163) (13,188,728) 47,061,366 Comprehensive income: Net income - - 6,189,317 - - Cumulative translation adjustment - - - (231,570) - Interest rate swap, net of tax of $60,357 - - - (105,004) - Total comprehensive income 5,852,743 Dividends paid, $.34 per share - - (1,562,968) - - (1,562,968) Dividend declared, $.085 per share - - (517,070) - - (517,070) Proceeds from issuance of common stock under dividend reinvestment plan (12,582 shares) 1,258 145,247 - - - 146,505 Stock option transactions - (405,678) - - 1,497,931 1,092,253 Purchase of 145,590 shares of treasury stock - - - - (1,793,435) (1,793,435) - ------------------------------------------------------------------------------------------------------------------------------------ Balances, January 31, 2002 721,916 7,879,368 55,990,079 (827,737) (13,484,232) 50,279,394 Comprehensive income: Net income - - 5,888,379 - - Cumulative translation adjustment - - - 617,563 - Interest rate swap, net of tax of $109,056 - - - (202,802) - Minimum pension liability adjustment, net of tax of $70,991 - - - (128,983) - Total comprehensive income 6,174,157 Issuance of treasury stock for acquisition of business - 250,782 - - 1,349,218 1,600,000 Dividends paid, $.345 per share - - (1,614,024) - - (1,614,024) Dividend declared, $.09 per share - - (559,167) - - (559,167) Proceeds from issuance of common stock under dividend reinvestment plan (7,138 shares) 714 100,801 - - - 101,515 Stock option transactions - (34,169) - - 387,397 353,228 Purchase of 19,941 shares of treasury stock - - - - (289,218) (289,218) - ------------------------------------------------------------------------------------------------------------------------------------ Balances, January 31, 2003 $722,630 $8,196,782 $59,705,267 ($541,959) ($12,036,835) $56,045,885 ====================================================================================================================================
The notes to consolidated financial statements are an integral part of the above statement. 21
MET-PRO CORPORATION CONSOLIDATED BUSINESS SEGMENT DATA Years ended January 31, 2003 2002 2001 - ------------------------------------------------------------------------------------------------- Net sales to unaffiliated customers Product recovery/pollution control equipment $46,094,834 $44,498,316 $51,650,730 Fluid handling equipment 23,524,548 25,590,130 29,552,820 - ------------------------------------------------------------------------------------------------- $69,619,382 $70,088,446 $81,203,550 Includes foreign sales of: Product recovery/pollution control equipment $4,777,495 $4,437,309 $7,787,437 Fluid handling equipment 5,907,012 6,598,746 8,846,889 - ------------------------------------------------------------------------------------------------- $10,684,507 $11,036,055 $16,634,326 ================================================================================================= Income from operations Product recovery/pollution control equipment $6,039,173 $5,144,940 $7,066,793 Fluid handling equipment 3,115,813 4,306,985 5,447,093 - ------------------------------------------------------------------------------------------------- $9,154,986 $9,451,925 $12,513,886 ================================================================================================= Depreciation and amortization expense Product recovery/pollution control equipment $859,590 $1,303,761 $1,450,025 Fluid handling equipment 699,767 742,246 772,630 - ------------------------------------------------------------------------------------------------- $1,559,357 $2,046,007 $2,222,655 ================================================================================================= Capital expenditures Product recovery/pollution control equipment $301,437 $675,435 $442,662 Fluid handling equipment 315,409 746,241 448,685 - ------------------------------------------------------------------------------------------------- 616,846 1,421,676 891,347 Corporate 135,279 209,680 132,335 - ------------------------------------------------------------------------------------------------- $752,125 $1,631,356 $1,023,682 ================================================================================================= Identifiable assets at January 31 Product recovery/pollution control equipment $41,396,626 $38,945,179 $40,274,449 Fluid handling equipment 18,417,187 18,209,157 18,785,577 - ------------------------------------------------------------------------------------------------- 59,813,813 57,154,336 59,060,026 Corporate 13,940,858 10,915,856 10,091,315 - ------------------------------------------------------------------------------------------------- $73,754,671 $68,070,192 $69,151,341 =================================================================================================
The Company follows the practice of allocating general corporate expenses, including depreciation and amortization expense, between the segments. 22 MET-PRO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JANUARY 31, 2003, 2002 AND 2001 NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of operations: The Company manufactures and sells product recovery/pollution control equipment for purification of air and liquids, and fluid handling equipment for corrosive, abrasive and high temperature liquids. Basis of presentation: The consolidated financial statements include the accounts of Met-Pro Corporation ("Met-Pro" or the "Company") and its wholly-owned subsidiaries, Mefiag B.V., Flex-Kleen Canada Inc., Strobic Air Corporation ("Strobic Air"), MPC Inc. and Pristine Hydrochemical Inc. Significant intercompany accounts and transactions have been eliminated. Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Foreign currency translation: Assets and liabilities of the Company's foreign subsidiaries are translated at current exchange rates, while income and expenses are translated at average rates for the period. Translation gains and losses are reported as a component of other comprehensive income in the Statement of Stockholders' Equity. Inventories: Inventories generally are stated at the lower of cost (principally first-in, first-out) or market except for the inventory at the Dean Pump Division which is determined on the last-in, first-out basis (see Note 4). Property, plant and equipment: Property, plant and equipment are stated at cost. Depreciation is computed principally by the straight-line method over estimated useful lives. Expenditures for maintenance and repairs are charged to expense as incurred. Renewals and betterments are capitalized (see Note 5). Costs in excess of net assets of businesses acquired: In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations", and SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS No. 141, which was effective for business combinations completed after June 30, 2001, requires, among other things, that (1) the purchase method of accounting be used for all business combinations, (2) specific criteria be established for the recognition of intangible assets separately from goodwill and (3) additional information about acquired intangible assets be provided. SFAS No. 142, which became effective for the Company as of February 1, 2002, primarily addresses the accounting for goodwill and intangible assets subsequent to their acquisition. Among other things it requires that goodwill not be amortized for financial statement purposes; instead, management is required to test goodwill for impairment at least annually. The Company performed its annual impairment test in the second quarter of the fiscal year ended January 31, 2003 using a fair value approach. No impairment was present upon performing this test. At January 31, 2003, costs in excess of net assets of businesses acquired associated with the Company's reportable business segments totalled $20,798,913. The Company cannot predict the occurrence of certain events that might adversely affect the reportable value of costs in excess of net assets of businesses acquired. 23
MET-PRO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JANUARY 31, 2003, 2002 AND 2001 (Continued) If SFAS No. 142 had been in effect during the years ended January 31, 2002 and 2001, the Company's earnings would have been improved because of reduced amortization, as described below: January 31, 2003 2002 2001 --------------------------------------------------------------------------------------------------------- Net income as reported $5,888,379 $6,189,317 $7,773,720 Add: amortization - 314,775 312,294 --------------------------------------------------------------------------------------------------------- Adjusted net income $5,888,379 $6,504,092 $8,086,014 ========================================================================================================= Basic earnings per share as reported $.95 $1.01 $1.26 Add: amortization - .05 .05 --------------------------------------------------------------------------------------------------------- Adjusted basic earnings per share $.95 $1.06 $1.31 ========================================================================================================= Diluted earnings per share as reported $.95 $1.01 $1.26 Add: amortization - .05 .05 --------------------------------------------------------------------------------------------------------- Adjusted diluted earnings per share $.95 $1.06 $1.31 =========================================================================================================
The changes in the carrying amount of costs in excess of net assets of businesses acquired by business segment for the fiscal year ended January 31, 2003 are as follows:
Product Recovery/ Pollution Control Fluid Handling Equipment Equipment Total --------------------------------------------------------------------------------------------------------- Balance as of February 1, 2002 $16,048,285 $1,732,482 $17,780,767 Goodwill acquired during the period 3,018,146 - 3,018,146 --------------------------------------------------------------------------------------------------------- Balance as of January 31, 2003 $19,066,431 $1,732,482 $20,798,913 =========================================================================================================
Revenue recognition: Revenues are generally recognized when products are shipped. Advertising: Advertising costs are charged to operations in the year incurred and were $1,299,908, $1,403,366 and $1,344,231 for the years ended January 31, 2003, 2002 and 2001, respectively. Research and development: Research and development costs are charged to operations in the year incurred and were $624,098, $979,813 and $788,777 for the years ended January 31, 2003, 2002 and 2001, respectively. Earnings per share: Basic earnings per share are computed based on the weighted average number of common shares outstanding during each year. Diluted earnings per share are computed based on the weighted average number of shares outstanding plus all potential dilutive common shares outstanding (stock options) during each year. 24 MET-PRO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JANUARY 31, 2003, 2002 AND 2001 (Continued) Dividends: On December 19, 2002, the Board of Directors declared a $.09 per share quarterly cash dividend payable on March 10, 2003 to stockholders of record on February 21, 2003, amounting to $559,167. Stock options: The Company accounts for stock options under the provisions of Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees" and related interpretations. Accounting for the issuance of stock options under the provisions of APB No. 25 typically does not result in compensation expense for the Company since the exercise price of options is normally established at the market price of the Company's Common Stock on the date granted. SFAS No. 123, "Accounting for Stock-Based Compensation", provides that the related expense may be recorded in the basic financial statements or the pro forma effect on earnings may be disclosed in the financial statements. Pro forma information regarding net income and earnings per share is required by SFAS No. 123, which requires that the information be determined as if we had accounted for our stock options under the fair value method. The fair value for these options was estimated at the date of grant using the Black-Scholes pricing model with the following assumptions: risk-free interest rates ranging from 2.5% to 5.9%, dividend yield ranging from 2.8% to 3.9%, expected volatility of the market price of the Company's Common Stock ranging from 26% to 30%, and an expected option life of five years. The risk-free interest rate is based on five-year treasury bill rates. For the purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting periods. The pro forma information compared to reported information for the three years ended January 31 is presented in the following table:
2003 2002 2001 ----------------------------------------------- Net income: As reported $5,888,379 $6,189,317 $7,773,720 Pro forma 5,788,478 6,097,825 7,709,076 Basic earnings per share: As reported $.95 $1.01 $1.26 Pro forma .94 1.00 1.25 Diluted earnings per share: As reported $.95 $1.01 $1.26 Pro forma .93 .99 1.25 ===============================================
The pro forma effects of applying SFAS No. 123 to fiscal 2003, 2002 and 2001 may not be representative of the pro forma effects in future years. Based on the vesting schedule of the Company's stock option grants, the pro forma effects on earnings are most pronounced in the early years following each grant. The timing and magnitude of any future grants is at the discretion of the Company's Board of Directors and cannot be assured. Non-employee directors of the Company are eligible to receive stock options for Common Stock. These stock options are accounted for the same as stock options granted to employees. 25 MET-PRO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JANUARY 31, 2003, 2002 AND 2001 (Continued) Concentrations of credit risk: Financial instruments which potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents (see Note 2), and trade accounts receivable. The Company believes concentrations of accounts receivable credit risk are limited due to the number of customers, and dispersion among the business segments and geographic areas. It is the policy of management to review the outstanding accounts receivable at the end of each reporting period, as well as the bad debt write-offs experienced in the past, and establish an allowance for doubtful accounts for uncollectable amounts. Supplemental cash flow information: 2003 2002 2001 ----------------------------------------------------------------------- Cash paid during the year for: Interest $465,728 $560,697 $819,054 Income taxes $2,732,862 $3,431,219 $3,689,100 ======================================================================= Recent accounting pronouncements: In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure", which provides alternative methods of transition for a voluntary change to a fair value based method of accounting for stock-based employee compensation as prescribed in SFAS No. 123. Additionally, SFAS No. 148 requires more prominent and more frequent disclosures in financial statements about the effects of stock-based compensation. The provisions of this Statement are effective for fiscal years ending after December 15, 2002. Management does not expect the adoption of this Statement to have a material impact on the Company's financial condition or results of operations. Reclassifications: Certain reclassifications have been made to the financial statements for the fiscal year ended January 31, 2002 to conform with the presentation of the financial statements for the fiscal year ended January 31, 2003. Such reclassifications did not have any impact on stockholders' equity and net income as of and for the year ended January 31, 2002. NOTE 2: FAIR VALUE OF FINANCIAL INSTRUMENTS Cash and cash equivalents: Short-term investments at January 31, 2003 and 2002 were valued at cost (approximating market) and amounted to $12,526,044 and $10,686,472, respectively. Short-term investments consist principally of commercial paper with an original maturity of six months or less, and money market funds, both of which are considered to be cash equivalents. The Company evaluates the creditworthiness of the financial institutions and financial instruments in which it invests. 26 MET-PRO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JANUARY 31, 2003, 2002 AND 2001 (Continued) Debt: The fair value and carrying amount of long-term debt was as follows: January 31, 2003 2002 ---------------------------------------------------------------------- Fair value $8,693,870 $8,350,325 Carrying amount 8,648,921 8,356,664 ====================================================================== Valuations for long-term debt are determined based on borrowing rates currently available to the Company for loans with similar terms and maturities. The Company uses an interest rate swap (see Note 6) to minimize its exposure to fluctuations in interest rates. The interest rate differential to be paid or received under this agreement is recognized over the term of the loan and is included in interest expense. The Company's financial instruments are not held for trading purposes. NOTE 3: ACQUISITION OF BUSINESS Effective May 22, 2002, the Company, pursuant to an Agreement and Plan of Merger, acquired 100% of the Common Stock of Pristine Hydrochemical Inc. ("Pristine") for a purchase price of approximately $3,200,000. The results of Pristine's operations have been included in the consolidated financial statements since that date. The acquisition was accounted for as a purchase transaction. Pristine sells water treatment chemicals and services to municipal water utilities, and boiler and water cooling chemicals and services to industrial and commercial markets. It is expected that Pristine will complement the operations of the Company's Stiles-Kem Division. The acquisition was completed by issuing Common Stock from the treasury valued at $1,600,000 (113,475 shares), a cash payment of $400,000, promissory notes payable for $1,200,000, plus acquisition costs. The notes are payable over a four-year period in installments of $300,000 annually, plus interest at a fixed rate of 4.75% (see Note 6). Goodwill totalling approximately $3,018,000 was acquired. The following unaudited pro forma summary presents the consolidated results of operations for the fiscal years ended January 31, 2003 and 2002 as if the Company had acquired Pristine on February 1, 2001: January 31, 2003 2002 ------------------------------------- Net sales $70,391,540 $72,306,135 Income before taxes 9,085,238 10,199,364 Net income 5,996,257 6,476,596 Earnings per share, basic $.97 $1.06 Earnings per share, diluted $.96 $1.05 ===================================== 27 MET-PRO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JANUARY 31, 2003, 2002 AND 2001 (Continued) NOTE 4: INVENTORIES Inventories consisted of the following: January 31, 2003 2002 ---------------------------------------------------------------------- Raw materials $7,066,298 $7,369,965 Work in process 1,366,127 1,559,273 Finished goods 4,941,703 4,772,438 ---------------------------------------------------------------------- $13,374,128 $13,701,676 ====================================================================== At January 31, 2003 and 2002, inventories valued at the last-in, first-out method ("LIFO") were $2,257,859 and $2,211,522, respectively. The LIFO value of inventories was lower than replacement cost by $942,516 and $909,793 at January 31, 2003 and 2002, respectively. The book basis of LIFO inventories exceeded the tax basis by approximately $1,026,000 at both January 31, 2003 and 2002 as a result of applying the provisions of Accounting Principles Board Opinion No. 16, "Business Combinations", to an acquisition completed in a prior year. NOTE 5: PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consisted of the following: January 31, 2003 2002 ------------------------------------------------------------ Land $2,057,581 $1,963,882 Buildings and improvements 11,040,510 10,808,463 Machinery and equipment 11,324,083 10,391,578 Furniture and fixtures 4,485,052 4,300,390 Automotive equipment 982,895 1,016,212 Construction in progress 87,059 619,089 ------------------------------------------------------------ 29,977,180 29,099,614 Less accumulated depreciation 18,026,758 16,594,500 ------------------------------------------------------------ $11,950,422 $12,505,114 ============================================================ Depreciation of property, plant and equipment charged to operations amounted to $1,486,083, $1,461,478 and $1,454,467 for the years ended in 2003, 2002 and 2001, respectively. 28 MET-PRO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JANUARY 31, 2003, 2002 AND 2001 (Continued) NOTE 6: DEBT Short-term debt: The Company has available both domestic and foreign unsecured lines of credit totalling $5,000,000 which can be used for working capital. The lines of credit were not used during either year. Long-term debt: Long-term debt consisted of the following:
January 31, 2003 2002 ---------------------------------------------------------------------------- Note payable, bank, payable in quarterly installments of $300,000, plus interest at a fixed rate swap of 5.98%, maturing October, 2008 $6,900,000 $8,100,000 Various equipment notes, payable in monthly installments ranging from $455 to $1,074, maturing November 2004 through March 2005, no interest 71,702 91,303 Notes payable, payable in annual installments of $300,000, plus interest at a fixed rate of 4.75%, maturing May, 2006 1,200,000 - ----------------------------------------------------------------------------- 8,171,702 8,191,303 Less current portion 1,536,926 1,231,469 ----------------------------------------------------------------------------- 6,634,776 6,959,834 Fair market value of interest rate swap liability 477,219 165,361 ----------------------------------------------------------------------------- Long-term portion $7,111,995 $7,125,195 =============================================================================
The note payable, bank is subject to certain covenants, including maintenance of prescribed amounts of leverage and fixed charge coverage ratios. 29 MET-PRO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JANUARY 31, 2003, 2002 AND 2001 (Continued) Maturities of long-term debt are as follows: Year Ending January 31, --------------------------------------------------------------- 2004 $1,536,926 2005 1,533,866 2006 1,500,910 2007 1,500,000 2008 1,200,000 Thereafter 900,000 --------------------------------------------------------------- $8,171,702 =============================================================== Interest expense was $505,394, $557,855 and $694,112 for the years ended in 2003, 2002 and 2001, respectively. NOTE 7: STOCKHOLDERS' EQUITY On December 15, 2000, the Company announced a 300,000 share stock repurchase program, which began after the Company's February 21, 2000 stock repurchase program was completed. During the fiscal year ended January 31, 2003, the Company repurchased 19,941 shares of its Common Stock at a cost of $0.3 million. At January 31, 2003, the Company had the authority to repurchase 230,968 shares under the December 15, 2000 stock repurchase program. The Company has a Shareholders' Rights Plan, under which the Company's Board of Directors declared a dividend of one Right for each share of Company Common Stock owned. The Plan provides, under certain conditions involving acquisition of the Company's Common Stock, that holders of Rights, except for the acquiring entity, would be entitled to purchase shares of Common Stock of the Company, or acquiring company, having a value of twice the Rights' exercise price. The Rights under the Plan expire in 2010. NOTE 8: INCOME TAXES The provision for income taxes was comprised of the following: 2003 2002 2001 ----------------------------------------------------------------------- Current Federal $2,291,842 $2,675,479 $3,408,005 State 275,729 552,851 662,757 Foreign 91,894 173,889 243,023 ----------------------------------------------------------------------- 2,659,465 3,402,219 4,313,785 Deferred 379,874 155,419 256,998 ----------------------------------------------------------------------- $3,039,339 $3,557,638 $4,570,783 ======================================================================= 30 MET-PRO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JANUARY 31, 2003, 2002 AND 2001 (Continued) Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the net deferred tax assets (liabilities) were as follows:
2003 2002 ------------------------------------------------------------------------------- Deferred tax assets Inventory cost capitalization $152,674 $163,501 Pension cost 639,327 597,996 Non-compete agreements 395,783 463,236 Excess of tax over book basis of property acquired in acquisition 8,954 - Other 449,226 181,374 ------------------------------------------------------------------------------- Total deferred tax assets 1,645,964 1,406,107 ------------------------------------------------------------------------------- Deferred tax liabilities Accelerated depreciation 478,219 308,424 Inventory - Dean Pump Division 364,438 374,706 Excess of book over tax basis of property acquired in acquisitions - 8,893 Goodwill 981,947 692,897 ------------------------------------------------------------------------------- Total deferred tax liabilities 1,824,604 1,384,920 ------------------------------------------------------------------------------- Net deferred tax assets/(liabilities) ($178,640) $21,187 ===============================================================================
A reconciliation of the federal statutory rate and the Company's effective tax rate is presented as follows:
2003 2002 2001 ---------------------------------------------------------------------------------------------------------------------- Computed expected tax expense (federal) $3,035,424 34.0% $3,313,965 34.0% $4,197,131 34.0% State income taxes, net of federal income tax benefit 188,981 2.1 306,012 3.2 403,528 3.2 Other (185,066) (2.1) (62,339) (.7) (29,876) (.2) ---------------------------------------------------------------------------------------------------------------------- Effective income taxes $3,039,339 34.0% $3,557,638 36.5% $4,570,783 37.0% ======================================================================================================================
NOTE 9: LEASES AND OTHER COMMITMENTS The Company has various real estate operating leases for warehouse space and office space for sales, general and administrative purposes. Future minimum lease payments under these non-cancelable operating leases at January 31, 2003 were as follows: 2004 $260,829 2005 201,419 2006 147,761 2007 119,189 2008 107,206 Rental expense for the above operating leases during the years ended in 2003, 2002 and 2001 was $466,911, $474,910 and $411,929, respectively. 31 MET-PRO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JANUARY 31, 2003, 2002 AND 2001 (Continued) NOTE 10: EMPLOYEE BENEFIT PLANS Pension Plans: The Company has several defined benefit pension plans covering eligible employees in the United States. The Company contributes amounts to the plans equal to the amounts that are tax deductible. A minimum pension liability adjustment was recorded in the fourth quarter of the fiscal year ended January 31, 2003 as a liability with a corresponding decrease to stockholders' equity. At January 31, 2003, the Company recorded an after-tax charge to stockholders' equity of $128,983. Net periodic pension cost (income) included the following components:
2003 2002 2001 -------------------------------------------------------------------------------- Service cost - benefits earned during the period $574,129 $570,695 $583,387 Interest cost on projected benefit obligation 881,278 836,860 788,141 Expected return on assets (1,064,136) (1,178,322) (1,158,685) Amortization 31,332 (440,135) (515,449) -------------------------------------------------------------------------------- $422,603 ($210,902) ($302,606) ================================================================================
The following table sets forth the plans' change in benefit obligations, change in plan assets and amounts recognized in the Company's balance sheet at January 31, 2003 and 2002:
2003 2002 --------------------------------------------------------------------------------------- Change in benefit obligation: Benefit obligation at beginning of year $12,876,395 $10,532,088 Service cost 574,129 570,695 Interest cost 881,278 836,860 Actuarial (gain) loss (302,479) 911,170 Benefits paid (666,722) (634,258) Other 44,698 659,840 --------------------------------------------------------------------------------------- Benefit obligation at end of year $13,407,299 $12,876,395 --------------------------------------------------------------------------------------- Change in plan assets: Fair value of plan assets at beginning of year $12,125,268 $15,003,327 Actual loss on plan assets (1,080,918) (2,303,801) Employer contribution 460,000 60,000 Benefits paid (666,722) (634,258) --------------------------------------------------------------------------------------- Fair value of plan assets at end of year $10,837,628 $12,125,268 --------------------------------------------------------------------------------------- Funded status ($2,569,671) ($751,127) Unrecognized actuarial (gain) loss 130,739 (1,766,672) Unrecognized transition (asset) (112,920) (123,435) Unrecognized prior service costs 936,738 988,723 Contribution after measurement date, prior year 15,000 15,000 --------------------------------------------------------------------------------------- Net amount recognized ($1,600,114) ($1,637,511) --------------------------------------------------------------------------------------- Amounts recognized in the balance sheet consist of: Accrued benefit liability ($1,600,114) ($1,637,511) =======================================================================================
32 MET-PRO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JANUARY 31, 2003, 2002 AND 2001 (Continued) Assumptions used in the accounting for pension costs were: 2003 2002 2001 ---------------------------------------------------------------------- Discount rate 7.00% 7.00% 7.75% Rate of increase in compensation levels (where applicable) 4.50% 4.50% 4.50% Expected long-term rate of return on assets 9.00% 9.00% 8.00% ====================================================================== Directors' Benefit Plan: The Company also provides a non-qualified pension plan for Directors which is presently unfunded. The plan is designed to provide pension benefits based on the category of the Director and length of service. The aggregate benefit obligation payable in the future under the terms of the Plan was $711,693 and $708,881 at January 31, 2003 and 2002, respectively. The amounts applicable are included in the tables above. This plan was discontinued in December 1999 as to non-vested Directors. Defined Contribution Plan: The Company has a 401(k) profit sharing plan in which all employees of the Company in the United States are eligible to participate in the plan following completion of one year of service and attaining age 21. Pursuant to this plan, employees can contribute up to 25% of their compensation to the Plan. The Company will match, in the form of Met-Pro Common Stock, up to 50% of the employee's contribution up to 4% of compensation. The Company provided for cash contributions to the 401(k) profit sharing plan of $206,257, $206,866 and $208,975, for the years ended January 31, 2003, 2002 and 2001, respectively. Employees' Stock Ownership Trust: The Company sponsors an employee stock ownership plan under which it makes discretionary contributions to the trust either in cash or in stock of the Company for salaried employees in the United States eligible to participate in the plan. There were no contributions to the Employees' Stock Ownership Trust for the fiscal years ended in 2003, 2002 and 2001. All shares are considered to be allocated to participants or to be released for allocation to participants, and are included in the earnings per share computations. Stock Option Plans: In 1991, the Board of Directors of the Company approved a stock option plan covering 100,000 shares (increased to 225,000 shares after giving effect to stock splits and stock dividends), that was approved by the Company's stockholders at the 1992 meeting of stockholders (the "1992 Plan"). In 1997, the Board of Directors of the Company approved a stock option plan covering 350,000 shares that was approved by the Company's stockholders at the 1997 meeting of stockholders (the "1997 Plan"). In 2001, the Board of Directors of the Company approved an equity incentive plan covering 350,000 shares that was approved by the Company's stockholders at the 2001 meeting of stockholders (the "2001 Plan"). As of January 31, 2003, the Company had not granted any options from the 2001 Plan. All of these plans contain anti-dilution provisions that apply to stock splits and stock dividends declared by the Company. 33 MET-PRO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JANUARY 31, 2003, 2002 AND 2001 (Continued) The status of the plans was as follows:
1992 Plan 2003 2002 2001 ---------------------------------------------------------------------------------------------------------- Options outstanding, beginning - 121,025 121,025 Grants - - - Exercises - 113,525 - Cancellations - 7,500 - Options outstanding, ending - - 121,025 Options price range at January 31 - $5.00 $5.00 to to $13.13 $13.13 Options exercisable at January 31 - - 121,025 ---------------------------------------------------------------------------------------------------------- Options available for grant at January 31 0 0 0 1997 Plan 2003 2002 2001 ---------------------------------------------------------------------------------------------------------- Options outstanding, beginning 203,375 132,075 134,950 Grants 93,500 83,800 1,325 Exercises 32,525 12,500 - Cancellations 3,800 - 4,200 Options outstanding, ending 260,550 203,375 132,075 Options price range at January 31 $9.75 $9.75 $9.75 to to to $15.50 $15.50 $15.50 ---------------------------------------------------------------------------------------------------------- Options exercisable at January 31 230,781 145,655 95,324 ---------------------------------------------------------------------------------------------------------- Options available for grant at January 31 9,425 102,925 186,725 ==========================================================================================================
The weighted average exercise prices of the Company's employee stock option plans were as follows:
2003 2002 2001 ---------------------------------------------------------------------------------------------------------- Options outstanding, beginning $11.26 $ 9.75 $9.76 Grants $13.15 $12.08 $9.75 Exercises $10.86 $ 8.67 - Cancellations $12.87 $13.13 $9.88 Options outstanding, ending $11.97 $11.26 $9.75 ==========================================================================================================
34 MET-PRO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JANUARY 31, 2003, 2002 AND 2001 (Continued) NOTE 11: OTHER INCOME, NET Other income, net, was comprised of the following: 2003 2002 2001 ------------------------------------------------------------------ Gain/(loss) on sales of property and equipment $5,248 $472,895 ($12,656) Other, primarily interest income 272,878 379,990 537,385 ------------------------------------------------------------------ $278,126 $852,885 $524,729 NOTE 12: BUSINESS SEGMENT DATA The Company's operations are conducted in two business segments as follows: the manufacture and sale of product recovery/pollution control equipment, and the manufacture and sale of fluid handling equipment. No significant intercompany revenue is realized by either business segment. Interest income and expense are not included in the measure of segment profit reviewed by management. Income taxes are also not included in the measure of segment operating profit reviewed by management. Financial information by business segment is shown on page 22. NOTE 13: GEOGRAPHIC INFORMATION Transfers between geographic areas are accounted for at cost and consistent with rules and regulations of governing tax authorities. Such transfers are eliminated in the consolidated financial statements. Income from operations by geographic segment includes an allocation of general corporate expenses. Identifiable assets are those that can be directly associated with the geographic area. Geographic information for the three years ended January 31 is presented in the following table:
2003 2002 2001 --------------------------------------------------------------------------------------------------- Net sales: United States $58,934,875 $59,052,391 $64,569,224 Foreign 10,684,507 11,036,055 16,634,326 --------------------------------------------------------------------------------------------------- $69,619,382 $70,088,446 $81,203,550 =================================================================================================== Income from operations: United States $8,093,077 $8,337,026 $10,822,911 Foreign 1,061,909 1,114,899 1,690,975 --------------------------------------------------------------------------------------------------- $9,154,986 $9,451,925 $12,513,886 =================================================================================================== Total assets: United States $69,012,399 $63,813,498 $64,620,734 Foreign 4,742,272 4,256,694 4,530,607 --------------------------------------------------------------------------------------------------- $73,754,671 $68,070,192 $69,151,341 ===================================================================================================
35 MET-PRO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED JANUARY 31, 2003, 2002 AND 2001 (Continued) NOTE 14: CONTINGENCIES Recently there appears to have been a significant increase, in certain states, in asbestos-related litigation claims against numerous industrial companies, particularly companies in the pump and fluid handling industries. During the last year, the Company was named as one of many defendants in a number of such cases filed in one of these states, Mississippi. The Company, along with the other defendants, is alleged to have sold products containing asbestos, although as of January 31, 2003, none of the Company's products have been specifically identified by any plaintiff in any case as a cause of alleged injuries. The Company believes that it has defenses to the claims that have been asserted. Although the Company is vigorously defending all of the cases, the amount expended by the Company to date in responding to these cases has not been material, as most of the costs have been paid by insurance. Given the current status of these cases, it is not possible to determine the Company's potential liability, if any, and no provision has been made in the Company's financial statements for any such claims. In addition, the Company is party in a small number of legal proceedings arising out of the ordinary course of business. Management does not currently believe that these proceedings will materially impact the Company's results of operations, liquidity or financial condition. 36 QUARTERLY FINANCIAL DATA (Unaudited)
Earnings Earnings Per Share, Per Share, 2002 Net Sales Gross Profit Net Income Basic Diluted - ----------------------------------------------------------------------------------------------------------------- First Quarter $17,556,044 $6,417,658 $1,635,715 $.27 $.27 Second Quarter 20,371,781 6,928,802 1,856,419 .30 .30 Third Quarter 16,363,945 5,357,408 1,355,325 .22 .22 Fourth Quarter 15,796,676 5,324,364 1,341,858 .22 .22 Earnings Earnings Per Share, Per Share, 2003 Net Sales Gross Profit Net Income Basic Diluted - ----------------------------------------------------------------------------------------------------------------- First Quarter $16,193,880 $5,528,831 $1,200,128 $.20 $.20 Second Quarter 18,278,083 6,176,474 1,433,166 .23 .23 Third Quarter 16,671,696 6,045,425 1,440,616 .23 .23 Fourth Quarter 18,475,723 6,429,095 1,814,469 .29 .29
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure: During the period since before February 1, 2001, the Company's independent auditors have been the same firm. PART III Item 10. Directors and Executive Officers of the Registrant: The information required by this Item (except for the information set forth on page 6 with respect to Executive Officers of the Registrant) is hereby incorporated by reference to the information set forth under the captions "Election of Directors" and "Security Ownership of Certain Beneficial Owners and Management" contained in the Company's definitive Proxy Statement for its 2003 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company's fiscal year. Item 11. Executive Compensation: The information required by this Item is hereby incorporated by reference to the information set forth under the caption "Executive Compensation and Other Information" contained in the Company's definitive Proxy Statement for its 2003 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company's fiscal year. Item 12. Security Ownership of Certain Beneficial Owners and Management: The information required by this Item is hereby incorporated by reference to the information set forth under the caption "Security Ownership of Certain Beneficial Owners and Management" contained in the Company's definitive Proxy Statement for its 2003 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company's fiscal year. Item 13. Certain Relationships and Related Transactions: The information required by this Item is hereby incorporated by reference to the information set forth under the captions "Election of Directors" and "Certain Business Relationships" contained in the Company's definitive Proxy Statement for its 2003 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of the Company's fiscal year. 37 PART IV Item 14. Controls and Procedures: Within the ninety (90) day period prior to the date of this Annual Report on Form 10-K, we carried out an evaluation, under the supervision of and with the participation of our management including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-14 and 15d-14 of the Securities Exchange Act of 1934 (the "Exchange Act"). Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosures are effective in timely alerting them to material information relating to us, including our consolidated subsidiaries, required to be included in our Exchange Act filing. There have been no significant changes in our internal controls or in other factors that could significantly affect controls subsequent to the date we carried out our evaluation. Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K: A. Financial statements: Financial statements filed as part of this report are listed in the Index to Consolidated Financial Statements and Supplementary Data on page 16. B. Reports on Form 8-K: The Company did not file any Current Reports on Form 8-K during the fourth quarter of the fiscal year covered by this Annual Report. C. Exhibits, Including Those Incorporated by Reference: See the Exhibit Index which follows. 38 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MET-PRO CORPORATION April 28, 2003 By: /s/ Raymond J. De Hont - ------------------ -------------------------------- Date Raymond J. De Hont Chief Executive Officer and Director Pursuant to the requirement of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date --------- ----- --------- /s/ William L. Kacin Chairman, April 28, 2003 - ---------------------------- William L. Kacin /s/ Raymond J. De Hont President, April 28, 2003 - ---------------------------- Chief Executive Raymond J. De Hont Officer and Director /s/ Gary J. Morgan Vice President-Finance, April 28, 2003 - ---------------------------- Secretary, Treasurer, Gary J. Morgan Chief Financial Officer, Chief Accounting Officer and Director /s/ Alan Lawley Director April 28, 2003 - ---------------------------- Alan Lawley /s/ Nicholas DeBenedictis Director April 28, 2003 - ---------------------------- Nicholas DeBenedictis /s/ Jeffrey H. Nicholas Director April 28, 2003 - ---------------------------- Jeffrey H. Nicholas /s/ Michael J. Morris Director April 28, 2003 - ---------------------------- Michael J. Morris 39 MET-PRO CORPORATION CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Raymond J. De Hont, certify that: 1. I have reviewed this Annual Report on Form 10-K of Met-Pro Corporation; 2. Based on my knowledge, this Annual Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Annual Report; 3. Based on my knowledge, the financial statements, and other financial information included in this Annual Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Annual Report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Annual Report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within ninety (90) days prior to the filing date of this Annual Report (the "Evaluation Date"); and c) presented in this Annual Report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this Annual Report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. /s/ Raymond J. De Hont April 28, 2003 - ------------------------- Raymond J. De Hont Chief Executive Officer 40 MET-PRO CORPORATION CERTIFICATION UNDER SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Gary J. Morgan, certify that: 1. I have reviewed this Annual Report on Form 10-K of Met-Pro Corporation; 2. Based on my knowledge, this Annual Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Annual Report; 3. Based on my knowledge, the financial statements, and other financial information included in this Annual Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Annual Report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Annual Report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within ninety (90) days prior to the filing date of this Annual Report (the "Evaluation Date"); and c) presented in this Annual Report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this Annual Report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. /s/ Gary J. Morgan April 28, 2003 - ---------------------------- Gary J. Morgan Chief Financial Officer 41 Exhibit Index Exhibit No. Description ----------- ----------- (2)(a) Agreement and Plan of Merger dated September 12, 1996 by and between Met-Pro Corporation, Met-Pro Acquisition Corporation, Strobic Air Corporation, Lynn T. Secrest, Ronald H. Secrest, Richard P. Secrest and John W. Stone, III. Incorporated by reference to Registrant's Registration Statement on Form S-3 (File No. 333-13929), declared effective December 31, 1996. (2)(b) Asset Purchase Agreement dated October 29, 1998 among Flex-Kleen Corporation, Flex-Kleen Canada Limited, Aqua Alliance, Inc., AWT Air Company Inc., 1321249 Ontario Limited and Met-Pro Corporation. Incorporated by reference to Company's Registration Statement on Form 8-K filed on November 13, 1998 and amended on January 12, 1999. (3)(a) Restated Certificate of Incorporation, incorporated by reference to Company's Registration Statement on Form 8-A filed June 12, 1998. (3)(b) Certificate of Amendment of Certificate of Incorporation, incorporated by reference to Company's Annual Report on Form 10-K filed April 24, 1998. (3)(c) By-Laws as amended through February 7, 1968, incorporated by reference to Company's Registration Statement No. 2-26979, declared effective October 15, 1968. (3)(d) Amendments to By-Laws adopted June 3, 1987, July 18, 1978 and June 15, 1977, incorporated by reference to Company's Registration Statement on Form 8-A filed June 12, 1998. (3)(e) Amendments to By-Laws adopted February 21, 2000, incorporated by reference to the Company's Annual Report on Form 10-K filed April 27, 2000. (4) Stockholders' Rights Plan, incorporated by reference to Company's Current Report on Form 8-K filed on January 6, 2000. (10)(a) The 1992 Stock Option Plan, incorporated by reference to Company's Registration Statement on Form S-8 filed June 13, 2000.* (10)(b) The 1997 Stock Option Plan, incorporated by reference to Company's Registration Statement on Form S-8 filed January 16, 1998.* (10)(c) Amendment No. 1 to the 1992 Stock Option Plan, incorporated by reference to Company's Annual Report on Form 10-K filed on May 4, 2001.* (10)(d) Amendment No. 1 to the 1997 Stock Option Plan, incorporated by reference to Company's Annual Report on Form 10-K filed on May 4, 2001.* (10)(e) Key Employee Severance Agreement between Met-Pro Corporation and William L. Kacin, incorporated by reference to Company's Annual Report on Form 10-K filed on May 4, 2001.* (10)(f) Key Employee Severance Agreement between Met-Pro Corporation and Gary J. Morgan, incorporated by reference to Company's Annual Report on Form 10-K filed on May 4, 2001.* (10)(g) Key Employee Severance Agreement between Met-Pro Corporation and Raymond J. De Hont, incorporated by reference to Company's Annual Report on Form 10-K filed on May 4, 2001.* (10)(h) Amendment to Key Employee Severance Agreement between Met-Pro Corporation and William L. Kacin, incorporated by reference to Company's Annual Report on Form 10-K filed on May 4, 2001.* 42 Exhibit Index Exhibit No. Description ----------- ----------- (10)(i) Amendment to Key Employee Severance Agreement between Met-Pro Corporation and Gary J. Morgan, incorporated by reference to Company's Annual Report on Form 10-K filed on May 4, 2001.* (10)(j) The Company's Director's Retirement Plan, incorporated by reference to Company's Annual Report on Form 10-K filed on May 4, 2001.* (10)(k) Amendment No. 1 to the Company's Director's Retirement Plan, incorporated by reference to Company's Annual Report on Form 10-K filed on May 4, 2001.* (10)(l) Amendment No. 2 to the Company's Director's Retirement Plan, incorporated by reference to Company's Annual Report on Form 10-K filed on May 4, 2001.* (10)(m) Restoration Plan, effective February 1, 2000, incorporated by reference to Company's Annual Report on Form 10-K filed on May 4, 2001.* (10)(n) Amendment No. 1 to the Company's Restoration Plan, incorporated by reference to Company's Annual Report on Form 10-K filed on May 4, 2001.* (10)(o) Additional 1% Supplemental Executive Retirement Plan, effective February 1, 2000, incorporated by reference to Company's Annual Report on Form 10-K filed on May 4, 2001.* (10)(p) The 2001 Equity Incentive Plan, incorporated by reference to Company's Registration Statement on Form S-8 filed August 22, 2001.* (10)(q) Year 2000 Employee Stock Purchase Plan, incorporated by reference to the Company's Registration Statement on Form S-8 filed on June 13, 2000.* (10)(r) Salaried Pension Plan Amended and Restated effective September 1, 2000.* (10)(s) First Amendment to the Company's Salaried Pension Plan dated August 15, 2002.* (10)(t) Second Amendment to the Company's Salaried Pension Plan dated October 23, 2002.* (10)(u) Amendment No. 3 to the Company's Directors' Retirement Plan dated as of February 24, 2003.* (10)(v) Amendment No. 1 to the Company's Additional 1 % Supplemental Executive Plan dated as of March 21, 2003.* (10)(w) Directors Retirement Plan Trust dated as of February 11, 2000.* (10)(x) Amendment No. 1 to the Company's Directors' Retirement Plan Trust dated as of February 24, 2003.* (10)(y) Amendment No. 2 to the Company's Directors' Retirement Plan Trust dated as of February 24, 2003.* (10)(z) Restoration and Supplemental Executive Retirement Plan Trust Agreement dated as of February 11, 2000.* (10)(aa) Amendment No. 1 to the Company's Restoration and Supplemental Executive Retirement Plan Trust Agreement dated as of February 24, 2003.* (11) Statement Re-computation of Per Share Earnings. See page 18 of Item 8. 43 Exhibit Index Exhibit No. Description ----------- ----------- (21) List of Subsidiaries of Registrant:
Corporate Jurisdiction of Name under which Business Name Incorporation is Conducted ---- ------------- ------------ Mefiag B.V. The Netherlands Mefiag B.V., a wholly- owned subsidiary of Met-Pro Corporation Flex-Kleen Canada Inc. Ontario, Canada Flex-Kleen Canada Inc., a wholly-owned subsidiary of Met-Pro Corporation Strobic Air Corporation Delaware Strobic Air Corporation, a wholly-owned subsidiary of Met-Pro Corporation MPC Inc. Delaware MPC Inc., a wholly-owned subsidiary of Met-Pro Corporation Pristine Hydrochemical Inc. Delaware Pristine Hydrochemical Inc., a wholly-owned subsidiary of Met-Pro Corporation
(23) Consent of Independent Auditors. (99.1) Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (99.2) Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. The following exhibits required under Item 601 of Regulation S-K promulgated by the Securities & Exchange Commission have been omitted because they are either inapplicable or non-existent: (9) Voting trust agreements. (12) Statements re computation of ratios. (13) Annual report to security holders. (16) Letter re change in certifying accountant. (18) Letter re change in accounting principles. (22) Published report regarding matters submitted to vote of security holders. (24) Power of attorney. * Indicates management contract or compensatory plan or arrangement. 44 EX-10 3 ex10r.txt EXHIBIT 10.R Exhibit (10.r) MET-PRO CORPORATION SALARIED PENSION PLAN AMENDED AND RESTATED EFFECTIVE SEPTEMBER 1, 2000 MET-PRO CORPORATION SALARIED PENSION PLAN AMENDED AND RESTATED EFFECTIVE SEPTEMBER 1, 2000 TABLE OF CONTENTS
Article Page - ------- ---- I. Definitions ...........................................................................................1 II. Transition and Eligibility to Participate .............................................................8 III. Service and Credited Service, Transfers ..............................................................10 IV. Eligibility for Benefits .............................................................................14 V. Calculation of Benefits ..............................................................................15 VI. Vesting ..............................................................................................20 VII. Pre-Retirement Death Benefits ........................................................................21 VIII. Distribution .........................................................................................23 IX. Limitation on Benefits ...............................................................................29 X. Funding ..............................................................................................35 XI. Administration .......................................................................................36 XII. Management of Trust Fund .............................................................................38 XIII. Benefit Claims Procedure .............................................................................39 XIV. Non-Alienation of Benefits ...........................................................................40 XV. Designation of Beneficiary ...........................................................................41 XVI. Amendment and Termination ............................................................................42 XVII. Top-Heavy Provisions .................................................................................45 XVIII. General Provisions ...................................................................................49 Appendix A ...........................................................................................51 Appendix B............................................................................................53
MET-PRO CORPORATION SALARIED PENSION PLAN WHEREAS, MET-PRO CORPORATION ("Company") adopted the Met-Pro Corporation Salaried Pension Plan ("Plan"), effective September 1, 1968 for certain of its employees; and WHEREAS, under the terms of the Plan, the Company has the ability to amend the Plan; and WHEREAS, the Company desires at this time to amend and restate the Plan in its entirety to incorporate amendments adopted since the previous restatement effective September 1, 1989, and to comply with, inter alia, the Uniformed Services Employment and Reemployment Rights Act of 1994, the Small Business Job Protection Act of 1996, and the Taxpayer Relief Act of 1997; NOW, THEREFORE, effective September 1, 2000, unless otherwise provided, the Met-Pro Corporation Salaried Pension Plan is continued, amended, and restated, as hereinafter set forth: ARTICLE I DEFINITIONS ----------- Except where otherwise clearly indicated by context, the masculine shall include the feminine, the singular shall include the plural, and vice-versa. 1.1 "Actuarial Equivalent" of a given benefit shall mean a benefit payable in a different form from such given benefit but having the same actuarial present value of such benefit taking into account, where applicable, the probability of surviving to receive such benefit ("Mortality") and the time value of money ("Interest"). The calculation of actuarial present values shall be based on the actuarial assumptions as set forth in Appendix A to this Plan. 1.2 "Actuary" shall mean the firm employing an "enrolled actuary" as defined in Section 7701(a)(35) of the Code appointed by the Administrator. 1.3 "Administrator" shall mean the Company acting through its officers or a Committee appointed by the Company under Article XI. 1.4 "Annuity Starting Date" shall mean the first date as of which distribution of Retirement Benefits to a Participant is to begin under Section 8.3 or the first date as of which distribution of Pre-Retirement Death Benefits to a Spouse is to begin under Section 7.3. 1.5 "Average Monthly Compensation" shall mean the monthly Compensation of a Participant averaged over the five consecutive calendar years which produce the highest monthly average within the last ten completed calendar years of employment. If a Participant has less than five completed consecutive calendar years of service, his Average Monthly Compensation will be based on his monthly Compensation during his months of service from his date of employment to the earlier of the date he terminates and the date he has completed 60 months of service. 1.6 "Board of Directors" shall mean the Board of Directors of the Company. 1.7 "Break in Service" shall mean any Plan Year during which an employee suffers a Break in Service described in Article III. 1.8 "Code" shall mean the Internal Revenue Code of 1986, as it may from time to time be amended or supplemented. References to any section of the Code shall be to that section as it may be renumbered, amended, supplemented or reenacted. -1- 1.9 "Committee" shall mean the persons who may be appointed by the Board of Directors to act on behalf of the Company to supervise the administration of the Plan, as hereinafter provided. 1.10 "Compensation" shall mean with respect to any Participant, total Compensation paid by the Company for the calendar year excluding reimbursement or other expense allowances, fringe benefits (cash and non-cash), moving expenses, deferred compensation, and welfare benefits but including any Employee deferrals pursuant to Code Sections 125 or 401(k). Compensation shall not exceed the maximum amount that may be taken into account under Code Section 401(a)(17), adjusted as provided under Code Section 415(d) to reflect increases in the cost of living. In applying this limitation, for Plan Years ending on or before August 31, 1997, the family group of a highly compensated Participant who is subject to the family member aggregation rules of Code Section 414(q)(6) because such Participant is either a "Five Percent Owner" of the Employer or one of the ten (10) highly compensated employees paid the greatest "415 Compensation" during the year, shall be treated as a single Participant, except that for this purpose family members shall include only the affected Participant's Spouse and any lineal descendants who have not attained age nineteen (19) before the close of the year. If, as a result of the application of such rules the adjusted limitation is exceeded, then the limitation shall be prorated among the affected family members in proportion to each such family member's compensation prior to the application of this limitation, or the limitation shall be adjusted in accordance with any other method permitted by Regulation. 1.11 "Company" shall mean Met-Pro Corporation, including its several Divisions, and its successors. 1.12 "Corporation Division" shall mean the corporate headquarters unit of the Company. 1.13 "Dean Pump Division" shall mean the Dean Pump Division of Met-Pro Corporation. 1.14 "Defined Benefit Plan" shall mean an employee benefit plan, as defined in Section (3)(3) of ERISA that (a) is maintained by the Company, (b) is qualified under Sections 401 and 501 of the Code, and (c) is not a Defined Contribution Plan. 1.15 "Defined Contribution Plan" shall mean an employee benefit plan, as defined in Section (3)(3) of ERISA that (a) is maintained by the Company, (b) is qualified under Sections 401 and 501 of the Code, and (c) provides for an individual account for each Participant and for benefits based solely on the amounts credited to those accounts. -2- 1.16 "Divisions" shall mean those divisions of the Company who are participating in the Plan and shall include the Corporation Division, Dean Pump Division, Fybroc Division, Keystone Filter Division, Sethco Division, Stiles-Kem Division, Systems Division (Non-Oxy), and Systems Division (Oxy). Effective November 1, 1989, "Divisions" shall also mean Duall Division. Effective July 1, 1993, "Divisions" shall also mean Mefiag Division, and effective November 1, 1998, shall also mean the Flex Kleen Division. 1.17 "Duall Division" shall mean, effective November 1, 1989, the Duall Division of Met-Pro Corporation. 1.18 "Early Retirement Date" shall mean the first day of the calendar month coincident with or next following the day on which a Participant (a) attains age 55, and (b) is credited with three Years of Service. 1.19 "Effective Date" shall mean September 1, 2000. 1.20 "Eligible Employee" shall mean any salaried Employee of the Company employed in a Division or by a Subsidiary who is not a Leased Employee and who is not covered by a collective bargaining agreement, unless the same provides for participation hereunder. 1.21 "Employee" shall mean anyone who is employed by the Company or by a Subsidiary of the Company. Solely for the requirements prescribed in Code Section 414(n)(3), Employee shall include Leased Employees within the meaning of Code Sections 414(n)(2) and 414(o)(2) unless such Leased Employees are covered by a plan described in Code Section 414(n)(5) and such Leased Employees do not constitute more than 20 percent of the recipient's non-highly compensated work force. The following shall not be considered an Employee: (i) any individual who is classified by the Company or a Subsidiary as an independent contractor or self-employed individual, whether or not such individual is subsequently determined to have been a common-law employee, or (ii) any individual employed by the Company for a specified limited period of time, or for the duration of a specified project, with no expectation of long-term employment (until and unless such individual is specifically notified by the Company in writing that he is being reclassified as a regular Employee). 1.22 "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as it may from time to time be amended or supplemented. References to any section of ERISA shall be to that section as it may be renumbered, amended, supplemented or reenacted. 1.23 "Five Percent Owner" shall mean an Employee who owns more than five percent of the Company (within the meaning of Section 416(i)(1)(B)(i) of the Code). 1.24 "Flex Kleen" shall mean, effective November 1, 1998, the Flex Kleen Division of Met-Pro Corporation. -3- 1.25 "Fund" shall mean the trust fund established for this Plan, administered under the Trust Agreement, out of which benefits payable under this Plan shall be paid. 1.26 "Fybroc Division" shall mean Fybroc Division of Met-Pro Corporation. 1.27 "Hour of Service" shall mean an hour for which: (a) an Employee is directly or indirectly paid or entitled to payment by the Company for the performance of employment duties, or (b) back pay, irrespective of mitigation of damages, is either awarded or agreed to, or (c) an Employee is directly or indirectly paid or entitled to payment by the Company on account of a period of time during which no duties are performed due to vacation, holiday, illness, incapacity (including disability), jury duty, lay-off, leave of absence, or military duty. There shall be excluded from the foregoing those periods during which payments are made or due under a plan maintained solely for the purpose of complying with applicable workers' compensation, unemployment compensation, or disability insurance laws. An Hour of Service shall not be credited where an employee is being reimbursed solely for medical or medically related expenses. Hours of Service shall not be credited twice. Hours of Service shall be credited in accordance with the rules set forth in U.S. Department of Labor Regulations 2530.200b-2(b) and (c). Hours of Service shall be credited for any individual considered a Leased Employee for purposes of this Plan under Section 414(n) of the Code. Notwithstanding the foregoing, the Committee may, in accordance with uniform rules nondiscriminatorily applied, elect to credit Hours of Service using one or more of the following equivalencies: Basis Upon Which Records Credit Granted to Individual Are Maintained For Period -------------- ---------- Shift Actual Hours for Full Shift Day 10 Hours of Service Week 45 Hours of Service Semi-Monthly Period 95 Hours of Service Month 190 Hours of Service -4- 1.28 "Initial Anniversary Date" shall mean September 1, 1968 for Employees of the Corporation and Systems Division (Non-Oxy), September 1, 1975 for Employees of Fybroc Division and Keystone Filter Division, September 1, 1977 for Employees of Sethco Division and Stiles-Kem Division, and September 1, 1979 for Employees of Systems Division (Oxy). 1.29 "Keystone Division" shall mean Keystone Division of Met-Pro Corporation. 1.30 "Late Retirement Date" shall mean the first day of the calendar month coincident with or next following the day on which a Participant's employment with the Company has ceased after the Participant's Normal Retirement Date. 1.31 "Mefiag Division" shall include, effective July 1, 1993, only those Employees of the Mefiag Division of Met-Pro Corporation who are employed in the United States. 1.32 "Normal Retirement Age" shall mean exact age 65. 1.33 "Normal Retirement Date" shall mean the first day of the calendar month coincident with or next following the day on which a Participant attains age 65. 1.34 "Participant" shall mean a participant in this Plan as determined under Article 2. 1.35 "Past Service Date" shall mean September 1, 1975 for Employees of the Corporation, Systems (Non-Oxy) Division, Fybroc Division and Keystone Filter Division; September 1, 1977 for Employees of Sethco Division and Stiles-Kem Division; September 1, 1979 for Employees of Systems Division (Oxy); September 1, 1986 for Employees of Dean Pump Division; effective November 1, 1989, shall mean September 1, 1990 for Employees of Duall Division; effective July 1, 1993, shall mean September 1, 1993 for Employees of the Mefiag Division; and shall also mean February 1, 1997 for Employees of the Strobic Air Subsidiary. "Past Service Date" shall mean September 12, 1996 for former Employees of the Strobic Air Corporation (see also Article VI), and shall mean November 1, 1998 for former Employees of the Flex Kleen Division. 1.36 "Plan" shall mean the retirement plan set forth in this document as it may from time to time be amended or supplemented. 1.37 "Plan Year" shall mean a twelve-month period which shall commence each September 1 and end on the next following August 31. 1.38 "Pre-Retirement Death Benefit" shall mean the death benefit payable under Article VII to the beneficiary of a Participant who dies before his Annuity Starting Date. -5- 1.39 "Prior Plan" shall include the Fybroc, Inc. Salaried Pension Plan, the Keystone Filter Salaried Pension Plan, and the Stiles-Kem Corporation Defined Benefit Plan as in effect on April 14, 1978 immediately prior to their amendment and replacement in entirety by this Plan on April 15, 1978. "Prior Plan" shall also include the Oxy-Catalyst, Inc. Employees' Pension Plan as in effect June 30, 1980 immediately prior to its amendment and replacement in entirety by this Plan on July 1, 1980. 1.40 "Qualified Domestic Relations Order" is a domestic relations order that meets the requirements as defined in Section 414(p) of the Code. 1.41 "Qualified Joint and Survivor Annuity" shall mean an annuity for the life of a Participant with a survivor annuity for the life of the Participant's Spouse where the survivor annuity is 50 percent of the amount of the annuity payable during the joint lives of the Participant and the Participant's Spouse and the joint and survivor annuity is at least the Actuarial Equivalent of the most valuable form of benefit under the Plan payable on his Annuity Starting Date. 1.42 "Qualified Pre-Retirement Survivor Annuity" shall mean a survivor annuity for the life of the Participant's Spouse. Each payment under the survivor annuity shall be equal to: (a) in the case of a Participant who dies after his Early Retirement Date and has not had a Separation from Service, the survivor annuity the Participant's Spouse would have received if the Participant had a Retirement on the day before his death and received distribution of benefits in the form of an immediate Qualified Joint and Survivor Annuity, or (b) in the case of a Participant who dies on or before his Early Retirement Date or has had a Separation from Service, the survivor annuity the Participant's Spouse would have received if the Participant had a Separation from Service on the earlier of his actual Separation from Service and the day of his death, survived to the later of his Early Retirement Date and his date of death, received distribution of benefits in the form of a Qualified Joint and Survivor Annuity and died on the day after the later of his Early Retirement Date and his date of death. 1.43 "Regulations" shall mean the Income Tax Regulation as promulgated by the Secretary of the Treasury or his delegate, and amended from time to time. 1.44 "Rehired Employee" shall mean an Employee who is re-employed by the Company after Separation from Service. 1.45 "Retirement" shall mean a Participant's termination of employment on or after his Normal or Early Retirement Date. 1.46 "Retirement Benefit" shall mean the monthly benefit that accrues to a Participant under Article V. -6- 1.47 "Separation From Service" of an Employee shall mean the time when the employer-employee relationship with the Company is terminated for any reason, including but not limited to, a termination by resignation, discharge, death, total disability, or retirement. 1.48 "Sethco Division" shall mean Sethco Division of Met-Pro Corporation. 1.49 "Six Months of Service" shall mean the first consecutive six-month period after the Employee's date of hire with the Company or an acquired company or return to service in which the Employee completes at least 500 Hours of Service. 1.50 "Spouse" shall mean the person to whom a Participant is married on the applicable date. 1.51 "Stiles-Kem Division" shall mean Stiles-Kem Division of Met-Pro Corporation. 1.52 "Strobic Air Subsidiary" shall mean, effective February 1, 1997, the Strobic Air Corporation, a subsidiary of the Met-Pro Corporation. 1.53 "Subsidiary" shall mean those subsidiaries of the Company who are participating in the Plan and shall include the Strobic Air Subsidiary. 1.54 "Systems Division (Non-Oxy)" shall include only those Employees of the Systems Division of Met-Pro Corporation who were not employees of Oxy-Catalyst, Inc. on the date of its acquisition by the Company. 1.55 "Systems Division (Oxy)" shall include only those Employees of Systems Division of Met-Pro Corporation who were employees of Oxy-Catalyst, Inc. on the date of its acquisition by the Company. 1.56 "Trust" shall mean the trust established or maintained under the Trust Agreement. 1.57 "Trust Agreement" shall mean the agreement between the Company and the Trustee which provides for the establishment or continuation of the Trust in accordance with Article XII. 1.58 "Trustee" shall mean the Bank, Trust Company or Insurance Company designated as provided under Article XI. 1.59 "Vested Interest" shall mean the nonforfeitable portion of a Participant's Normal Retirement Benefit. 1.60 "Years of Credited Service" shall mean the number of full and partial Plan Years counted with respect to determining a Participant's Accrued Benefit under the Plan, as further described in Article III. -7- 1.61 "Years of Service" shall mean the number of Plan Years counted with respect to determining a Participant's eligibility for benefits and vested status under the Plan, as further described in Article III and Article VI. -8- ARTICLE II TRANSITION AND ELIGIBILITY TO PARTICIPATE ----------------------------------------- 2.1 Rights Affected. Unless specified to the contrary, each Participant who --------------- has retired or has terminated service with the Company before the Effective Date shall receive no additional rights as a result of this amended and restated Plan, but shall have his rights and benefits determined solely under the Plan as in effect before the Effective Date. Any former Employee who has terminated employment before the Effective Date and who is reemployed as an Employee on or after the Effective Date shall have the rights and benefits provided hereunder. 2.2 Preservation of Plan Benefits. Subject to the maximum benefit --------------------------------- limitations, in no event shall the Accrued Benefit of a Participant at any time after the Effective Date be less than the amount of the Participant's Accrued Benefit on the day preceding the Effective Date. 2.3 Eligibility to Participate. Each Employee who was a Participant in the --------------------------- Plan immediately prior to the Effective Date and who remains an Eligible Employee of the Company on the Effective Date shall be a Participant hereunder as of such date. Each other Eligible Employee shall become a Participant on the later of (a) the September 1 coincident with or next following the date he completed Six Months of Service, and (b) the date he qualified as an Eligible Employee, but not later than six months following the date he completes 1000 Hours of Service in a consecutive twelve-month period. Effective as of September 1, 2000, an Eligible Employee shall become a Participant on the later of his date of hire or the date such employee qualifies as an Eligible Employee. 2.4 Cessation of Participant. A Participant shall cease to be a Participant ------------------------ on the earliest of the following three dates: (a) his date of death, (b) the date all distributions to the Participant have been made, (c) the date he incurs a Break in Service provided that at that time he has no entitlement to non-forfeitable benefits under the Plan. 2.5 Participation Upon Reemployment. If a Rehired Employee who is not a --------------------------------- Participant before he is rehired is an Eligible Employee as of the date he is reemployed, and his Break in Service caused prior service to be disregarded, then the Employee shall be treated as a new Employee. If a Rehired Employee who was not a Participant before he is rehired or who was a Participant before rehire is an Eligible Employee as of the date he is reemployed and his Break in Service did not cause prior service to be disregarded, then the employee shall again become a Participant on the date he was rehired. -9- 2.6 Plant Shutdown. Effective December 31, 1996 the Systems Division was --------------- shut down. Each Participant in the Met-Pro Corporation Negotiated Pension Plan is a Participant in this Plan effective June 1, 1997. All benefit provisions applicable to such Participants will be determined under the Met-Pro Corporation Negotiated Pension Plan. -10- ARTICLE III SERVICE AND CREDITED SERVICE, TRANSFERS --------------------------------------- 3.1 Past Service shall mean full calendar years and full calendar months of ------------ service on an elapsed time basis (with a full month equal to 1/12 of a year) completed by an Eligible Employee after his date of employment with the Company or, if applicable, his earlier date of employment with a company that has been acquired by the Company, and before his Past Service Date. 3.2 Future Service for Purposes of Meeting Eligibility Requirements for ------------------------------------------------------------------------ Benefits and Vesting. An Employee shall accrue a Year of Service for ---------------------- each Plan Year commencing on or after his Past Service Date during which he is credited with 1,000 or more Hours of Service. 3.3 Full Years of Future Credited Service for Benefit Accrual. Except as ------------------------------------------------------------ provided otherwise in this Article, an Employee shall accrue a full year of Future Credited Service for each Plan Year commencing on or after his Past Service Date in which he is an Eligible Employee for the full Plan Year and is credited with 1,000 or more Hours of Service. 3.4 Partial Years of Future Credited Service for Benefit Accrual. With ----------------------------------------------------------------- respect to any Plan Year commencing on or after an Employee's Past Service Date and during which the Employee is an Eligible Employee for less than the full Plan Year, the Employee shall accrue 1/12 of a year of Future Credited Service for each month during which he is an Eligible Employee for the full month and completes at least 83-1/3 Hours of Service. Notwithstanding the above, a Participant who transfers out of the Plan after the 15th day of a month shall accrue 1/12 of a year of Future Credited Service for the month that he transfers out of the Plan as long as he is an Employee for the full month and completes at least 83-1/3 Hours of Service, and a Participant who transfers into the Plan before the 16th day of the month shall accrue 1/12 of a year of Future Credited Service for the month that he transfers into the Plan, provided that he is an Employee for the full month and completes at least 83-1/3 Hours of Service. 3.5 Credited Service shall mean the total of an Employee's Past Service and ----------------- his full and partial years of Future Credited Service, subject to the following adjustments for Employees of the Corporation Division (former Strobic Air Corporation employees), Dean Pump Division, Duall Division, Mefiag Division, Sethco Division, Stiles-Kem Division, and Systems Division (Oxy), the Strobic Air Subsidiary and the Flex Kleen Division: (a) Dean Pump Division - All Past Service accumulated before October 1, 1985 shall not be taken into account in determining the amount of Credited Service. -11- (b) Duall Division - Effective November 1, 1989, all Past Service accumulated before July 1, 1988 shall not be taken into account in determining the amount of Credited Service. (c) Mefiag Division - Effective July 1, 1993, all Past Service accumulated before July 1, 1993 shall not be taken into account in determining the amount of Credited Service. (d) Sethco Division - All Past Service accumulated before July 1, 1977 shall not be taken into account in determining the amount of Credited Service. (e) Stiles-Kem Division - All Past Service accumulated before August 1, 1970 shall not be taken into account in determining the amount of Credited Service. (f) Systems Division (Oxy) - All Past Service accumulated before January 1, 1970 shall not be taken into account in determining the amount of Credited Service. (g) Corporation Division (former Strobic Air Corporation employees) - All Past Service accumulated before October 1, 1996 by former employees of Strobic Air Corporation shall not be taken into account in determining the amount of Credited Service. (h) Strobic Air Subsidiary - All Past Service accumulated before February 1, 1997 shall not be taken into account in determining the amount of Credited Service. (i) Flex Kleen Division - All Past Service accumulated before November 1, 1998 shall not be taken into account in determining the amount of Credited Service. 3.6 Years of Service shall mean the total of an Employee's Past Service and ---------------- his Future Service for Eligibility for Benefits and Vesting, plus any period of eligibility and vesting service accumulated by the Employee under the provisions of another of the Company's pension plans or Prior Plans, provided that, for Employees of Sethco Division, any Past Service accumulated before August 1, 1971 shall not be taken into account in determining Years of Service. 3.7 Transfers. When a Participant transfers to another pension plan of the --------- Company, his continuity of service for eligibility and vesting shall not be affected in any way whatsoever. His Years of Service, as calculated for purposes of this Plan, shall include Years of Service as calculated to date of transfer, plus all Years of Service subsequently earned in the plan to which his is transferred. Similarly, his Years of Service for purposes of the plan to which he is transferred shall include all Years of Service earned under this Plan. -12- 3.8 Breaks in Service. ------------------ (a) Any Plan Year in which a Participant is not credited with more than 500 Hours of Service shall constitute a one-year Break in Service; provided, however, that if an Employee is absent for the following reasons, he shall be credited with an Hour of Service, for purposes of this Section only, for each Hour of Service he would have received if he had continued in the active employ of the Company during the following periods of absence: (i) layoff for a period not in excess of one year; (ii) leave of absence with the approval of the Committee for a period not in excess of one year, unless extended by the Committee; (iii) military service under leave granted by the Company or required by law, provided the absent Participant returns to service with the Company within 90 days of his release from active military duty or any longer period during which his right to reemployment is protected by law. (b) Service credited under this Section shall not be credited for any other purpose under the Plan unless such service is comprised of Hours of Service. (c) If a Participant is absent from work by reason of pregnancy, childbirth, adoption, or for purposes of the care of such Participant's child immediately after birth or adoption, such Participant shall be credited solely for purposes of this Section with sufficient Hours of Service to avoid a Break in Service in the Plan Year in which the absence commences or, if the Participant already has more than 500 Hours of Service in such Plan Year, the immediately following Plan Year. Hours of Service during such absence shall be credited in an amount equal to the Hours of Service the Participant would have had but for such absence or, if such hours cannot be determined, at the rate of eight hours per normal workday. 3.9 Restoration of Service. ----------------------- (a) A Participant who had a Vested Interest under Article VI and who incurs a Break in Service shall have his pre-break and post-break service with the Company aggregated for purposes of Sections 3.5 and 3.6 on his reemployment by the Company. (b) A Participant who does not have a Vested Interest under Article VI and who incurs a Break in Service shall have his pre-break and post-break service with the Company aggregated for purposes of Sections 3.5 and 3.6 on his reemployment within a period of less than five consecutive Breaks in Service. If the consecutive Breaks in Service are equal to or in excess of five, he shall receive no credit for his pre-break service for purposes of Sections 3.5 and 3.6. -13- 3.10 Credit for Military Service. Effective as of December 12, 1994, ------------------------------ notwithstanding any provision of this Plan to the contrary, contributions, benefits and service credit with respect to qualified military service will be provided in accordance with Section 414(u) of the Internal Revenue Code. -14- ARTICLE IV ELIGIBILITY FOR BENEFITS ------------------------ 4.1 Normal Retirement Benefit. A Participant shall be eligible for normal --------------------------- retirement benefits on his Normal Retirement Date. 4.2 Early Retirement Benefit. A Participant shall be eligible for early -------------------------- retirement benefits as of his Early Retirement Date. 4.3 Late Retirement Benefit. A Participant shall be eligible for late ------------------------- retirement benefits on his Late Retirement Date. 4.4 Deferred Vested Benefit. A Participant who has completed three or more ------------------------ Years of Service and who, at the time of Separation from Service, is not eligible for a benefit under Sections 4.1, 4.2 or 4.3 of this Plan, shall be eligible for deferred vested retirement benefits. -15- ARTICLE V CALCULATION OF BENEFITS ----------------------- 5.1 General. The retirement benefits for a Participant that are payable ------- under the single life form of payment shall be determined under this Article V subject to the limitations set forth in Article IX. Each Participant shall be entitled to the non-forfeitable portion, as determined under Article VI of his retirement benefit and shall have no right to any portion of his retirement benefit which is not nonforfeitable under Article VI. Adjustments for forms of payment other than the single life form shall be made in accordance with the provisions of Article VIII. 5.2 Accrued Monthly Pension. On any given date, the Accrued Monthly Pension ----------------------- for a Participant shall be determined as follows: For a Participant whose date of hire with the Company or an acquired Company (or whose date of rehire in the case of a Participant who terminates and forfeits service in accordance with Section 3.9 and is subsequently rehired) is on or before December 15, 1982 and whose Past Service Date is prior to September 1, 1986, such benefit shall be equal to the greater of 1/12 of [(a) + (b)], or (c) or (d) as set forth below in this Section 5.2. For a Participant whose date of hire with the Company or an acquired company (or whose date of hire in the case of a Participant who terminates and forfeits service in accordance with Section 3.10 and is subsequently rehired) is after December 15, 1982, or whose Past Service Date is on or after September 1, 1986, such benefit shall be equal to the greater of (c) or (d) as set forth below in this Section 5.2. (a) 0.75 percent of the Participant's base wage or salary on his Initial Anniversary Date up to $7,800 and 1.20 percent of such base wage or salary in excess of $7,800, multiplied by Credited Service prior to his Initial Anniversary Date, plus (b) For each Plan Year beginning with the Plan Year commencing on the Participant's Initial Anniversary Date, and ending with the Plan Year beginning September 1, 1988, 0.75 percent of base wage or salary up to $7,800 and 1.75 percent of base wage or salary in excess of $7,800, multiplied by the fraction of a year of Credited Service completed by the Participant in the Plan Year in question, plus 1.65 percent of base wage or salary earned in each Plan Year beginning on or after September 1, 1989. -16- Annual base wage or salary for Plan Years beginning before September 1, 1989 means the annual base wage or salary in effect on the September 1, beginning the Plan Year in question, except that when necessary, a Participant's annual base wage or salary on the September 1 following his date of hire shall be used in determining the amount of Accrued Benefit attributable to his first partial year of Credited Service. For the period beginning September 1, 1989, Compensation, as defined in Section 1.10 is used in lieu of annual base wage or salary. (c) Credited Service multiplied by the rate in effect on the last day that the Participant accrued Credited Service under the Plan. Notwithstanding the above, effective February 27, 1995, if the Participant transfers out of the Plan and into another of the Company's defined benefit pension plans, the rate used to calculate the monthly pension will be the rate in effect on the last day that the Participant accrued credited service under any of the Company's defined benefit pension plans. The rates in effect are as follows: Rate Effective Date ---- -------------- 9.00 September 1, 1984 - June 14, 1987 12.00 June 15, 1987 - June 14, 1988 14.00 June 15, 1988 - June 14, 1989 16.00 June 15, 1989 - June 14, 1990 18.00 June 15, 1990 - June 30, 1994 20.00 July 1, 1994 - April 30, 1995 21.00 May 1, 1995 - September 30, 1996 22.00 October 1, 1996 and thereafter (d) One percent of the Participant's Average Monthly Compensation multiplied by Credited Service or, in the case of an individual who is or becomes a Participant on or after September 1, 2000, if greater, a monthly benefit of $62.50, payable commencing on the Participant's Normal Retirement Date. (e) For Participant's with Compensation for a Plan Year prior to September 1, 1994 in excess of $150,000, in no event will such Participant's benefit determined according to (a) and (b) and (d) of this Section 5.2 be less than the sum of: (i) the Participant's Accrued Benefit on August 31, 1994 frozen in accordance with Section 1.401(a)(4)-13 of the Regulations and (ii) the Participant's Accrued Benefit determined using the benefit formula applicable on or after September 1, 1994 with respect to Credited Service earned on or after September 1, 1994. -17- 5.3 Normal Retirement Benefit. A Participant who is eligible for normal --------------------------- retirement benefits shall receive a monthly pension equal to his Accrued Monthly Pension benefit on such retirement date. 5.4 Early Retirement Benefit. A Participant who is eligible for early -------------------------- retirement benefits, upon retirement, shall receive either of the following: (a) A monthly pension equal to the product of (i) his Accrued Monthly Pension as of his date of Separation from Service, and (ii) his vesting percentage as of his date of Separation of Service with such product, reduced by 5/9 percent for each of the first 60 fall calendar months, and 5/18 percent for each of the next 60 full calendar months by which the commencement of his benefits precedes his Normal Retirement Date. (b) A deferred monthly pension equal to the product of (a) his Accrued Monthly Pension as of the date of his Separation from Service, and (b) his vesting percentage as of the date of his Separation from Service with payment commencing at his Normal Retirement Date. 5.5 Deferred Vested Benefit. A Participant who is eligible for deferred ------------------------- vested retirement benefits shall receive either of the following: (a) A deferred monthly pension with payments commencing any time on or after his Early Retirement Date equal to the product of (i) his Accrued Monthly Pension as of the date of his Separation of Service, and (ii) his vesting percentage as of the date of his Separation of Service with such product, reduced by 5/9 percent for each of the first 60 full calendar months, and 5/18 percent for each of the next 60 full calendar months by which the commencement of his benefits precedes his Normal Retirement Date, and (b) A deferred monthly pension equal to the product of (i) his Accrued Monthly Pension as of the date of his Separation of Service, and (ii) his vesting percentage as of the date of his Separation of Service with payment commencing on his Normal Retirement Date. 5.6 Late Retirement Benefit. A Participant who is eligible for late ------------------------- retirement benefits shall receive a monthly pension equal to the greater of (a) his Accrued Monthly Pension benefit on his Normal Retirement Date or (b) the Actuarial Equivalent of his Normal Retirement Benefit except that the benefit provided under Appendix B is not subject to any actuarial increase that would otherwise result due to the benefit commencing after his Normal Retirement Date, except to the extent required by law. -18- 5.7 Suspension of Benefits ---------------------- (a) (i) In the event that a Participant is employed in qualified reemployment or qualified employment, the benefits otherwise payable to the Participant shall be suspended for each calendar month in which he continues his qualified reemployment or qualified employment. The rules relating to such a suspension of benefits and their subsequent resumption are described in this Section. (ii) The Committee shall notify the Participant by personal delivery or first class mail of the suspension of his benefits during the first month in which such suspension of benefits occurs if required in accordance with the notification requirements of Department of Labor Regulations Section 2530.203-3(b)(4). (iii) Each Participant receiving benefits under the Plan shall be required to give notice to the Committee of any employment relationship which such Participant has with the Company. The Committee shall have the right to use all reasonable efforts to determine whether such employment constitutes qualified reemployment or qualified employment. The Committee shall also have the right to require the Participant to provide information sufficient to prove that such employment does not constitute qualified reemployment or qualified employment. (iv) A Participant may, by written request, ask the Committee to make a determination as to whether specific contemplated employment constitutes qualified reemployment or qualified employment. The Committee shall respond to such request in writing within 60 days of the Committee's receipt of the request. (v) Subject to Sections 8.3 and 8.8, benefit payments to the Participant will resume (or commence) no later than the first day of the third calendar month following the month in which his qualified reemployment or qualified employment ceases or, if later, the first day of the calendar month following receipt by the Committee of the Participant's notice that his qualified reemployment or qualified employment has ceased. The initial resumption payment shall include payment for the current month and for all previous calendar months since the cessation of the Participant's qualified employment or reemployment. (vi) The Committee shall offset resumed benefits by an amount equal to any benefits which were paid to the Participant with respect to a calendar month in which the Participant was engaged in qualified reemployment or qualified employment. However, the offset to any monthly benefit, other than the initial resumption payment, shall not exceed twenty-five percent (25%) of such monthly benefit. Any remaining offset shall be applied to benefits payable in subsequent months. -19- (b) In the event that a Participant is employed or reemployed by the Company under any circumstances other than as described in Subsection (a), the benefits otherwise payable to the Participant shall be continued during such period of employment or reemployment. (c) Qualified reemployment shall mean the reemployment of a Participant by the Company after his Normal Retirement Date in such a capacity that (and provided that) the Participant receives or is entitled to be paid for at least 40 Hours of Service (not including Hours of Service credited as a result of back pay) during a calendar month. Notwithstanding the above, for Participants that attain age 70 1/2 in calendar years before January 1, 2003, qualified reemployment shall not include employment on or after the April 1st following the calendar year in which the Participant attains age 70 1/2. In addition, effective January 1, 2002, qualified reemployment shall not include employment with respect to a Participant that makes an election to commence benefits under Section 8.3(b). (d) Qualified employment shall mean the continued employment of a Participant after his Normal Retirement Date in such a capacity that (and provided that) the Participant receives or is entitled to be paid for at least 40 Hours of Service (not including Hours of Service credited as a result of back pay) during a calendar month. Notwithstanding the above, for Participants that attain age 70 1/2 in calendar years before January 1, 2003, qualified employment shall not include employment on or after the April 1st following the calendar year in which the Participant attains age 70 1/2. In addition, effective January 1, 2002, qualified employment shall not include employment with respect to a Participant that makes an election to commence benefits under Section 8.3(b). -20- ARTICLE VI VESTING ------- If a Participant has been credited with three or more Years of Service, a portion of the Participant's Accrued Benefit shall be nonforfeitable. The nonforfeitable portion shall be an amount equal to a Participant's Accrued Benefit multiplied by a percentage based upon the number of Years of Service, as follows: Number of Years of Service Vesting Percentage -------------------------- ------------------ 0 0 1 0 2 0 3 20 4 40 5 60 6 80 7 or more 100 Notwithstanding the above, the Vesting Percentage of a Participant who has attained his Normal Retirement Age shall be 100 percent. Also notwithstanding the above, each individual who was an employee of Strobic Air Corporation on the date of acquisition by the Company and who continued his employment with the Company and became a Participant in the Plan shall have his Vesting Percentage equal to 100% if he had attained age 55 on or before the September 12, 1996 date of acquisition. -21- ARTICLE VII PRE-RETIREMENT DEATH BENEFITS ----------------------------- 7.1 Pre-Retirement Survivor Death Benefit --------------------------------------- In the event of a death of a Participant who (a) has a Vested Interest, and (b) has not yet had an Annuity Starting Date, the Participant's designated beneficiary shall receive a Pre-Retirement Survivor Death Benefit. For purposes of this Article, a married Participant's designated beneficiary shall be the Participant's Spouse. For Employees who are hired by the Company or a Subsidiary on or after September 1, 2001, the provisions of this Section 7.1 will apply only if the Participant is married on his or her date of death. 7.2 Amount and Form of Pre-Retirement Survivor Death Benefit -------------------------------------------------------- Subject to the following, the Participant's Pre-Retirement Survivor Death Benefit shall be paid to the Participant's Spouse or designated beneficiary in the form of an annuity for the Spouse's or designated beneficiary's life. The amount of the monthly annuity shall be such that the present value of the Pre-Retirement Survivor Death Benefit shall be equal to the present value of the deceased Participant's vested Accrued Benefit on his date of death. Notwithstanding the above, if the Participant is married, the present value of the monthly annuity shall not be less than the present value of a Qualified Pre-Retirement Survivor Annuity. If the Actuarial Equivalent present value of a Participant's Pre-Retirement Survivor Death Benefit as of the Annuity Starting Date does not exceed $5,000, the method of distribution to the Participant's Spouse or designated beneficiary shall be as a single cash distribution which is the Actuarial Equivalent of the Qualified Pre-Retirement Survivor Annuity. 7.3 Timing of Distribution ---------------------- Distribution of a Participant's Pre-Retirement Survivor Death Benefit shall commence as of the Annuity Starting Date of the Participant's Spouse or designated beneficiary. The Annuity Starting Date of the Participant's Spouse or designated beneficiary shall be the earliest date which the Participant could have begun to receive benefits if he had survived (the first day of the month following the Participant's death if the Participant had been eligible at the time of his death to begin receiving benefits). Notwithstanding the above, (1) if the Participant's Pre-Retirement Survivor Death Benefit is not payable in the form of a Qualified Pre-Retirement Death Benefit, then the Annuity Starting Date of the Participant's designated beneficiary shall be the first day of the month coincident with or next following the Participant's date of death, and (2) if the Actuarial Equivalent present value of his Pre-Retirement Survivor Death Benefit does not exceed $5,000, the Annuity Starting Date of the Participant's designated beneficiary shall be the first day of the month coincident with or next following the Participant's death. -22- 7.4 Required Distribution --------------------- If a Participant's Pre-Retirement Survivor Death Benefit is paid in the form of a single cash payment, the Participant's entire Pre-Retirement Survivor Death Benefit shall be distributed to his designated beneficiary within five years of the Participant's death. If a Participant's Pre-Retirement Survivor Death Benefit is distributed in the form of an annuity, distribution shall commence by the December 31 of the year after the year of the Participant's death or, if later, in the case of a married Participant, the December 31 of the year the Participant would have attained age 70 1/2. Such Pre-Retirement Survivor Death Benefit must be distributed over a period not extending beyond the life expectancy of the Spouse or designated beneficiary. -23- ARTICLE VIII DISTRIBUTION ------------ 8.1 Optional Forms of Benefits. The Participant may elect, subject to ---------------------------- Section 8.7, to receive distribution of his Retirement Benefit (if the Actuarial Equivalent present value of such benefit as of the Participant's Annuity Starting Date or at the time of any prior distribution is in excess of $5,000) by one of the following methods: (a) a Single Life Annuity - an annuity payable in equal monthly installments to the retired Participant for his life; or (b) a Qualified Joint and Survivor Annuity - an annuity payable in monthly installments to the Participant for his life and with fifty percent (50%) of the amount of such monthly installment payable after his death of the Participant to the Spouse of such Participant, if then living, for the life of such Spouse. The benefit payable to the Participant and co-pensioner under this form of payment shall be the Actuarial Equivalent of the Single Life form of payment; or (c) a Single Life Annuity with a 60, 120, or 180 month period certain feature - an annuity payable in equal monthly installments to the retired Participant for his life, with 60, 120, or 180 monthly payments guaranteed. The benefits payable shall be the Actuarial Equivalent of the Single Life form of payment; or (d) a Joint and Survivor Annuity for the life of the Participant with a survivor annuity for the life of the Participant's named co-pensioner equal to 50 percent or 100 percent of the amount payable to the Participant. The benefit payable to the Participant and co-pensioner under this form of payment shall be the Actuarial Equivalent of the Single Life form of payment. 8.2 Small Benefit Payments. If the Actuarial Equivalent present value of the ---------------------- Retirement Benefit is less than $5,000, such benefit shall be paid in a single lump sum payment. Notwithstanding the above, effective for distributions occurring on or after March 22, 1999, if a Participant has begun to receive distributions pursuant to an optional form of benefit under which at least one scheduled periodic distribution has not yet been made, and if the present value of the Participant's benefit at the time of the first distribution exceeded the cash-out limit set forth above, then the present value of the Participant's benefit is deemed to continue to exceed such cash-out limit. -24- 8.3 Timing of Distribution; Annuity Starting Date. ---------------------------------------------- (a) Distribution of a Participant's Retirement Benefit shall commence as of his Annuity Starting Date. A Participant's Annuity Starting Date shall be the earliest of (1) the first day of the month coincident with or next following the day of the Participant's Retirement, (2) the first day of the month coincident with or next following the day of the Participant's Separation from Service if as of that date the Actuarial Equivalent present value of his Vested Interest does not exceed $5,000, (3) the first day of the month coincident with or next following the Participant's Normal Retirement Date if the Participant has a Separation from Service prior to that time, unless the Participant elects under Section 8.4 to commence to receive distribution prior to his Normal Retirement Date, and (4) effective for all Participants (except Participants that attained age 70 1/2after January 1, 1988 and before January 1, 2003, or Participants that are Five Percent Owners during the Plan Year ending with or within the calendar year in which they attain age 70 1/2or any subsequent Plan Year), the first day of April immediately following the calendar year in which the Participant retires or attains age 70 1/2, whichever occurs later. For Participants that attained age 70 1/2after January 1, 1988 and prior to January 1, 2003, and for Five Percent Owners as described above, the required beginning date of Plan benefits is April 1 of the calendar year following the calendar year in which the Participant attains age 70 1/2. In no event, unless the Participant elects otherwise, shall distribution of a Participant's Vested Interest commence later than 60 days after the latest of the last day of the Plan Year in which occurs (i) the Participant's Retirement, and (ii) the Participant's attainment of age 65. (b) Notwithstanding the above, effective January 1, 2002, a Participant that has completed twenty years of Credited Service and attained age 70 who is an active Employee may elect (subject to the minimum distribution requirements of Sections 8.3(a) and 8.8) to commence benefits as of the first day of the month following attainment of age 70 or as of the first day of any month thereafter while an active Employee. The calculation of the benefit payable to such a Participant that makes an election under this subsection shall be made in accordance with Section 5.6. The first date for which benefits are payable due to an election under this subsection shall be considered the Participant's Annuity Starting Date. 8.4 Election to Receive Distribution Before Normal Retirement Date. A -------------------------------------------------------------------- Participant who (a) has a Separation from Service before his Normal Retirement Date and (b) has a Vested Interest, the Actuarial Equivalent present value of which exceeds $5,000 as of the Participant's Annuity Starting Date, may elect to have distribution of his Retirement Benefit commence before his Normal Retirement Date. In that event, distribution shall commence as of the first day of any month following the election, but not prior to a Participant's Early Retirement Date. -25- 8.5 Qualified Joint and Survivor Annuity for Married Participants ------------------------------------------------------------- (a) Subject to subsection (b), a Participant who is married on his Annuity Starting Date shall receive distribution of his Retirement Benefit in the form of a Qualified Joint and Survivor Annuity, unless the Participant has previously waived his right to receive benefits in this form. The waiver must be executed and consented to by the Participant's Spouse in accordance with Section 8.7. Both the Participant's waiver and the Spouse's consent must state the particular optional form of benefit to be distributed. Alternatively, the Spouse's consent may permit the Participant to elect any optional form of benefit available under the Plan. Such a general consent must acknowledge that the Spouse has voluntarily relinquished rights to limit consent to a specific form of benefit. A Participant's waiver of a Qualified Joint and Survivor Annuity under this Section 8.5 may be revoked at any time before the Participant's Annuity Starting Date and, once revoked, may be made again before that date. A Spouse's consent to the waiver once given may be revoked before the Annuity Starting Date. (b) In the case of a Participant (i) who is married for less than one year on his Annuity Starting Date, (ii) receives distribution of his Retirement Benefit in the form of a Qualified Joint and Survivor Annuity and (iii) does not remain married to his Spouse for at least one year, such Spouse shall lose all survivor rights. In such event the Participant shall be entitled to receive distribution of his Retirement Benefit in any other form under Section 8.1. 8.6 Notification of Right to Waive Qualified Joint and Survivor Annuity. ----------------------------------------------------------------------- Within the period beginning no earlier than 90 days, and no later than 30 days before the Participant's Annuity Starting Date the Administrative Committee shall provide each Participant with a notice of the Participant's right to elect to waive his right to receive distribution of his Retirement Benefit in the form of a Qualified Joint and Survivor Annuity. The notice shall contain an explanation, in nontechnical language, of (a) the terms and conditions of the election and its effect upon the Participant's Retirement Benefit (in terms of dollars per annuity payment), (b) the requirement that the Participant's Spouse must consent to the election in accordance with Section 8.7, (c) the Participant's right to revoke the election in the manner prescribed in regulations promulgated by the Secretary of the Treasury and (d) a general description of the eligibility conditions and other features of the optional forms of benefit under the Plan and sufficient information to explain the relative values of these optional forms of benefits. The Annuity Starting Date may not occur before the expiration of the 30 day period beginning on the date a written explanation describing the terms of the Qualified Joint and Survivor Annuity is provided to the Participant; provided however that the Annuity Starting Date may be less than 30 days after receipt by the Participant of the written explanation provided: (a) the Participant has been provided with information that clearly indicates that the Participant has at least 30 days to consider whether to waive the Qualified Joint and Survivor Annuity; (b) the Participant is permitted to revoke any affirmative distribution election at least until the Annuity Starting Date or , if later, at any time -26- prior to the expiration of the 7-day period that begins the day after the explanation of the Qualified Joint and Survivor Annuity is provided to the Participant; and (c) the Annuity Starting Date is a date after the date that the written explanation was provided to the Participant. 8.7 Spousal Consent. A Participant's waiver of a Qualified Joint and ---------------- Survivor Annuity described in Section 8.6 shall be valid only if the Participant's Spouse executes a written consent to that election acknowledging the effect of the election and the consent is witnessed by a notary public or Plan Administrator. The Spouse's consent is not required if (a) the Participant's Spouse cannot be located or for such other circumstances as may be provided in regulations promulgated by the Secretary of the Treasury, (b) the Participant is legally separated from the Spouse or (c) the Participant has been abandoned by his or her Spouse (within the meaning of local law) and the Participant has a court order to that effect. A Participant's waiver of a Qualified Joint and Survivor Annuity shall be effective only with respect to the Spouse who consents to it as provided in this Section 8.7. 8.8 Minimum Distribution Requirements. ---------------------------------- (a) Notwithstanding any provision of this Plan to the contrary, all distributions under the Plan shall be made in accordance with Section 401(a)(9) of the Code and the regulations promulgated by the Secretary of the Treasury thereunder. (b) In the case of a Participant who is a Five Percent Owner, or a Participant that attains age 70 1/2prior to January 1, 2003, or a Participant that makes an election to commence benefits under Section 8.3(b), if such a Participant remains an Employee after attainment of age 70 1/2(or age 70 for a Participant electing under Section 8.3(b)) and has commenced to receive Retirement Benefits from the Plan, such Participant shall have such benefits increased as of the first day of each calendar year to reflect any additional Credited Service accrued during the Plan Year ending immediately before the first day of that calendar year. If a Participant who is not a Five Percent Owner attains age 70 1/2after January 1, 2003, the Participant's accrued benefit shall be actuarially increased in accordance with Appendix A to take into account the period after age 70 1/2in which the Participant is not receiving any benefits from the Plan. The actuarial increase shall be provided for the period starting on April 1 following the calendar year in which the employee attains age 70 1/2. The actuarial increase described above will be provided even during the period when a valid benefit suspension is in place under ERISA Section 203(a)(3)(B). (c) If a Participant dies after the date his Retirement Benefit has commenced, the remaining portion, if any, of the Participant's benefit shall be distributed to the Participant's beneficiary at least as rapidly as it would have been distributed under the method of distribution in effect on the day of the Participant's death. -27- (d) If a Participant's Retirement Benefit is distributed in the form of an annuity other than an annuity for the life of the Participant or an annuity for the joint lives of the Participant and the Participant's Spouse or in installments and the Participant's Beneficiary is other than the Participant's Spouse, the distribution must satisfy the minimum distribution incidental benefit requirements under Section 1.401(a)(9)-2 of the Income Tax Regulations. (e) With respect to distributions under the Plan made in calendar years beginning on or after January 1, 2001, the Plan will apply the minimum distribution requirements of section 401(a)(9) of the Internal Revenue Code in accordance with the regulations under section 401(a)(9) that were proposed in January 2001, notwithstanding any provision of the Plan to the contrary. This amendment shall continue in effect until the end of the last calendar year beginning before the effective date of final regulations under Code section 409(a)(9) or such other date specified in guidance published by the Internal Revenue Service. This also applies to required distributions made under Article VII. 8.9 Direct Rollover --------------- (a) This Section applies to distributions made on or after January 1, 1993. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this Section, a distributee may elect, at the time and in the manner prescribed by the Plan Administrator, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover. (b) For purposes of this Section the following definitions shall apply: (i) An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Code Section 401(a)(9); and the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). (ii) An eligible retirement plan is an individual retirement account described in Code Section 408(a), an individual retirement annuity described in Code Section 408(b), an annuity plan described in Code Section 403(a), or a qualified trust described in Code Section 401(a), that accepts the distributee's eligible rollover distribution. However, in the case of an eligible -28- rollover distribution to the surviving Spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity. (iii) A distributee includes an Employee or former Employee. In addition, the Employee's or former Employee's surviving Spouse and the Employee's or former Employee's Spouse or former Spouse who is the alternate payee under a qualified domestic relations order, as defined in Code Section 414(p), are distributees with regard to the interest of the Spouse or former Spouse. (iv) A direct rollover is a payment by the plan to the eligible retirement plan specified by the distributee. 8.10 Payments To Incompetents ------------------------ If the Committee shall find that any person to whom a benefit is payable from the Trust Fund is unable to care for his affairs because of illness or accident, or is a minor, any payment due (unless a prior claim therefore shall have been made by a duly appointed guardian, committee or other legal representative) may be paid to the Spouse, a child, a parent, or a brother or sister, or to any person deemed by the Committee to have incurred expense for such person otherwise entitled to payment. Any such payment shall be a complete discharge of any liability of the Company, the Administrator, the Committee, the Trustee, and the Fund therefore. 8.11 Lost Participant. Neither the Administrator nor the Trustee shall be ----------------- obligated to search for or ascertain the whereabouts of any Participant or Beneficiary (other than to write to the Participant at his last mailing address shown in the Plan Administrator's records). If a Participant or Beneficiary cannot be located, the Participant's Retirement Benefit or Pre-Retirement Death Benefit shall be forfeited, but shall be reinstated (without interest) upon the Participant's or Beneficiary's claim for the benefit. 8.12 Deemed Cashouts --------------- Notwithstanding any other provision contained herein, if a Participant separates from service and the Actuarial Equivalent present value of his vested Accrued Monthly Pension is zero, the Participant shall be deemed to have received a distribution of his vested Accrued Monthly Pension. -29- ARTICLE IX LIMITATION ON BENEFITS ----------------------
9.1 Definitions. The following definitions apply for purposes of Section 9.2: -----------
(a) Annual Benefit - shall mean a benefit which is payable annually in the form of a straight life annuity with no ancillary benefits. (b) Compensation - shall mean annual compensation, as defined in Regulation 1.415(2)(d)(l) of the Code, and effective for limitation years beginning on or after January 1, 1998, shall include (i) any elective deferral as defined in Code Section 402(g)(3) and (ii) any amount which is contributed or deferred by the Company at the election of an Employee which is not includible in gross income by reason of Code Section 125, or effective January 1, 2001, Code Section 132(f). (c) Defined Benefit Plan Fraction - for any limitation year ending before the 2000 limitation year is a fraction: (i) the numerator of which is the Projected Annual Benefit of a Participant under the Defined Benefit Plan (determined as of the close of the year), and (ii) the denominator of which is the lesser of: (1) 1.25 multiplied by $90,000 (or the applicable dollar limitation under Section 415(d) of the Code), or (2) 1.4 multiplied by the average of the Participant's total Compensation during the three consecutive years in which he earned the greatest amount of total Compensation from the Company. (d) Defined Contribution Plan Fraction - for any limitation year ending on or before the 2000 limitation year is a fraction: (i) the numerator of which is the sum of annual additions to the Participant's accounts under the Defined Contribution Plan as of the close of the year, and (ii) the denominator of which is the sum of the lesser of the following amounts for such year and for each prior year of service with the Company; -30- (1) 1.4 multiplied by the amount determined under Section 415(c)(l)(B) of the Code, or (2) 1.25 multiplied by $30,000 (or the applicable dollar limitation under Section 415(c)(1)(A) of the Code). For limitation years ending before the 2000 limitation year, in the case of a Participant with respect to whom the sum of his Defined Benefit Plan Fraction and Defined Contribution Plan Fraction exceeds 1.0 as of either (or both) December 31, 1982 or December 31, 1986 (computed as if the provisions of Section 415 of the Code, as amended by the Tax Equity and Fiscal Responsibility Act of 1982 or the Tax Reform Act of 1986, respectively, were in effect on the applicable of those dates) the numerator of the Participant's Defined Contribution Plan Fraction shall be reduced so that the sum of those fractions as of the applicable date does not exceed 1.0. (e) Projected Annual Benefit - shall mean the annual benefit to which a Participant would be entitled under the terms of all Defined Benefit Plans if he had continued employment until his normal retirement date under such plans and if his compensation for the purpose of such plans had continued at the same rate. 9.2 Maximum Retirement Benefit. Notwithstanding any other provisions of this -------------------------- Plan the Maximum Retirement Benefit shall be: (a) Subject to Sections 9.2(b), (c), and (d), the Retirement Benefit of a Participant shall be reduced to the extent that it (plus, if applicable, the aggregate retirement benefit to which the Participant is entitled under all other Defined Benefit Plans in which he or she was a participant) exceeds the lesser of (1) $90,000 (or such higher amount as may be permitted under Section 415 (d) of the Code to reflect increases in the cost of living, and (2) 100 percent of the Participant's average annual compensation during the three consecutive Plan Years in which the Participant received the greatest aggregate amount of annual compensation. No reduction shall be required under this Section 9.2(a) in the case of a Participant who never participated in a defined contribution plan if the Participant's Retirement Benefit (plus, if applicable, the Participant's retirement benefit under all other Defined Benefit Plans) does not exceed $10,000. (b) The following adjustments shall be made in applying the limitations of Sections 9.2(a) and 9.4. (i) If a Participant's Retirement Benefit (or a retirement benefit to which the Participant is entitled under any other Defined Benefit Plan) is payable in a form other than an Annual Benefit, the Retirement Benefit shall be adjusted so that it is the Actuarial Equivalent of an Annual Benefit, except that the following shall not be taken into account: (A) any ancillary benefit that is -31- not related to retirement income benefits and (B) the survivor annuity provided under the portion of any annuity that constitutes a Qualified Joint and Survivor Annuity (as defined in Section 417(b) of the Code). Effective September 1, 1995, for purposes of adjusting any benefit for any form of payment subject to Code Section 417(e)(3), the interest rate assumption shall not be less than the greater of the applicable interest rate described in Appendix A(2)(b) or the rate described in Appendix A(1)(a). (ii) The dollar limitation set forth in Section 9.2(a)(i) shall be adjusted as follows: (1) If distribution of a Participant's Retirement Benefit begins before the Participant's Social Security retirement age as defined in Section 415(b)(8) of the Internal Revenue Code but on or after the Participant's attainment of age 62 then the limitation shall be reduced by 5/9 of one percent for each of the first 36 months and 5/12 of one percent for each of the additional months (up to 24 months), if any, by which the benefits commenced before the month in which the Participant attains his or her Social Security retirement age. (2) If the distribution of a Participant's Retirement Benefit begins before his or her attainment of age 62 then the limitation shall be reduced by (A) reducing the limitation to the applicable limit for benefits payable at age 62 in accordance with paragraph (i); and (B) then determining the Actuarial Equivalent of that amount at the Participant's age at the time that the benefit commences. (3) If distribution of a Participant's Retirement Benefit begins after the Participant's Social Security retirement age, the limitation shall be increased (in accordance with regulations promulgated by the Secretary of the Treasury) so that it equals the amount of an Annual Benefit beginning at the time distribution of the Participant's Retirement Benefit begins, which is the Actuarial Equivalent of an Annual Benefit equal to the dollar limitation set forth in Section 9.2(a)(1) beginning at the Participant's Social Security retirement age. (iii) In the case of a Participant with less than ten years of participation in the Plan or less than ten (10) years of Credited Service: (1) the dollar limitation set forth in Section 9.2(a)(i) shall be multiplied by a fraction the numerator of which is the aggregate number of -32- the Participant's years of participation in the Plan at the time the determination is made and the denominator of which is ten, and (2) the percentage limitation set forth in Section 9.2(a)(2) and the $10,000 minimum benefit referred to in the last sentence of Section 9.2(a) shall be multiplied by a fraction the numerator of which is the aggregate number of the years of the Participant's Years of Service at the time the determination is made and the denominator of which is ten. (iv) For purposes of adjusting the Participant's retirement benefit under Section 9.2(b)(i) or the dollar limitation under Section 9.2(b)(ii), the interest rate assumption shall be that set forth in the Appendix to this Plan subject to the limitations on interest rates of Section 415(b)(2)(E) of the Code, and the mortality decrement shall be ignored to the extent that a forfeiture does not occur at death. (c) The Retirement Benefit of a Participant who was a Participant before January 1, 1987 shall not be reduced under any other provisions of this Section 9.2 to the extent that it does not exceed the Participant's Retirement Benefit accrued as of that date and determined in accordance with the requirements of Section 415 of the Code in effect on that date and without regard to amendments to the Plan after May 5, 1986. The Retirement Benefit of a Participant who was a Participant before January 1, 1983 shall be similarly protected. (d) If a Participant is a participant in any Defined Contribution Plan for limitation years ending before the 2000 limitation year, the Participant's Retirement Benefit shall be reduced to the extent that it causes the sum of the Participant's Defined Benefit Plan Fraction and the Participant's Defined Contribution Plan Fraction to exceed 1.0 for any Plan Year. (e) If Section 415 of the Code is amended, or if new regulations are promulgated by the Secretary of Treasury, the restrictions under this Section 9.2 shall be correspondingly modified without formal amendment to this Plan. 9.3 Incorporation by Reference -------------------------- Notwithstanding anything contained in Section 9.1 and 9.2 to the contrary, the limitations, adjustments and other requirements prescribed in Section 9.1 and 9.2 shall at all times comply with the provisions of Code Section 415 and the Regulations thereunder, the terms of which are specifically incorporated herein by reference. -33- 9.4 Restrictions on 25 Highest Paid Employees ----------------------------------------- (a) Benefits distributed to any of the twenty-five (25) most highly compensated active and highly compensated former employees with the greatest compensation in the current or prior year are restricted such that the monthly payments are no greater than an amount equal to the monthly payment that would be made on behalf of such individual under a straight life annuity that is the Actuarial Equivalent of the sum of the individual's Accrued Monthly Pension, the individual's other benefits under the Plan (other than a social security supplement within the meaning of Regulation 1.411(a)-7(c)(4)(ii)), and the amount the individual is entitled to receive under a social security supplement. However, the limitation of this Section 9.4 shall not apply if: (i) after payment of the benefit to an individual described above, the value of Plan assets equals or exceeds 110 percent of the value of current liabilities, as defined in Code Section 412(1)(7); (ii) the value of the benefits payable under the Plan to an individual described above is not less than 1 percent of the value of current liabilities before distribution; or (iii) the value of the benefits payable under the Plan to an individual described above does not exceed $5,000. (b) For purposes of this Section, benefit includes any periodic income, any withdrawal values payable to a living Participant, and any death benefits not provided for by insurance on the individual's life. (c) An individual's otherwise restricted benefit may be distributed in full to the affected individual if, prior to receipt of the restricted amount, the individual enters into a written agreement with the Administrator to secure repayment to the Plan of the restricted amount. The restricted amount is the excess of the amounts distributed to the individual (accumulated with reasonable interest) over the amounts that could have been distributed to the individual under the straight life annuity described above (accumulated with reasonable interest). The individual may secure repayment of the restricted amount upon distribution by: (i) entering into an agreement for promptly depositing into escrow with an acceptable depositary, property having a fair market value equal to at least 125 percent of the restricted amount; (ii) providing a bank letter of credit in an amount equal to at least 100 percent of the restricted amount; or -34- (iii) posting a bond equal to at least 100 percent of the restricted amount. The bond must be furnished by an insurance company, bonding company or other surety for federal bonds. (d) The escrow agreement may permit an individual to withdraw from escrow amounts in excess of 125 percent of the restricted amount. If the market value of the property in an escrow account falls below 110 percent of the remaining restricted amount, the individual must deposit additional property to bring the value of the property held by the depositary up to 125 percent of the restricted amount. The escrow arrangement may provide that the individual has the right to receive any income from the property placed in escrow, subject to the individual's obligation to deposit additional property, as set forth in the preceding sentence. (e) A surety or bank may release any liability on a bond or letter of credit in excess of 100 percent of the restricted amount. (f) If the Administrator certifies to the depositary, surety or bank that the individual (or the individual's estate) is no longer obligated to repay any restricted amount, a depositary may deliver to the individual any property held under an escrow arrangement, and a surety or bank may release any liability or an individual's bond or letter of credit. (g) Notwithstanding the foregoing, with respect to Plan Years beginning prior to January 1, 1989, compliance with the Plan and Regulations then in effect shall be deemed compliance with this Section 9.4. -35- ARTICLE X FUNDING ------- 10.1 Contributions to the Fund. The benefits provided under the Plan shall be ------------------------- financed exclusively by contributions made from time to time to the Trustees by the Company and by the Fund created thereby. Subject to the provisions of applicable law, the liability of the Company under the Plan shall be limited to the contributions determined by the Company from time to time in accordance with the advice and counsel of the Actuary. The Company's liability for Plan payments shall be limited to making contributions into the Fund in order to maintain the funding standard account set forth in Section 412 of the Internal Revenue Code. The funding policy applicable to the Fund shall be established by the Committee and reviewed from time to time. 10.2 Use of Contributions to the Fund. The contributions deposited under the -------------------------------- terms of this Plan shall constitute the Fund held for the benefit of Participants, former Employees, and their eligible survivors under and in accordance with this Plan. No part of the corpus or income of the Fund shall be used for or diverted to purposes other than exclusively for the benefit of such Participants, former Employees, and their eligible survivors and for necessary administrative costs; provided, however, that, in the event of the termination of the Plan and after all fixed and contingent liability, as defined under the Code and ERISA, shall have been satisfied and, upon receipt of the necessary approvals from the Pension Benefit Guaranty Corporation, any remaining funds attributable to contributions by the Company shall revert to the Company; and further provided that, in the case of a contribution (a) made by the Company as a mistake of fact, or (b) for which a tax deduction is disallowed, in whole or in part, by the Internal Revenue Service, the Company shall be entitled to a refund of said contributions (i) within one year after payment of a contribution is made as a mistake of fact, or (ii) within one year after disallowance, to the extent of such disallowance, as the case may be. 10.3 Forfeitures. Forfeitures and other actuarial gains shall not be applied ----------- to increase the benefits of any Participant, but shall reduce the contributions of the Participating Company hereunder. -36- ARTICLE XI ADMINISTRATION -------------- 11.1 Committee. The Company is plan administrator with full discretionary --------- authority to interpret the Plan, find facts relating to the Plan, and apply the Plan as such to the facts. The Board of Directors of the Company shall appoint a Committee consisting of not less than two persons to act on behalf of the Company with full discretionary authority to control and manage the operation of, and administer, the Plan. The Committee members may, but need not be, employees of the Company and shall serve at the pleasure of the Board of Directors of the Company. They shall be entitled to reimbursement of expenses, but those members of the Committee who are also employees of the Company shall be entitled to no compensation for their service on the Committee. Any reimbursement of expenses of the Committee members shall be paid directly by the Company. Vacancies on the Committee shall be filled by the Board of Directors of the Company. Such Committee shall be responsible for the general administration of the Plan under the policy guidance of the Company. 11.2 Duties and Powers of the Committee. In addition to the duties and powers ---------------------------------- described elsewhere hereunder, the Committee shall have the following specific duties and powers: (a) to retain such consultants, accountants, attorneys, and Actuaries as deemed necessary or desirable to render statements, reports, and advice with respect to the Plan and to assist the Committee in complying with all applicable rules and regulations affecting the Plan; any consultants, accountants, attorneys, and Actuaries may be the same as those retained by the Company; (b) to decide appeals under Article XIII; (c) to establish a funding policy consistent with the objectives of the Plan; (d) to enact uniform and nondiscriminatory rules and regulations to carry out the provisions of the Plan; (e) to resolve questions or disputes relating to eligibility for benefits or the amount of benefits under the Plan; (f) to interpret the provisions of the Plan; (g) to determine whether any domestic relations order received by the Plan is a qualified domestic relations order, as provided in Section 414(p) of the Code; (h) to evaluate administrative procedures; and -37- (i) to delegate such duties and powers as the Committee shall determine from time to time to any person or persons, including the Administrator. 11.3 Functioning of Committee. The Committee and those persons or entities to ------------------------ whom the Committee has delegated responsibilities shall keep accurate records and minutes of meetings, interpretations and decisions. Any Employee may examine records pertaining directly to him. The Committee shall elect a chairman and a secretary from its membership. The Committee shall act by majority vote of the members, and such action shall be evidenced by a written document. 11.4 Indemnification. Each member of the Committee, and any other person who --------------- is an employee or director of the Company, shall be indemnified by the Company against expenses (other than amounts paid in settlement to which the Company does not consent) reasonably incurred by him in connection with any action to which he may be a party by reason of his performance of administrative functions and duties under the Plan, except in relation to matters as to which he shall be adjudged in such action to be personally guilty of negligence or willful misconduct in the performance of his duties. The foregoing right to indemnification shall be in addition to such other rights as the Committee member, or other person may enjoy as a matter of law or by reason of insurance coverage of any kind. Rights granted hereunder shall be in addition to and not in lieu of any rights to indemnification to which the Committee member, or other person may be entitled pursuant to the by-laws of the Company. 11.5 The Trustee. The Trustee shall be the named fiduciary with respect to ----------- the management and control of Plan assets held by it, and shall have exclusive authority to hold, manage and administer the Trust Fund in accordance with the terms of the Trust Agreement entered into between the Company and the Trustee except to the extent that authority to manage certain assets held by the Trust is delegated by the Administrative Committee to an Investment Manager pursuant to the terms of the Trust Agreement. The Trustee may designate agents or others to carry out certain of the administrative responsibilities in connection with the management of the Trust. 11.6 The Trust Fund. The Trust Fund shall be used to pay benefits as provided -------------- in the Plan and for the payment of expenses relating to the Plan except to the extent that such expenses are paid by the Employers. For all other purposes, including investment management and custodial functions, the Trust Fund held under this Plan may be commingled with the Trust Fund or Funds held under any other pensions plan or plans of the Company. Prior to the satisfaction of all rights of Participants and Beneficiaries under the Plan, no part of the principal or income of the Trust Fund shall be used or diverted to purposes other than those provided in the Plan, and no part thereof shall revert to the Employers except after satisfaction of all liabilities of the Plan. -38- ARTICLE XII MANAGEMENT OF TRUST FUND ------------------------ 12.1 The Trust Fund. The Trust Fund shall be held in trust by the Trustee --------------- appointed from time to time (before or after termination of the Plan) by the Administrative Committee and shall he evidenced by a Trust Agreement between the Company and the Trustee, a copy of which shall be filed with the Administrative Committee. 12.2 Exclusive Benefit. The Trust Agreement must contain a provision that it ----------------- shall be impossible at any time prior to the satisfaction of all liabilities with respect to Participants or Beneficiaries thereof under the Trust, for any part of the corpus or income to be used for purposes other than for the exclusive benefit of Participants or Beneficiaries and paying the reasonable expenses of the Plan and of the Trust, provided that nothing herein shall be deemed to prevent the return of any employer contribution (1) resulting from a mistake of fact, or (2) conditioned upon deductibility under Section 404 of the Code, within one year after the date of (i) payment of the contribution, or (ii) the disallowance of the contribution, respectively. 12.3 Trustee's Reports. As soon as practicable after each Plan Year, the ------------------ Trustee shall submit to the Administrative Committee an appropriate report stating the net value of the Trust Fund as of the end of the Plan Year and containing such other information relating to the Trust Fund as the Administrative Committee from time to time may request. 12.4 Trust Agreement. The Trust Agreement shall be a part of this Plan and ---------------- any rights or benefits under this Plan shall be subject to all the terms and provisions of the Trust Agreement. 12.5 Expenses. All expenses incurred in the administration of the Plan shall -------- be paid for by the Trust Fund to the extent not paid by the Company. Such expenses include any expenses incident to the administration of the Plan including, but not limited to, fees of accountants, counsel and other specialist. -39- ARTICLE XIII BENEFIT CLAIMS PROCEDURE ------------------------ 13.1 Claim for Benefits. Any claim for benefits under this Plan shall be made ------------------ in writing to the Administrative Committee. If a claim for benefits is wholly or partially denied, the Administrative Committee shall so notify the Participant or Beneficiary within 90 days after receipt of the claim, unless special circumstances require an extension to 180 days, in which case the Participant will be notified of the need for the extension within the initial 90-day period. The notice of denial shall be written in a manner calculated to be understood by the Participant or Beneficiary and shall contain (a) the specific reason or reasons for denial of the claim, (b) a specific reference to the pertinent Plan provisions upon which the denial is based, (c) a description of any additional material or information necessary to perfect the claim together with an explanation of why such material or information is necessary and (d) an explanation of the claims review procedure. If a written notice of denial is not provided to the Participant or Beneficiary within such time period, the claim may be considered denied. 13.2 Review of Claim. Within 60 days after the receipt by the Participant or --------------- Beneficiary of notice of denial of a claim (or at such later time as may be reasonable in view of the nature of the benefit subject to claim and other circumstances), the Participant or Beneficiary may (a) file a request with the Committee that it conduct a full and fair review of the denial of the claim, (b) review pertinent documents and (c) submit questions and comments to the Committee in writing. 13.3 Decision After Review. Within 60 days after the receipt of a request for --------------------- review under Section 13.2, the Administrative Committee shall deliver to the Participant or Beneficiary a written decision with respect to the claim, except that if there are special circumstances (such as the need to hold a hearing) which require more time for processing, the 60-day period shall be extended to 120 days upon notice within the initial 60-day period to the Participant or Beneficiary to that effect. The decision shall be written in a manner calculated to be understood by the Participant or Beneficiary and shall (a) include the specific reason or reasons for the decision and (b) contain a specific reference to the pertinent Plan provisions upon which the decision is based. If a written notice of denial is not provided to the Participant or Beneficiary within such time period, the appeal may be considered denied. 13.4 Committee Determination Binding. The Committee shall have the right to --------------------------------- decide, in their sole and exclusive discretion, all questions respecting the interpretation, application, or administration of the rules of eligibility for the benefits or services furnished by the Plan and such decisions shall be conclusive and binding upon all Participants, dependents and beneficiaries. -40- ARTICLE XIV NON-ALIENATION OF BENEFITS -------------------------- 14.1 Non-Alienation. Subject to Section 14.2, any benefits under or interests -------------- in this Plan shall not be assignable or subject to alienation, hypothecation, garnishment, attachment, execution or levy of any kind. Any action in violation of this provision shall be void. 14.2 Qualified Domestic Relations Orders. Section 13.1 shall not apply to the ----------------------------------- creation, assignment or recognition of a right to the Retirement Benefit of a Participant pursuant to a Qualified Domestic Relations Order. The Administrative Committee shall establish reasonable procedures for determining whether a domestic relations order is a Qualified Domestic Relations Order and for administering distributions under such order. -41- ARTICLE XV DESIGNATION OF BENEFICIARY -------------------------- 15.1 Beneficiary Designation. ----------------------- (a) The designation of a beneficiary under a joint and survivor annuity shall be fixed and may not be changed on or after benefit payments commence. (b) The designation of a beneficiary to receive any remainder of a guaranteed number of payments may be made or changed until the date on which the guaranteed period has expired. (c) Subject to Subsections (a) and (b) and to the provisions set forth above relating to the rights of Spouses to survivor benefit payments, each Participant shall have the right at any time to designate or to change the previous designation of the beneficiary or beneficiaries who shall receive benefits, if any, after his death by executing and filing with the Committee a form prescribed by the Committee. No designation, revocation, or change of beneficiaries shall be valid and effective unless and until filed with the Committee. If no designation is made, or if all of the beneficiaries named in such designation predeceases the Participant or cannot be located by the Committee, the interest, if any, of the deceased Participant shall be paid to the surviving relatives of the Participant in the first surviving class in the schedule set forth as follows: (i) Spouse, (ii) lineal descendants (including stepchildren and adopted persons), (iii) parents equally, and (iv) the Participant's estate. 15.2 Effective Date of Designation. Any designation or revocation of a ------------------------------- designation of a Beneficiary shall become effective when actually received by the Administrative Committee but shall not affect any distribution previously made pursuant to a prior designation. -42- ARTICLE XVI AMENDMENT AND TERMINATION ------------------------- 16.1 Power of Amendment and Termination. It is the intention of the Company ----------------------------------- that this Plan will be permanent. However, the Company reserves the right to terminate its participation in this Plan at any time by action of its board of directors or other governing body. Furthermore, the Company reserves the power to amend or terminate the Plan at any time by action of the Board of Directors. Each amendment to the Plan will be binding on the Company. 16.2 Limitation on Amendment. ------------------------ (a) Except as expressly provided elsewhere in the Plan, prior to the satisfaction of all liabilities with respect to the benefits provided under this Plan, no such amendment or termination shall cause any part of the monies contributed hereunder to revert to the Company or to be diverted to any purpose other than for the exclusive benefit of Participants and their beneficiaries. No amendment shall have the effect of retroactively depriving Participants of benefits already accrued under the Plan. Any amendment shall become effective as of the date designated by the Board of Directors. (b) Except as permitted by Regulations, no Plan amendment or transaction having the effect of a Plan amendment (such as a merger, plan transfer or similar transaction) shall be effective to the extent it eliminates or reduces any "Section 411(d) (6) protected benefit" or adds or modifies conditions relating to "Section 411(d) (6) protected benefits" the result of which is a further restriction on such benefit unless such protected benefits are preserved with respect to benefits accrued as of the later of the adoption date or effective date of the amendment. "Section 411(d) (6) protected benefits" are benefits described in Code Section 411(d)(6)(A), early retirement benefits and retirement-type subsidies, and optional forms of benefits. (c) If this Plan is amended and an effect of such amendment is to increase current liability (as defined in Code Section 401(a) (29) (E)) under the Plan for a Plan Year, and the funded current liability percentage of the Plan for the plan Year in which the amendment takes effect is less than sixty percent (60%), including the amount of the unfunded current liability under the Plan attributable to the amendment, the amendment shall not take effect until the Employer (or any member of a controlled group which includes the Employer) provides security to the Plan. The form and amount of such security shall satisfy the requirements of Code Section 401(a) (29) (B) and (C). Such security may be released provided the requirements of Code Section 401(a) (29) (D) are satisfied. -43- 16.3 Amendment to Vesting Provision. If the vesting provisions set forth in ------------------------------- Article VI are amended, any Participant who, as of the effective day of the amendment had been credited with three or more years of Vesting Service may irrevocably elect to have his nonforfeitable interest computed without regard to the amendment. Notice of the amendment and the availability of the election shall be given to each such Participant, and the election may be exercised by the Participant by notice to the Administrative Committee within 60 days after the later of (a) the Participant's receipt of the notice, (b) the day the amendment is adopted or (c) the effective date of the amendment. 16.4 Amendment to Maintain Qualified Status. Notwithstanding anything to the -------------------------------------- contrary in Section 16.1, the Board, in its discretion, may make any modifications or amendments to the Plan, retroactively or prospectively, which it deems appropriate to establish or maintain the Plan and the Trust Agreement as a qualified employees' plan and trust under Section 401 and 501 of the Code. 16.5 Disposition on Termination. In the event of the termination or partial --------------------------- termination of the Plan, as defined in the Code, the interest of each affected Participant who would not have a non-forfeitable right to one hundred percent (100%) of his Accrued Benefit if his employment terminated on the date of the termination or partial termination of the Plan shall become non-forfeitable; however, in the event of such a termination, each Participant and beneficiary shall have recourse toward satisfaction of his non-forfeitable rights to his pension only from Plan assets or from the Pension Benefit Guaranty Corporation to the extent that it guarantees benefits. The amount of the Fund shall be determined and, after providing for expenses incident to termination and liquidation, the remaining assets of such Fund shall be allocated in accordance with Section 4044 of ERISA for the purpose of paying benefits proportionately among each of the priority groups described below in the following order of precedence: (a) to provide benefits to retired Participants and beneficiaries who began receiving benefits at least three years before the Plan termination (including those benefits which would have been received for at least three years if the Participant had retired that long ago), based on Plan provisions in effect five years prior to termination during which period such benefit would be the least; provided that the lowest benefit in pay status during a three-year period shall be considered the benefit in pay status for such period; (b) to provide all other Accrued Benefits guaranteed by Federal law; (c) to provide all other vested Accrued Benefits; (d) to provide all remaining non-vested Accrued Benefits. -44- If the assets available for allocation under any priority group (other than as provided in priority groups (c) and (d)) are insufficient to satisfy in full the Accrued Benefits of all Participants and beneficiaries, the assets shall be allocated pro rata among such Participants and beneficiaries on the basis of the present value of their respective benefits (as of the termination date). The foregoing payments and payments in the event assets are insufficient to pay the Accrued Benefits provided in priority groups (c) and (d) will be paid in accordance with regulations prescribed by the Pension Benefit Guaranty Corporation. The procedure for allocation of assets upon termination of the Plan will be carried out in an appropriate manner as to prevent the Plan from being deemed disqualified by the Internal Revenue Service. In the event all Accrued Benefits described above have been fully funded, any remaining funds will revert to the Company. Notwithstanding any other provision in this Section, if any of the provisions of this Section conflicts with ERISA and regulations thereunder, then ERISA and its regulations shall control. 16.6 Merger, Consolidation, or Transfer. In case of any merger or ------------------------------------- consolidation with, or transfer of assets or liabilities to any other plan, as provided in the Code, the benefit of any Participant or beneficiary immediately after such merger, consolidation, or transfer (if the Plan had then terminated) shall be at least equal to the benefit such Participant or beneficiary would have received immediately before such merger, consolidation, or transfer (if the Plan had then terminated). Plant Shutdown. Effective December 31, 1996 the Systems Division was --------------- shut down. Certain employees were covered by the Met-Pro Corporation Negotiated Pension Plan. The Met-Pro Corporation Negotiated Pension Plan is merged into this Plan effective June 1, 1997. In the event of a termination or partial termination or spin-off of this Plan occurring on or prior to May 31, 2002, the allocation of assets of the Plan pursuant to this Article XVI shall be made in such a manner as to give effect to any special schedule of benefits which is required, pursuant to regulations issued under Section 414(l) of the Internal Revenue Code, to be created as a result of the merger of the Met-Pro Corporation Negotiated Pension Plan into this Plan which merger was effective as of June 1, 1997. -45- ARTICLE XVII TOP-HEAVY PROVISIONS -------------------- 17.1 The following definitions apply for purposes of this Article XVII: (a) Average Compensation - a Participant's average annual compensation (as defined in Regulation 1.415-2(d)(1) of the Code) during the five consecutive Plan Years in which the Participant received the greatest compensation, taking into account only Plan Years (1) during which he was a Participant, (2) with respect to which the Participant was credited with a year of Vesting Service and (3) ending no later than the last day of the last Plan Year in which the Plan was a Top Heavy Plan. (b) Determination Date - with respect to any plan year of the Plan, a Defined Benefit Plan or a Defined Contribution Plan, the last day of the preceding plan year (or in the case of the first plan year of a plan the last day of that plan year). (c) Key Employee - an Employee who at any time during a Plan Year or any of the preceding four Plan Years is (a) an officer of the Employer with Compensation greater than 50 percent of the amount in effect under Section 415(b)(l)(A) of the Code on the last day of the Plan Year, (b) one of the ten Employees with Compensation greater than the amount in effect under Section 415(c)(l)(A) of the Code on the last day of the Plan Year and owning the largest percentage (in excess of one half of one percent) interest in value of the Company (c) a Five Percent Owner and (d) an owner of more than One Percent Owner with Compensation in excess of $150,000. The determination of whether an Employee is a Key Employee shall be made in accordance with Section 416(i) of the Code. The Beneficiary of a Key Employee shall be treated as a Key Employee. (d) Permissive Aggregation Group of Plans - a group of employee benefit plans including a Required Aggregation Group of Plans and any other Defined Benefit Plans or Defined Contribution Plans which when considered as a group meets the requirements of Sections 401(a)(4) and 410 of the Code. (e) Required Aggregation Group of Plans - a group of employee benefit plans including each Defined Benefit Plan and Defined Contribution Plan (a) in which any Key Employee is or was a Participant or (b) which enables a plan described in clause (a) to meet the requirements of Section 401(a)(4) or Section 410 of the Code. (f) Super Top Heavy Plan - the Plan for any Plan Year if it satisfies the definition of Top Heavy Plan with 90 percent substituted for 60 percent. -46- (g) Top Heavy Fraction means (a) with respect to the Plan, a fraction for a Plan Year the numerator of which is the aggregate of the present values of the accrued benefits as of a Determination Date of all Participants who are Key Employees and the denominator of which is the aggregate of the present values of the accrued benefits as of a Determination Date of all Participants or (b) with respect to a Required Aggregation Group of Plans or a Permissive Aggregation Group of Plans a fraction (A) the numerator of which is the sum of (i) the aggregate of the present values of the accrued benefits as of the applicable Determination Date of all Participants who are Key Employees under all defined benefit plans included in that group and (ii) the aggregate credit balances as of the applicable Determination Date in the accounts of all Participants who are Key Employees under all defined contribution plans included in the group and (B) the denominator of which is the sum of (i) the aggregate of the present values of the accrued benefits as of the applicable Determination Date of all Participants under all defined benefit plans included in the Group and (ii) the aggregate credit balances as of the applicable Determination Date in the accounts of all Participants under all defined contribution plans included in the group. In computing a Top Heavy Fraction for a Plan Year, the following rules shall apply: (a) the present value of accrued benefits as of a Determination Date under each defined benefit plan and the aggregate account balances as of a Determination Date under each defined contribution plan shall be increased by the aggregate distributions made from that plan to Participants during the five year period ending on the Determination Date, (b) the accrued benefit under any defined benefit plan and the account balance under any defined contribution plan of a Participant who has not performed services for an Employer at any time during the five-year period ending on the Determination Date shall be disregarded, (c) the present value of accrued benefits under a defined benefit plan as of a Determination Date and the credit balance under a defined contribution plan shall be determined as of that plan's valuation date which occurs during the 12-month period ending on the Determination Date, (d) in the case of a Required Aggregation Group or a Permissive Aggregation Group, the Determination Date of each Plan included in the group shall be the Determination Date that occurs in the same calendar year as the Determination Date of the Plan, (e) in the case of a Required Aggregation Group or a Permissive Aggregation Group, in determining the present value of accrued benefits the actuarial assumptions set forth for this Plan shall be used for all defined benefit plans, and (f) in the case of a Required Aggregation Group or Permissive Aggregation Group the present value of the accrued benefits under all defined benefit plans of Participants other than Key Employees shall he determined based upon the method used uniformly for accrual purposes for all defined benefit plans but if there is no uniform method, based upon the benefit accrual rate which does not exceed the slowest accrual rate permitted under the fractional accrual rule of Section 411(b)(l)(C) of the Internal Revenue Code. -47- (h) Top Heavy Plan - the Plan for any Plan Year if the Top Heavy Fraction for that Plan Year exceeds 60 percent (a) for the Plan, if the Plan is not part of a Required Aggregation Group of Plans, (b) for the Required Aggregation Group of Plans, if the Plan is part of a Required Aggregation Group of Plans, or (c) for the Permissive Aggregation Group of Plans, if the Plan is part of a Permissive Aggregation Group of Plans and a Required Aggregation Group of Plans. 17.2 When Top Heavy Provisions Apply. Notwithstanding any other provision of ------------------------------- this Plan, the provisions of this Article XVII shall apply with respect to any Plan Year for which the Plan is a Top Heavy Plan. 17.3 Minimum Benefit. Subject to Article IX, upon the retirement or ---------------- termination of employment of a Participant who is not a Key Employee, the Participant's retirement benefit shall be equal to the greater of (a) the Retirement Benefit that otherwise would be determined for the Participant under Article V if no effect were given to this Article XVII and (b) the product of 2 percent of the Participant's Average Compensation and the number of years of his or her Years of Service (not in excess of 10) credited with respect to Plan Years in which the Plan is a Top Heavy Plan and he or she is a Participant. For purposes of determining a Participant's Retirement Benefit under this Section 17.3, it shall be assumed that payment of the Retirement Benefit shall be in the form of a straight life annuity without ancillary benefits, commencing on the Participant's Normal Retirement Date. If a Participant who is not a Key Employee participates in both a defined benefit and defined contribution Plan, the Company is not required to provide such Participant both the minimum benefit and the minimum contribution. In such event, the Participant shall receive the benefit described in this Section. The retirement benefit determined under this Section 17.3 shall apply even though as a result of other Plan provisions a Participant who is not a Key Employee would not otherwise have been entitled to have received a benefit or would have received a lesser benefit because (i) he or she failed to make mandatory employee contributions under the Plan; (ii) his or her Compensation is less than the stated amount; (iii) he or she is not employed on the last day of the accrual computation period or (iv) the Plan is integrated with Social Security. 17.4 Vesting. For any Plan Year the Plan is a Top Heavy Plan, the non- ------- forfeitable portion of the Retirement Benefit of a Participant who is credited with at least one Hour of Service during that Plan Year under Section 1.24 shall be the greater of the percentage determined under Article VI and a percentage based on the Participant's Years of Service as follows: Number of Years of Service Vesting Percentage 0 0 1 0 2 20 3 40 4 60 5 80 6 or more 100 -48- 17.5 Change From Top Heavy Vesting. If the Plan is a Top Heavy Plan for a ------------------------------- Plan Year and ceases to be a Top Heavy Plan for the subsequent Plan Year, the change in the vesting provision under this Section 17.5 to the vesting provision under Article VI shall for purposes of Section 16.3 be treated as an amendment of the vesting provisions of the Plan. 17.6 Combined Limitation. For any Plan Year in which the Plan is a Super Top ------------------- Heavy Plan, 1.0 shall be substituted for 1.25 in clause (1) of the definition of Defined Benefit Plan Fraction (Section 9.1(b)) and clause (2) of the definition of Defined Contribution Plan Fraction (Section 9.1(c)). The foregoing shall not apply for Plan Years beginning on or after the first day of the 2000 limitation year. -49- ARTICLE XVIII GENERAL PROVISIONS ------------------ 18.1 No Employment Rights. Neither the action of the Company in establishing -------------------- the Plan, nor any provisions of the Plan, nor any action taken by it or by the Committee shall be construed as giving to any employee of the Company the right to be retained in its employ, or any right to payment except to the extent of the benefits provided in the Plan to be paid from the Fund. 18.2 Governing Law. Except to the extent superseded by ERISA, all questions ------------- pertaining to the validity, construction, and operation of the Plan shall be determined in accordance with the laws of the state in which the principal place of business of the Company is located. 18.3 Severability of Provisions. If any provision of this plan is determined -------------------------- to be void by any court of competent jurisdiction, the Plan shall continue to operate and, for the purposes of the jurisdiction of that court only, shall be deemed not to include the provisions determined to be void. 18.4 No Interest in Fund. No persons shall have any interest in, or right to, ------------------- any part of the principal or income of the Fund, except as and to the extent expressly provided in this Plan and in the Trust Agreement. 18.5 Discretion. Any discretionary acts under this Plan by the Company or by ---------- the Administrative Committee shall be uniform and applicable to all persons similarly situated. No discretionary act shall be taken which constitutes prohibited discrimination under the provisions of Section 401(a) of the Code. 18.6 Gender. Wherever applicable, any word used in the masculine should ------ include the feminine, and any word used in the singular shall include the plural. 18.7 Participant Information. Each Participant shall notify the -------------------------- Administrative Committee of (a) his mailing address and each change of mailing address, (b) the Participant's, the Participant's Beneficiary's and, if applicable the Participant's Spouse's date of birth, (c) the Participant's marital status and any change of his marital status, and (d) any other information required by the Administrative Committee. The information provided by the Participant under this Section 18.7 shall be binding upon the Participant and the Participant's Beneficiary for all purposes of the Plan. -50- 18.8 Statement of Retirement Benefits. Upon a Participant's written request -------------------------------- to the Administrative Committee, but no more frequently than once in a twelve-month period, the Administrative Committee shall furnish him with a statement of his Retirement Benefits. 18.9 Notices. Any notice, request, election, designation, revocation or other ------- communication under this Plan shall be in writing and shall be considered given when delivered personally or mailed by first class mail to the last address furnished to the Committee. 18.10 Headings. The headings in this Plan are for convenience of reference and -------- shall not be given substantive effect. 18.11 Withholding. The Committee and the Trustees shall have the right to ----------- withhold any and all state, local, and Federal taxes which may be withheld in accordance with applicable law. Executed this 26th of February, 2002. [SEAL] (NAME) By: /s/ William L. Kacin ---------------------- President and CEO -51- APPENDIX A ACTUARIAL ASSUMPTIONS USED TO DETERMINE ACTUARIAL EQUIVALENCE ------------------------------------------------------------- 1. "Actuarial Equivalent". Subject to Section 2, the Actuarial Equivalent ----------------------- of a given benefit shall be determined using the following assumptions: (a) Interest - 8 percent per annum compounded annually. (b) Mortality - The 1971 Male Group Annuity Table with ages set back three years. 2. Minimum Actuarial Equivalent Present Value. ------------------------------------------ (a) Subject to paragraph (b) below, if a Participant's benefits are to be paid in a single sum, then in no event shall the Actuarial Present Value of a Participant's Vested Interest be less than the greater of: (i) such present value determined based on the assumptions set forth in Section 1 above, or (ii) such present value determined based on the interest rates which would be used as of the first day of the Plan Year in which distribution occurs by the Pension Benefit Guaranty Corporation for a trusteed single employer Plan and the mortality table specified in paragraph (b) of Section 1. (b) Effective September 1, 1995, if a Participant's benefits are to be paid in a single sum, then in no event shall the Actuarial Equivalent present value of a Participant's Vested Interest be less than: (i) such present value determined based on the assumptions set forth in Section 1 above, or (ii) such present value determined using the following assumptions: (A) Interest - the annual rate of interest on 30-Year Treasury securities as published by the IRS for the month prior to the first month of the Plan Year in which the distribution occurs. (B) Mortality - determined under the applicable mortality table under Code Section 417(e). -52- (c) Solely for the purpose of determining an actuarial increase in benefits due as a result of the commencement of such benefits after the Participant's attainment of age 70 1/2, the following assumptions will be used: (i) Interest - 5 percent per annum compounded annually, (ii) Mortality - 1994 Group Annuity Table. -53- APPENDIX B Effective as of December 31, 2000, the Accrued Monthly Pension of William L. Kacin is increased by $6,666.67. -54- EX-10 4 ex10s.txt EXHIBIT 10.S Exhibit (10.s) FIRST AMENDMENT TO THE MET-PRO CORPORATION SALARIED PENSION PLAN This First Amendment to the Met-Pro Corporation Salaried Pension Plan (the "Plan") is made by Met Pro Corporation (the "Company"). W I T N E S S E T H: WHEREAS,the Company established the Plan for its eligible employees effective as of September 1, 1968, and amended and restated as of September 1, 2000; and WHEREAS, the Company reserved the right in Section 16.1 of the Plan to amend the Plan at any time; and WHEREAS, the Company now desires to amend the Plan to make certain changes as required or permitted by the Economic Growth and Tax Relief Reconciliation Act of 2001; to make certain required changes to the Plan's claims procedures; to add Pristine Hydrochemical, Inc. as a participating employer; and to revise the use of mortality tables for certain purposes under the Plan. NOW, THEREFORE, the Plan is hereby amended as set forth below. Preamble - -------- 1. Adoption and effective date of amendment. This amendment of the Met-Pro ---------------------------------------- Corporation Salaried Pension Plan (the "Plan") is adopted to reflect certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA"), and to make certain other changes to the Plan. This amendment is intended as good faith compliance with the requirements of EGTRRA and is to be construed in accordance with EGTRRA and guidance issued thereunder. Except as otherwise provided, this amendment shall be effective as of the first day of the first plan year beginning after December 31, 2001. -1- 2. Supersession of inconsistent provisions. This amendment shall supersede --------------------------------------- the provisions of the plan to the extent those provisions are inconsistent with the provisions of this amendment. Section 1. Limitations on Benefits ----------------------- 1. Effective date. This section shall be effective for limitation years ending after December 31, 2001. 2. Definitions. ----------- 2.1 Defined benefit dollar limitation. The "defined benefit dollar ---------------------------------- limitation" is $160,000, as adjusted, effective January 1 of each year, under section 415(d) of the Code in such manner as the Secretary shall prescribe, and payable in the form of a straight life annuity. A limitation as adjusted under section 415(d) will apply to limitation years ending with or within the calendar year for which the adjustment applies. 2.2 Maximum permissible benefit. The "maximum permissible benefit" ---------------------------- is the lesser of the defined benefit dollar limitation or the defined benefit compensation limitation (both adjusted where required, as provided in (a) and, if applicable, in (b) or (c) below). (a) If the Participant has fewer than 10 years of participation in the Plan, the defined benefit dollar limitation shall be multiplied by a fraction, (i) the numerator of which is the number of years (or part thereof) of participation in the Plan and (ii) the denominator of which is 10. In the case of a Participant who has fewer than 10 years of service with the employer, the defined benefit compensation limitation shall be multiplied by a fraction, (i) the numerator of which is the number of years (or part thereof) of service with the employer and (ii) the denominator of which is 10. (b) If the benefit of a Participant begins prior to age 62, the defined benefit dollar limitation applicable to the Participant at such earlier age is an annual benefit payable in the form of a straight life annuity beginning at the earlier age that is the actuarial equivalent of the defined benefit dollar limitation applicable to the Participant at age 62 (adjusted under (a) above, if required). The defined benefit dollar limitation applicable at an age prior to age 62 is determined as the lesser of (i) the actuarial equivalent (at such age) of the defined benefit dollar limitation computed using the interest rate and mortality table specified in the Plan for early retirement and (ii) the actuarial equivalent (at such age) of the defined benefit dollar limitation computed using a 5 percent interest rate and -2- the applicable mortality table as defined in Appendix A of the Plan. Any decrease in the defined benefit dollar limitation determined in accordance with this paragraph (b) shall not reflect a mortality decrement if benefits are not forfeited upon the death of the Participant. If any benefits are forfeited upon death, the full mortality decrement is taken into account. (c) If the benefit of a Participant begins after the Participant attains age 65, the defined benefit dollar limitation applicable to the Participant at the later age is the annual benefit payable in the form of a straight life annuity beginning at the later age that is actuarially equivalent to the defined benefit dollar limitation applicable to the Participant at age 65 (adjusted under (a) above, if required). The actuarial equivalent of the defined benefit dollar limitation applicable at an age after age 65 is determined as (i) the lesser of the actuarial equivalent (at such age) of the defined benefit dollar limitation computed the interest rate and mortality table specified in the Plan for late retirement and (ii) the actuarial equivalent (at such age) of the defined benefit dollar limitation computed using a 5 percent interest rate assumption and the applicable mortality table as defined in Appendix A of the Plan. For these purposes, mortality between age 65 and the age at which benefits commence shall be ignored. Section 2. Increase in Compensation Limit ------------------------------ 1. Increase in limit. The annual compensation of each Participant taken ----------------- into account in determining benefit accruals in any Plan Year beginning after December 31, 2001, shall not exceed $200,000. Annual compensation means compensation during the Plan Year or such other consecutive 12-month period over which compensation is otherwise determined under the Plan (the determination period). For purposes of determining benefit accruals in a Plan Year beginning after December 31, 2001, the $200,000 limitation on compensation shall also apply for any prior determination period. 2. Cost-of-living adjustment. The $200,000 limit on annual compensation in -------------------------- paragraph 1 shall be adjusted for cost-of-living increases in accordance with section 401(a)(17)(B) of the Code. The cost-of-living adjustment in effect for a calendar year applies to annual compensation for the determination period that begins with or within such calendar year. -3- Section 3. Modification of Top-Heavy Rules ------------------------------- 1. Effective date. This section shall apply for purposes of determining --------------- whether the Plan is a top-heavy Plan under section 416(g) of the Code for Plan Years beginning after December 31, 2001, and whether the Plan satisfies the minimum benefits requirements of section 416(c) of the Code for such years. This section amends Article 17 of the Plan. 2. Determination of top-heavy status. ---------------------------------- 2.1 Key employee. Key employee means any employee or former employee ------------ (including any deceased employee) who at any time during the Plan Year that includes the determination date was an officer of the employer having annual compensation greater than $130,000 (as adjusted under section 416(i)(1) of the Code for Plan Years beginning after December 31, 2002), a 5-percent owner of the employer, or a 1-percent owner of the employer having annual compensation of more than $150,000. For this purpose, annual compensation means compensation within the meaning of section 415(c)(3) of the Code. The determination of who is a key employee will be made in accordance with section 416(i)(1) of the Code and the applicable regulations and other guidance of general applicability issued thereunder. 2.2 Determination of present values and amounts. This section 2.2 --------------------------------------------- shall apply for purposes of determining the present values of accrued benefits and the amounts of account balances of employees as of the determination date. 2.2.1 Distributions during year ending on the determination -------------------------------------------------------- date. The present values of accrued benefits and the ---- amounts of account balances of an employee as of the determination date shall be increased by the distributions made with respect to the employee under the Plan and any plan aggregated with the Plan under section 416(g)(2) of the Code during the 1-year period ending on the determination date. The preceding sentence shall also apply to distributions under a terminated plan which, had it not been terminated, would have been aggregated with the Plan under section 416(g)(2)(A)(i) of the Code. In the case of a distribution made for a reason other than separation from service, death, or disability, this provision shall be applied by substituting "5-year period" for "1-year period." 2.2.2 Employees not performing services during year ending on -------------------------------------------------------- the determination date. The accrued benefits and -------------------------- accounts of any individual who has not performed services for the employer during the 1-year period -4- ending on the determination date shall not be taken into account. 3. Minimum benefits. For purposes of satisfying the minimum benefit ----------------- requirements of section 416(c)(1) of the Code and the Plan, in determining years of service with the employer, any service with the employer shall be disregarded to the extent that such service occurs during a Plan Year when the Plan benefits (within the meaning of section 410(b) of the Code) no key employee or former key employee. Section 4. Direct Rollovers of Plan Distributions -------------------------------------- 1. Effective date. This section shall apply to distributions made after --------------- December 31, 2001. 2. Modification of definition of eligible retirement plan. For purposes of ------------------------------------------------------- the direct rollover provisions in section 8.9 of the Plan, an eligible retirement plan shall also mean an annuity contract described in section 403(b) of the Code and an eligible plan under section 457(b) of the Code which is maintained by a state, political subdivision of a state, or any agency or instrumentality of a state or political subdivision of a state and which agrees to separately account for amounts transferred into such plan from this Plan. The definition of eligible retirement plan shall also apply in the case of a distribution to a surviving spouse, or to a spouse or former spouse who is the alternate payee under a qualified domestic relation order, as defined in section 414(p) of the Code. Section 5. Definition of Pristine Hydrochemical, Inc. ------------------------------------------ 1. The following definition is inserted as section 1.40 of Article I (definitions) of the Plan and the remainder of the Article is renumbered accordingly: "Pristine Hydrochemical" shall mean Pristine Hydrochemical, Inc. a subsidiary of Met-Pro Corporation. 2. Section 1.53, definition of Subsidiary, is amended by adding "and effective June 1, 2002, Pristine Hydrochemical" at the end of the section. Section 6. Credited Service ---------------- 1. Section 1.35 of the Plan is amended by adding the following sentence to the end: "Past Service Date" shall mean June 1, 2002 for Employees of Pristine Hydrochemical." -5- 2. Section 3.5 of the Plan is amended effective June 1, 2002 by inserting the following at the end thereof as subsection (j): (j) Pristine Hydrochemical - All Past Service accumulated before June 1, 2002 shall not be taken into account in determining the amount of Credited Service. Section 7. Claims Procedures ----------------- Sections 13.1 through 13.3 of the Plan are deleted effective January 1, 2002 and the following is inserted in Section 13.1. Section 13.4 shall be renumbered as Section 13.2. Timing of Notification of Benefit Determination A claim for benefits shall be made in writing to the Administrator or Committee, as applicable. The Administrator (or Committee, if appointed) shall notify the claimant of an adverse benefit determination within a reasonable period of time, but not later than 90 days after receipt of the claim by the Plan, unless it determines that special circumstances require an extension of time for processing the claim. If the Administrator (or Committee, if applicable) determines that an extension of time for processing is required, written notice of the extension shall be furnished to the claimant within the initial 90-day period. In no event shall such extension exceed a period of 90 days from the end of such initial period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Plan expects to render the benefit determination. Manner and Content of Benefit Determinations The Administrator (or Committee, if applicable) shall provide a claimant with written or electronic notification of any adverse benefit determination. Any electronic notification shall comply with the standards imposed by 29 CFR 2520-104b-1(c)(1)(i), (iii) and (iv). The notification shall set forth, in a manner calculated to be understood by the claimant: (i) The specific reason or reasons for the adverse determination. (ii) Reference to the specific Plan provisions on which the determination is based. (iii) A description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary. -6- (iv) A description of the Plan's review procedures and the time limits applicable to such procedures, including a statement of the claimant's right to bring a civil action under section 502(a) of the Act following an adverse benefit determination on review. Appeal of Adverse Benefit Determination In order to provide a claimant with the opportunity for a full and fair review of a claim and adverse benefit determination: (i) A claimant has at least 60 days following receipt of a notification of an adverse benefit determination within which to appeal the determination. (ii) A claimant may submit written comments, documents, records and other information relating to the claim for benefits (iii) A claimant shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claimant's claim for benefits. A document, record or other information shall be considered "relevant" to a claimant's claim if such document, record or other information: (A) was relied upon in making the benefit determination; (B) was submitted, considered or generated in the course of making the benefit determination, without regard to whether such document or record was relied upon in making the benefit determination; or (C) demonstrates compliance with the administrative processes and safeguards required by the Department of Labor's regulations in making the benefit determination. (iv) The review will take into account all comments, documents, records and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. Timing of Notification of Benefit Determination on Review The Administrator (or Committee, as applicable) shall notify a claimant of the Plan's benefit determination on review within a reasonable period of time, but not later than 60 days after receipt of the claimant's request for review by the Plan, unless it determines that special circumstances (such as the need to hold a hearing) require an extension of time for processing the claim. If an extension of time for processing is required, written notice of the extension shall be furnished to the claimant prior to the termination of the initial -7- 60-day period. In no event shall such extension exceed a period of 60 days from the end of the initial period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Plan expects to render the determination on review. When the Committee is making the determination on review, if it holds regularly scheduled meetings at least quarterly, the paragraph above shall not apply, and the Committee shall instead make a benefit determination no later than the date of the meeting of the Committee that immediately follows the Plan's receipt of a request for review, unless the request for review is filed within 30 days preceding the date of such meeting. In such case, a benefit determination may be made by no later than the date of the second meeting following the Plan's receipt of the request for review. If special circumstances require a further extension of time for processing, a benefit determination shall be rendered not later than the third meeting of the Committee following the Plan's receipt of the request for review. If such an extension of time for review is required because of special circumstances, the Committee shall provide the claimant with written notice of the extension, describing the special circumstances and the date as of which the benefit determination will be made, prior to the commencement of the extension. The Committee shall notify the claimant of the benefit determination as soon as possible, but not later than 5 days after the benefit determination is made. The period of time within which a benefit determination on review is required to be made shall begin at the time an appeal is filed in accordance with the Plan procedures, without regard to whether all the information necessary to make a benefit determination on review accompanies the filing. In the event that a period of time is extended due to a claimant's failure to submit information necessary to decide a claim, the period for making the benefit determination on review shall be tolled from the date on which the notification of the extension is sent to the claimant until the date on which the claimant responds to the request for additional information. Manner and Content of Notification of Benefit Determination on Review The Administrator (or Committee as applicable) shall provide a claimant with written or electronic notification of a plan's benefit determination on review. Any electronic notification shall comply with the standards imposed by 29 CFR 2520.104b-1(c)(1)(i) , (iii), and (iv). In the case of an adverse benefit determination, the notification shall set forth, in a manner calculated to be understood by the claimant: (i) The specific reason or reasons for the adverse determination. (ii) Reference to the specific Plan provisions on which the benefit determination is based. -8- (iii) A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant's claim for benefits. (iv) A statement describing any voluntary appeal procedures offered by the Plan and the claimant's right to obtain the information about such procedures described in paragraph (c)(3)(iv) of this section, and a statement of the claimant's right to bring an action under section 502(a) of ERISA. In the case of an adverse benefit determination on review, the Administrator (or Committee, as applicable) shall provide such access to, and copies of, documents, records, and other information described above, as appropriate. Failure to Follow Claims Procedures In the case of the failure of the Plan to follow the claims procedures, the claimant shall be deemed to have exhausted the administrative remedies under the Plan and shall be entitled to pursue any available remedies under section 502(a) of ERISA. Section 8. Required Minimum Distributions ------------------------------ Section 8.8(f) is added to the Plan as follows: (f) Minimum Distribution Rules Effective January 1, 2003. (i) Effective Date. The provisions of this Section 8.8(f) will apply for purposes of determining required minimum distributions for calendar years beginning with the 2003 calendar year. (1) Precedence. The requirements of this article will take precedence over any inconsistent provisions of the plan. (2) Requirements of Treasury Regulations Incorporated. All distributions required under this article will be determined and made in accordance with the Treasury regulations under section 401(a)(9) of the Internal Revenue Code. (3) TEFRA Section 242(b)(2) Elections. Notwithstanding the other provisions of this article, other than section (f)(i)(2) above, distributions may be made under a designation made before January 1, 1984, in accordance with section 242(b)(2) of the Tax Equity and Fiscal Responsibility Act (TEFRA) and the provisions of the plan that relate to section 242(b)(2) of TEFRA. -9- (ii) Timing and Manner of Distribution (1) Required Beginning Date. The participant's entire interest will be distributed, or begin to be distributed, to the participant no later than the participant's required beginning date. (2) Death of Participant Before Distributions Begin. If the participant dies before distributions begin, the participant's entire interest will be distributed, or begin to be distributed, no later than as follows: (A) If the participant's surviving spouse is the participant's sole designated beneficiary, then, except as provided in the adoption agreement, distributions to the surviving spouse will begin by December 31 of the calendar year immediately following the calendar year in which the participant died, or by December 31 of the calendar year in which the participant would have attained age 70 1/2, if later. (B) If the participant's surviving spouse is not the participant's sole designated beneficiary, then, except as provided in the adoption agreement, distributions to the designated beneficiary will begin by December 31 of the calendar year immediately following the calendar year in which the participant died. (C) If there is no designated beneficiary as of September 30 of the year following the year of the participant's death, the participant's entire interest will be distributed by December 31 of the calendar year containing the fifth anniversary of the participant's death. (D) If the participant's surviving spouse is the participant's sole designated beneficiary and the surviving spouse dies after the participant but before distributions to the surviving spouse begin, this section (f)(ii)(2), other than section (f)(ii)(2)(A), will apply as if the surviving spouse were the participant. For purposes of this section (f)(ii)(2) and section (f)(v), distributions are considered to begin on the participant's required beginning date (or, if section (f)(ii)(2)(D) applies, the date distributions are required to begin to the -10- surviving spouse under section (f)(ii)(2)(A)). If annuity payments irrevocably commence to the participant before the participant's required beginning date (or to the participant's surviving spouse before the date distributions are required to begin to the surviving spouse under section (f)(ii)(2)(A), the date distributions are considered to begin is the date distributions actually commence. (3) Form of Distribution. Unless the participant's interest is distributed in the form of an annuity purchased from an insurance company or in a single sum on or before the required beginning date, as of the first distribution calendar year distributions will be made in accordance with subsections f(iii), (iv) and (v). If the participant's interest is distributed in the form of an annuity purchased from an insurance company, distributions thereunder will be made in accordance with the requirements of section 401(a)(9) of the Code and the Treasury regulations. Any part of the participant's interest which is in the form of an individual account described in section 414(k) of the Code will be distributed in a manner satisfying the requirements of section 401(a)(9) of the Code and the Treasury regulations that apply to individual accounts. (iii) Determination of Amount to be Distributed Each Year. (1) General Annuity Requirements. If the participant's interest is paid in the form of annuity distributions under the plan, payments under the annuity will satisfy the following requirements: (A) the annuity distributions will be paid in periodic payments made at intervals not longer than one year; (B) the distribution period will be over a life (or lives) or over a period certain not longer than the period described in section (f)(iv) or (f)(v); (C) once payments have begun over a period certain, the period certain will not be changed even if the period certain is shorter than the maximum permitted; (D) payments will either be nonincreasing or increase only as follows: (i) by an annual percentage increase that does not exceed the annual percentage -11- increase in a cost-of-living index that is based on prices of all items and issued by the Bureau of Labor Statistics; (ii) to the extent of the reduction in the amount of the participant's payments to provide for a survivor benefit upon death, but only if the beneficiary whose life was being used to determine the distribution period described in subsection (f)(iv) dies or is no longer the participant's beneficiary pursuant to a qualified domestic relations order within the meaning of section 414(p); (iii) to provide cash refunds of employee contributions upon the participant's death; or (iv) to pay increased benefits that result from a plan amendment. (2) Amount Required to be Distributed by Required Beginning Date. The amount that must be distributed on or before the participant's required beginning date (or, if the participant dies before distributions begin, the date distributions are required to begin under section (f)(ii)(2)(A) or (B)) is the payment that is required for one payment interval. The second payment need not be made until the end of the next payment interval even if that payment interval ends in the next calendar year. Payment intervals are the periods for which payments are received, e.g., bi-monthly, monthly, semi-annually, or annually. All of the participant's benefit accruals as of the last day of the first distribution calendar year will be included in the calculation of the amount of the annuity payments for payment intervals ending on or after the participant's required beginning date. (3) Additional Accruals After First Distribution Calendar Year. Any additional benefits accruing to the participant in a calendar year after the first distribution calendar year will be distributed beginning with the first payment interval ending in the calendar year immediately following the calendar year in which such amount accrues. (iv) Requirements For Annuity Distributions That Commence During Participant's Lifetime. -12- (1) Joint Life Annuities Where the Beneficiary Is Not the Participant's Spouse. If the participant's interest is being distributed in the form of a joint and survivor annuity for the joint lives of the participant and a nonspouse beneficiary, annuity payments to be made on or after the participant's required beginning date to the designated beneficiary after the participant's death must not at any time exceed the applicable percentage of the annuity payment for such period that would have been payable to the participant using the table set forth in Q&A-2 of section 1.401(a)(9)-6T of the Treasury regulations. If the form of distribution combines a joint and survivor annuity for the joint lives of the participant and a nonspouse beneficiary and a period certain annuity, the requirement in the preceding sentence will apply to annuity payments to be made to the designated beneficiary after the expiration of the period certain. (2) Period Certain Annuities. Unless the participant's spouse is the sole designated beneficiary and the form of distribution is a period certain and no life annuity, the period certain for an annuity distribution commencing during the participant's lifetime may not exceed the applicable distribution period for the participant under the Uniform Lifetime Table set forth in section 1.401(a)(9)-9 of the Treasury regulations for the calendar year that contains the annuity starting date. If the annuity starting date precedes the year in which the participant reaches age 70, the applicable distribution period for the participant is the distribution period for age 70 under the Uniform Lifetime Table set forth in section 1.401(a)(9)-9 of the Treasury regulations plus the excess of 70 over the age of the participant as of the participant's birthday in the year that contains the annuity starting date. If the participant's spouse is the participant's sole designated beneficiary and the form of distribution is a period certain and no life annuity, the period certain may not exceed the longer of the participant's applicable distribution period, as determined under this section (f)(iv)(2), or the joint life and last survivor expectancy of the participant and the participant's spouse as determined under the Joint and Last Survivor Table set forth in section 1.401(a)(9)-9 of the Treasury regulations, using the participant's and spouse's attained ages as of the participant's and spouse's birthdays in the calendar year that contains the annuity starting date. -13- (v) Requirements For Minimum Distributions Where Participant Dies Before Date Distributions Begin. (1) Participant Survived by Designated Beneficiary. Except as provided in the adoption agreement, if the participant dies before the date distribution of his or her interest begins and there is a designated beneficiary, the participant's entire interest will be distributed, beginning no later than the time described in section (f)(ii)(2)(A) or (B), over the life of the designated beneficiary or over a period certain not exceeding: (A) unless the annuity starting date is before the first distribution calendar year, the life expectancy of the designated beneficiary determined using the beneficiary's age as of the beneficiary's birthday in the calendar year immediately following the calendar year of the participant's death; or (B) if the annuity starting date is before the first distribution calendar year, the life expectancy of the designated beneficiary determined using the beneficiary's age as of the beneficiary's birthday in the calendar year that contains the annuity starting date. (2) No Designated Beneficiary. If the participant dies before the date distributions begin and there is no designated beneficiary as of September 30 of the year following the year of the participant's death, distribution of the participant's entire interest will be completed by December 31 of the calendar year containing the fifth anniversary of the participant's death. (3) Death of Surviving Spouse Before Distributions to Surviving Spouse Begin. If the participant dies before the date distribution of his or her interest begins, the participant's surviving spouse is the participant's sole designated beneficiary, and the surviving spouse dies before distributions to the surviving spouse begin, this section (f)(v) will apply as if the surviving spouse were the participant, except that the time by which distributions must begin will be determined without regard to section (f)(ii)(2)(A). -14- (vi) Definitions. (1) Designated beneficiary. The individual who is designated as the beneficiary under section 15.1 of the plan and is the designated beneficiary under section 401(a)(9) of the Internal Revenue Code and section 1.401(a)(9)-1, Q&A-4, of the Treasury regulations. (2) Distribution calendar year. A calendar year for which a minimum distribution is required. For distributions beginning before the participant's death, the first distribution calendar year is the calendar year immediately preceding the calendar year which contains the participant's required beginning date. For distributions beginning after the participant's death, the first distribution calendar year is the calendar year in which distributions are required to begin pursuant to section (f)(ii)(2). (3) Life expectancy. Life expectancy as computed by use of the Single Life Table in section 1.401(a)(9)-9 of the Treasury regulations. (4) Required beginning date. The date specified in section 8.3 of the plan. Section 9. Mortality Tables ---------------- 1. Effective date. This section shall apply to distributions with annuity starting dates on or after December 31, 2002. 2. Notwithstanding any other plan provisions to the contrary, the applicable mortality table used for purposes of adjusting any benefit or limitation under 415(b)(2)(B), (C), or (D) of the Internal Revenue Code as set forth in Appendix A of the plan and the applicable mortality table used for purposes of satisfying the requirements of 417(e) of the Internal Revenue Code as set forth in Appendix A of the plan is the table prescribed in Rev. Rul. 2001-62. -15- IN ALL OTHER RESPECTS, this Plan is continued in full force and effect. In order to maintain the terms of the Plan in a single document, this Amendment may be incorporated into the most recent restatement of the Plan. IN WITNESS WHEREOF, the Company has caused this First Amendment to be executed by its duly authorized officer this 15th day of August, 2002. ATTEST: Met Pro Corporation By /s/ Gary J. Morgan By /s/ William L. Kacin ----------------------------- ------------------------------- Title: V/P Finance Title: Pesident and CEO ------------------------- ---------------------------- -16- EX-10 5 ex10t.txt EXHIBIT 10.T Exhibit (10.t) SECOND (QUALIFICATION) AMENDMENT TO THE MET-PRO CORPORATION SALARIED PENSION PLAN This Second (Qualification) Amendment to the Met-Pro Corporation Salaried Pension Plan (the "Plan") is made by Met-Pro Corporation (the "Company") and is effective as of September 1, 2000 (or other specified effective dates). W I T N E S S E T H: WHEREAS, the Company maintains the Plan, amended and restated as of September 1, 2000 (and other effective dates) for its eligible employees; WHEREAS, Section 16.1 of the Plan permits the Company to amend the Plan; and WHEREAS, the Company desires to amend the Plan to make certain technical changes to comply with law as required by the Internal Revenue Service and to make other clarifying changes. NOW THEREFORE, the Plan is hereby amended, effective September 1, 2000 (or other specified effective dates) as follows: 1. The following sentence is added to the end of the first paragraph of Section 1.21 of the Plan, effective January 1, 1997: (ii) As used herein, "Leased Employee" means any person who is not an employee and who provides services to the Company: (a) under an agreement between the Company and the leasing organization, (b) such services have been performed by the person for the recipient (or for the recipient and related persons as defined in Code Section 414(n)) on a substantially full-time basis for at least one year, and (c) such services are performed under the primary direction and control of the Company. Notwithstanding, a "leased employee" shall be treated as an Employee of the Company solely to the extent required under Code Section 414(n) (but shall in no event be eligible to participate in the Plan). However, "leased employees" shall not be treated as Employees of the Company to the extent permitted under Code Section 414(n) if the leased employees constitute no more than 20% of the Company's "non-highly compensated" work force, and the leasing organization maintains a qualified nonintegrated money purchase pension plan in which: (a) at least 10% of compensation (within the meaning of Code Section 414(n)) contributed for each participant, (b) participants are immediately fully vested in all contributions, and (c) each leasing organization employee immediately participates. 2. Section 8.1(a) of the Plan is amended to read as follows: (a) a Single Life Annuity - an annuity payable in equal monthly installments to the retired Participant for his life; the Single Life Annuity shall be the normal form of payment for a single (unmarried) Participant; or 3. Section 9.3 of the Plan is amended by deleting at the end thereof "the terms of which are specifically incorporated herein by reference." 4. The following sentence is added to the end of Section 17.1(e) of the Plan: Plans that have terminated within the last five (5) years of the determination date shall be included in the definition of Required Aggregation Group of Plans. IN WITNESS WHEREOF, the Company has caused this Second (Qualification) Amendment to be executed by its duly authorized officers this 23rd day of October, 2002. [signature page follows] -2- ATTEST: MET-PRO CORPORATION AND PLAN ADMINISTRATOR By: /s/ Gary J. Morgan By: /s/ William L. Kacin ----------------------------- ---------------------------- Title: Vice President - Finance Title: President and CEO -------------------------- --------------------------- -3- EX-10 6 ex10u.txt EXHIBIT 10.U Exhibit (10.u) AMENDMENT NO. 3 TO THE MET-PRO CORPORATION DIRECTORS' RETIREMENT PLAN This Amendment to the Met-Pro Corporation Directors' Retirement Plan (the "Plan") is made and is effective this 24th day of February, 2003. WHEREAS, Met-Pro Corporation (the "Company") previously adopted the Plan and now wishes to further amend the Plan in certain respects. NOW, THEREFORE, the Plan is hereby amended as follows: 1. Section 5(e) is restated as follows: (e) If a Change in Control (as defined in Section 6 hereof) occurs, or if the Company fails to cure any breach of its obligations under this Plan in less than 30 days after receiving written notice of the same from a Director or a Director's surviving spouse or estate (a "Default"), then the Company (i) shall immediately prior to the Change in Control, or in the case of a Default, on the 31st day following the date of such written notice, make an irrevocable contribution to the Trust (as hereafter defined) in the amount provided for in Subsection 1(b) of the Trust Agreement (as hereafter defined) and (ii) shall be liable to pay the reasonable attorneys' fees and expenses incurred by any such beneficiary in filing suit to enforce any provision of this Subsection and prosecuting such claims should such beneficiary be the prevailing party in such litigation. Each Director shall be entitled to an immediate lump sum payment of the Retirement Payments then applicable to such person's status pursuant to Subsection 4(a) and, if applicable, Subsection 4(b) of this Plan, in both cases without regard and not subject to the lump sum limitations of Section 4(d) of this Plan. A former Director who has retired prior to a Change in Control (or such Director's spouse, if such Director has died) shall be entitled to an immediate lump sum payment of all Retirement Payments to which such Director was entitled under Section 4 hereof and which have not yet been paid, without regard and not subject to the lump sum limitations of Section 4(d) of this Plan. 2. Section 7 is restated as follows: 7. NO OBLIGATION TO MAINTAIN RESERVES. The Company has executed an agreement, as amended, with a Trustee (the "Trust Agreement") to hold, invest and disburse funds set aside for payments required under the Plan. However, except as provided in Subsection 5(e) of this Plan, -1- contributions to the trust created by the Trust Agreement (the "Trust") by the Company shall be in the discretion of the Board of Directors. Except as provided in Subsection 5(e), nothing in this Plan shall create an obligation on the Company's part to set aside or earmark any monies or other assets specifically for the purposes of this Plan or to pay any specified amount to the Trust. To the extent that assets of the Trust are insufficient to meet the Company's obligations under the Plan, such obligations will be paid out of the general funds of the Company. 3. This Amendment has been approved and authorized by the Company's Board of Directors by action taken as of the date hereof. IN WITNESS WHEREOF, the Company has caused its authorized officers to execute this Amendment on behalf of the Company. WITNESS MET-PRO CORPORATION /s/ Raymond J. De Hont BY: /s/ Gary J. Morgan - ----------------------------- --------------------------------------- Gary J. Morgan, Vice President--Finance -2- EX-10 7 ex10v.txt EXHIBIT 10.V Exhibit (10.v) Amendment No. 1 Effective as of February 24, 2003 (this "Amendment") to Met-Pro Corporation Supplemental Executive Retirement Plan Established Effective February 1, 2000 Met-Pro Corporation (the "Company") established effective February 1, 2000 a Supplemental Executive Retirement Plan (the "Supplemental Plan") to provide for the payment of supplementary retirement benefits to William L. Kacin (hereafter, "Eligible Executive"). Section 8 of the Supplemental Plan provides that the Board may amend the Supplemental Plan at any time and from time to time, provided that no such amendment may adversely affect the accrued benefit of the Eligible Executive, his surviving spouse or other beneficiaries, as more fully provided for therein. All terms used but not defined in this Amendment shall have such meaning as is ascribed to them in the Supplemental Plan. By action taken on February 24, 2003, the Board hereby amends the Supplemental Plan as follows: the date "February 24, 2003" shall be deemed to replace the date "January 31, 2004" on page 3 of the Supplemental Plan in the column entitled "Continued Employment until", with the effect that the Vested Percentage of the Eligible Executive shall be deemed to be 100% as of February 24, 2003. Except to the extent set forth herein, the Supplemental Plan is unmodified, and remains in full force and effect. Executed this 21st day of March, 2003, effective as of February 24, 2003. MET-PRO CORPORATION BY:/s/ Gary J. Morgan ------------------ Gary J. Morgan, Vice President--Finance Witness:/s/ Marion Berkey ----------------- Marion Berkey ------------- print name EX-10 8 ex10w.txt EXHIBIT 10.W Exhibit (10.w) Met-Pro Corporation Directors Retirement Plan Trust Agreement ------------------------------------------------------------- This Met-Pro Corporation Directors Retirement Plan Trust Agreement (the "Trust Agreement") is made this 11th day of February, 2000, by and between Met-Pro Corporation a Delaware corporation (the "Company"), and Mellon Bank, N.A. (the "Trustee"). WITNESSETH: WHEREAS, the Company adopted the Met-Pro Corporation Directors Retirement Plan as amended, (the "Plan"), a copy of which is attached hereto; and WHEREAS, the Company wishes to establish this trust (the "Trust") to fund its obligations under the Plan, with the assets held in the Trust to be subject to the claims of the Company's creditors in the event the Company becomes Insolvent (as defined in Section 3(a)) until paid to Plan participants or their beneficiaries in such manner and at such times as specified in the Plan. WHEREAS, it is the intention of the parties that this Trust shall constitute an unfunded arrangement and shall not affect the status of the Plan as an unfunded plan maintained for the purpose of providing deferred compensation for a select group of management or highly compensated employees for purposes of Title I of the Employee Retirement Income Security Act of 1974; and WHEREAS, it is the intention of the Company to make contributions to the Trust to provide the Trust with a source of funds to assist it in the meeting of the Company's liabilities under the Plan; NOW, THEREFORE, the parties do hereby establish the Trust and agree that the Trust shall be comprised, held and disposed of as follows: Section 1. Establishment of Trust. (a) The initial principal of the Trust, together with any future contributions to the Trust and any other assets held in the Trust, and earnings thereon, are collectively referred to herein as the "Trust Assets". The Company shall make contributions to the Trust in cash or other property acceptable to the Trustee. The Trustee shall hold, administer and distribute Trust Assets as provided in this Trust Agreement. The Company shall have the sole duty and responsibility for the determination of the accuracy or sufficiency of the contributions to be made under the Plan. (b) Upon a Change of Control (as defined in Section 14 of the Trust), the Trustee shall, immediately upon the Change of Control, pay each Plan participant or beneficiary thereof the benefits to which Plan participants or their beneficiaries would be entitled pursuant to the terms of the Plan as of 1 the date on which the Change of Control occurred to the extent then funded under the Trust. In the event a Change of Control of the Company (as defined in Section 14 of the Trust) shall be deemed to occur (whenever such shall occur, and whether or not the Eligible Executive is then employed by the Company or shall be alive), all payments due to the Eligible Executive, his surviving spouse or other beneficiary under the Plan shall be accelerated and immediately paid in a lump sum payment in an amount determined in accordance with the provisions of the Plan. (c) The Trust hereby established shall be irrevocable except as explicitly provided to the contrary in Section 3 or 4. (d) The Trust is intended to be a "grantor trust", of which the Company is the grantor, within the meaning of subpart E; part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended (the "Code"), and shall be construed accordingly. (e) The Trust Assets shall be used exclusively to discharge the Company's obligations under the Plan, except as provided to the contrary in Section 3 or 4 hereof. Neither any Plan participant nor beneficiary thereof shall have a preferred claim on, or any beneficial ownership interest in, any of the Trust Assets. Each Plan participants' rights to benefits under the Plan and this Trust Agreement shall be mere unsecured contractual rights against the Company. Trust Assets are subject to the claims of the Company's general creditors to the extent provided under federal and state law if the Company becomes Insolvent (f) The Company represents and warrants to the Trustee that the Plan is not covered under Title I of ERISA. (g) The Company's Chief Financial Officer or such Officer's designee shall have authority to act for the Company under this Trust Agreement. Section 2. Payments to Plan Participants. (a) Pending the Company's funding of the Trust, the Company shall pay all benefits to Plan participants as they become due under the Plan. After the Trust is funded, the Company may continue to make payment directly. In such case, the Company shall notify the Trustee of its decision to make payment directly prior to the time payment is due. In addition, if at any time the Trust Assets are not sufficient to make payment in accordance with the terms of the Plan, the Company shall make the balance of each such payment as it falls due. The Trustee shall notify the Company and affected participants in the Plan if Trust Assets are not sufficient to make a scheduled payment. (b) After the Company funds the Trust, in advance of the time that any amounts are payable under the Plan, the Company shall deliver to the Trustee a schedule (the "Payment Schedule") that indicates with respect to each Participant (i) the amounts payable or provides a formula or other instructions 2 acceptable to the Trustee for determining the amounts so payable, (ii) the form in which such amount is to be paid, and (iii) the time of commencement and duration for payment of such amounts. Except as otherwise provided herein, upon direction of the Company, the Trustee shall make payments in accordance with such Payment Schedule. It is the intent of the Company and the Trustee that the Company shall be responsible for determining and effecting all federal, state and local tax aspects of the Plan and the Trust, including without limitation income taxes payable on the Trust's income, if any, any required withholding of income or other payroll taxes in connection with the payment of benefits from the Trust pursuant to the Plan, and all reporting required in connection with any such taxes. To the extent that the Company is required by applicable law to pay or withhold such taxes or to file such reports, such obligation shall be a responsibility allocated to the Company, as the case may be, hereunder. To the extent the Trustee is required by applicable law to pay or withhold such taxes or to file such reports, the Company shall inform the Trustee of such obligation, shall direct the Trustee with respect to the performance of such obligations and shall provide the Trustee with all information required by the Trustee to meet such obligations. (c) The entitlement of a Plan participant or beneficiary thereof to benefits under the Plan shall be determined by the Company or such party as it shall designate under the Plan, and any claim for such benefits shall be considered and reviewed under the procedures set out in the Plan. Section 3. The Trustee's Responsibility Regarding Payments to Trust Beneficiaries when the Company is Insolvent. (a) The Trustee shall cease payment to Plan participants or their beneficiaries if the Company becomes Insolvent. The Company shall be considered "Insolvent" for purposes of this Trust Agreement if (i) if the Company is unable to pay its debts as they become due or (ii) the Company is subject to a pending proceeding as a debtor under the United States Bankruptcy Code. (b) At all times during the continuance of this Trust, the Trust Assets shall be subject to claims of general creditors of the Company. (1) The Company shall have the duty to inform the Trustee and affected participants in the Plan in writing if the Company becomes Insolvent. If a person claiming to be a creditor of the Company alleges in writing to the Trustee that the Company has become Insolvent, the Trustee shall determine whether the Company is Insolvent and, pending such determination, the Trustee shall discontinue payment to Plan participants and beneficiaries. In all cases, the Trustee shall be entitled to conclusively rely upon the written certification of the Board of Directors or the Chief Executive Officer of the Company when determining whether the Company is Insolvent. 3 (2) Unless the Trustee has actual knowledge that the Company is Insolvent or has received notice from the Company or a person claiming to be a creditor alleging the Company is Insolvent, the Trustee shall have no duty to inquire whether the Company is Insolvent. The Trustee may in all events rely on such evidence concerning the Company's solvency as may be furnished to the Trustee that provides the Trustee with a reasonable basis for making a determination concerning the Company's solvency. (3) If at any time the Trustee has determined that the Company is Insolvent, the Trustee shall discontinue payments to Plan participants and their beneficiaries and shall hold the Trust Assets for the benefit of the Company's general creditors. Nothing in this Trust Agreement shall in any way diminish any rights of Plan participants and their beneficiaries to pursue rights as a general creditor of the Company with respect to payments due under the Plan. (4) The Trustee shall resume payments in accordance with Section 2 of this Trust Agreement only after the Trustee has determined that the Company is not Insolvent (or no longer Insolvent). (c) Provided that there are sufficient assets, the Trustee discontinues the payment of benefits from the Trust pursuant to Section 3 (a) hereof and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to Plan participants or their beneficiaries under the terms of the Plan for the period of such discontinuance, less the aggregate amount of any payments made to them by the Company in lieu of the payments provided for hereunder during any such period of discontinuance, plus interest at the prime rate of interest announced from time to time by the Trustee. Section 4. Payments to the Company. Except as provided in Section 3 hereof, the Company shall have no right or power to direct the Trustee to return to the Company or to divert to others any of the Trust Assets before all payments required under the Plan have been made to Plan participants and their beneficiaries. Section 5. Investment and Other Authority. The Company and the Trustee may formulate investment policies and standards for the investment of the Trust, which shall be broad guidelines and shall not restrict the Trustee's investment discretion with respect to the selection of Trust assets. Subject to the preceding sentence, the Trustee shall have the powers described below: (a) The Trustee may invest and reinvest the principal and income of the Trust and keep it invested, without distinction between principal and income, in any security or property as it, in its sole discretion, deems advisable; provided, however, that in no event may the Trustee invest in (i) securities 4 (including stock or rights to acquire stock) or obligations issued by the Company, other than a de minimis amount held in common investment vehicles in which the Trustee invests, (ii) any asset settled or held in safekeeping outside of the United States, or (iii) real estate. For this purpose, "real estate" includes, but is not limited to, real property, leaseholds, mineral interests, and any form of asset which is secured by any of the foregoing. All rights associated with assets of the Trust shall be exercised by the Trustee or the person designated by the Trustee, and shall in no event be exercisable by or rest with the Participants. (b) The Trustee may invest in securities (including stock or rights to acquire stock) or obligations issued by the Trustee. All rights associated with assets of the Trust shall be exercised by Trustee or the person designated by Trustee, and shall in no event be exercisable by or rest with Plan participants. The Company shall have the right at anytime, and acceptable to the Trustee from time to time, in its sole discretion, to substitute assets of equal fair market value for any asset held by the Trust. This right is exercisable by Company in a nonfiduciary capacity without the approval or consent of any person in a fiduciary capacity. (c) In carrying out its responsibilities under Section 5, the Trustee is authorized: (1) To invest and reinvest the funds received hereunder, and any accretions thereto, without distinction between principal and income, in such securities or in such other property, wherever situate, whether or not income producing, including but not limited to stock, common or preferred, interests in registered investment companies, including registered investment companies for which the Trustee or an affiliate of the Trustee receives compensation for providing custodial, transfer agency, investment advisory or other services (The Company acknowledges that interest in such registered investment companies are not bank deposits and are not insured by, guaranteed by, obligations of, or otherwise supported by the United States of America, the Federal Deposit Insurance Corporation, Mellon Bank, N.A. or any bank or government entity), bonds and mortgages, and other evidences of indebtedness (including debt securities underwritten by the Trustee or any of its affiliates, whether individually or as a member of a divided or undivided syndicate), and deposits in a bank or other financial institution under state or Federal supervision, including the Trustee's banking department, which bear a reasonable rate of interest. In making such investment, the Trustee shall not be a restricted by any state law or statute designating investments eligible for trust funds. (2) To hold uninvested, from time to time, without liability for interest thereon, such amounts as are necessary for the cash requirements of the Plan; and to hold assets of the Trust in cash or equivalents, government securities, or straight debt securities in varying proportions when and for so long as, in the opinion of the Trustee, prevailing market and economic considerations indicate that it is in the best interest of the Trust to do so. (3) To vote upon any stocks, bonds or other securities; to give general or special proxies or powers of attorney with or without power of substitution, to exercise any conversion privileges, subscription rights, or other options, and to make any payments incidental thereto, 5 to oppose or to consent to, or otherwise participate in, corporate reorganizations or other changes affecting corporate securities, to delegate discretionary powers, and to pay any assessments or charges in connection therewith; and generally to exercise any of the powers of an owner with respect to stocks, bonds, securities, or other properties held as part of the Trust. (4) To settle, compromise, or submit to arbitration any claims, debts, or damage due or owing to or from the Trust, to commence or defend suits or legal or administrative proceedings, and to represent the Trust in all legal and administrative proceedings, provided, however, that the Trustee shall not be obligated to take any action or to appear and participate in any action which would subject it to expense or liability unless it is first indemnified in an amount and manner satisfactory to it, or its furnished with funds sufficient, in its sole judgement, to cover the same. (5) To purchase, enter, sell hold, and generally deal in any manner in and with contracts for the immediate or future delivery of financial instruments of any issuer or of any other property; the Trustee may also grant, purchase, sell, exercise, permit to expire, permit to be held in escrow, or otherwise acquire, dispose of, hold and generally deal in any manner with and in all forms of options or any combination thereof. (6) To take all action necessary to pay for authorized transactions, including borrowing or raising monies from any lender, including the Trustee, in its corporate capacity in conjunction with its duties under this Agreement and upon such terms and conditions as the Trustee may deem advisable to settle security purchases and securing the repayments thereof by pledging all or any part of the Account. (7) To appoint custodians, subcustodians or subtrustees (including affiliates of the Trustee), as to part or all of the Trust. The Trustee shall not be responsible or liable for any losses or damages suffered by the Company arising as a result of the insolvency of any custodian, subcustodian or subtrustee, except to the extent the Trustee was negligent in its selection or continued retention of such agent. (8) To hold property in nominee name, in bearer form, or in book entry form, in a clearinghouse corporation or in a depository (including an affiliate of the Trustee), so long as the Trustee's records clearly indicate that the assets held are a part of the Trust. The Trustee shall not be responsible for any losses resulting from the deposit or maintenance of securities or other property (in accordance with market practice, custom, or regulation) with any recognized clearing facility, book-entry system, centralized custodial depository, or similar organization. (9) Generally to do all acts, whether or not expressly authorized, which the Trustee may reasonably deem necessary or desirable for the protection of the Trust. 6 (d) Notwithstanding anything to the contrary, the Company may reserve to itself the exclusive authority to direct the Trustee as to the acquisition, retention or disposition of all or any portion of the assets of the Trust and, to the extent the Company reserves such authority, the Trustee shall not be responsible for the management and control of such assets other than to serve as custodian of them. Upon receipt by the Trustee of a written notice from the Company advising the Trustee that the Company has reserved such authority, the Trustee shall, pursuant to such notice, invest all or any portion of the Trust designated in such notice only in accordance with the instructions of the Company. The Trustee shall be under no duty to question any instruction of the Company. Any such instruction may be of continuing nature or otherwise and may be changed or revoked in writing by the Company at any time. In the absence of such a written direction, the Trustee shall have full authority as to the acquisition, retention or disposition of the assets of the Trust. The Company may revoke or amend the investment powers that it reserves to itself provided such revocation or amendment is in writing and is consented to in advance by the Trustee. Section 6. Contractual Settlement and Income; Market Practice Settlements. (a) In accordance with the Trustee's standard operating procedure, the Trustee shall credit the Trust with income and maturity proceeds on securities on contractual payment date net of any taxes or upon actual receipt. To the extent the Trustee credits income on contractual payment date, the Trustee may reverse such accounting entries to the contractual payment date if the Trustee reasonably believes that such amount will not be received. (b) In accordance with the Trustee's standard operating procedure, the Trustee will attend to the settlement of securities transactions on the basis of either contractual settlement date accounting or actual settlement date accounting. To the extent the Trustee settles certain securities transactions on the basis of contractual settlement date accounting, the Trustee may reverse to the contractual settlement date any entry relating to such contractual settlement if the Trustee reasonably believes that such amount will not be received. (c) Settlements of transactions may be effected in trading and processing practices customary in the jurisdiction or market where the transaction occurs. The Company acknowledges that this may, in certain circumstances, require the delivery of cash or securities (or other property) without the concurrent receipt of securities (or other property) or cash. In such circumstances, the Trustee shall have no responsibility for nonreceipt of payment (or late payment) or nondelivery of securities or other property (or late delivery) by the counterparty. Section 7. Disposition of Income. During the term of this Trust, all income received by the Trust, net of expenses and taxes, shall be accumulated and reinvested. 7 Section 8. Accounting by the Trustee. The Trustee shall keep accurate and detailed records of all investments, receipts, disbursements, and all other transactions required to be made, including such specific records as shall be agreed upon between the Company and the Trustee. Within ninety (90) days following the close of each calendar year and within ninety (90) days after the removal or resignation of the Trustee, the Trustee shall deliver to the Company and the affected participants in the Plan a written account of its administration of the Trust during such year or during the period from the close of the last preceding year to the date of such removal or resignation, setting forth all investments, receipts, disbursements and other transactions effected by it, including a description of all securities and investments purchased and sold with the cost or net proceeds of such purchases or sales (accrued and showing all cash, securities and other property held in the Trust at the end of such year or as of the date of such removal or resignation, as the case may be. If, within ninety (90) days after the Trustee mails to the Company a statement with respect to the Trust, the Company has not given the Trustee written notice of any exception or objection thereto, the statement shall be deemed to have been approved, and in such case, the Trustee shall not be liable for any matters reasonably apparent from the face of such statements. Section 9. Responsibility of the Trustee. (a) The Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, provided, however, that the Trustee shall incur no liability to any person for any action taken pursuant to the written direction, request or approval of the Company. In the event of a dispute between the Company and a third party, the Trustee may apply to a court of competent jurisdiction to resolve the dispute. (b) The Trustee is not a party to, and has no duties or responsibilities under, the Plan other than those that may be expressly contained in this Agreement. In any case in which a provision of this Agreement conflicts with any provision in the Plan, this Agreement shall control. (c) The Trustee shall not be responsible for the title, validity or genuineness of any property or evidence of title thereto received by it or delivered by it pursuant to this Agreement and shall be held harmless in acting upon any notice, request, direction, instruction, consent, certification or other instrument believed by it to be genuine and delivered by the proper party or parties. (d) The Company agrees to indemnify and hold harmless the Trustee, its parent, subsidiaries and affiliates and each of their respective officers, directors, employees and agents from and against all liability, loss and 8 expense, including reasonable attorneys' fees and expenses incurred by the Trustee or any of the foregoing indemnities arising out of or in connection with this Agreement, except as a result of the Trustee's own negligence or willful misconduct. This indemnification shall survive the termination of this Agreement. (e) If the Trustee undertakes or defends any litigation or other claim or action or participates in a negotiation resulting in a settlement prior to the commencement of litigation arising in connection with this Trust, the Company agrees to indemnify the Trustee against the Trustee's reasonable costs, expenses and liabilities (including, without limitation, attorneys' fees and expenses) relating thereto and to be primarily liable for such payments. This provision shall not apply, however, to any litigation claim or action where the Trustee's actions are determined to involve fraud, self-dealing or breach of the Trustee's duties hereunder. If the Company does not pay such costs, expenses and liabilities in a reasonably timely manner, the Trustee may obtain payment from the Trust. (f) The Trustee may consult with legal counsel (who may also be counsel for the Company generally) with respect to any of its duties or obligations hereunder and shall have no liability for any action or failure to act exclusively in reliance upon the reasonable written advice of such counsel. (g) The Trustee may hire agents, accountants, actuaries, investment advisors, financial consultants and other professionals to assist it in performing any of its duties or obligations hereunder. (h) The Trustee shall have, without exclusion, all powers conferred on trustees by applicable law, unless expressly provided otherwise herein, provided, however, that if an insurance policy is held as an asset of the Trust, Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor Trustee, or to loan to any person the proceeds of any borrowing against such policy. (i) Notwithstanding anything in this Agreement to the contrary contained herein, the Trustee shall not be responsible or liable for any losses to the Trust resulting from any event beyond the reasonable control of the Trustee, its agents or custodians, including but not limited to nationalization, strikes, expropriation, devaluation, seizure, or similar action by any governmental authority, de facto or de jure; or enactment, promulgation, imposition or enforcement by any such governmental authority of currency restrictions, exchange controls, levies or other charges affecting the Trust's property; or the breakdown, failure or malfunction or any utilities or telecommunications systems; or any order or regulation of any banking or securities industry including changes in market rules and market conditions affecting the execution or settlement of transactions; or acts of war, terrorism, insurrection or revolution; or acts of God; or any other similar event. This Section shall survive the termination of this Agreement. (j) The Trustee shall not be liable for any act of omission of any other person in carrying out any responsibility imposed upon such person and under no 9 circumstances shall the Trustee be liable for any indirect, consequential, or special damages with respect to its role as Trustee. (k) Notwithstanding any powers granted to the Trustee pursuant to this Trust Agreement or applicable law, the Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of Section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Code. Section 10. Compensation and Expenses of the Trustee. The Company shall pay all agreed upon administrative and Trustee's fees and reasonable expenses. If not so paid, the fees and expenses shall be paid from the Trust. The Trustee shall be entitled to fees for services as mutually agreed. The Company acknowledges that as part of the Trustee's compensation, the Trustee may earn interest on balances including disbursement balances and balances arising from purchase and sale transactions. If the Trustee advances cash or securities to the Trust for any purpose, or in the event that the Trustee shall incur or be assessed taxes, interest, charges, expenses, assessments, or other liabilities in connection with the performance of this Agreement, except such as may arise from its own negligent action, negligent failure to act or willful misconduct, any property at any time held in the Trust Fund shall be security therefor and the Trustee shall be entitled to collect from the Trust sufficient cash for reimbursement, and if such cash is insufficient, dispose of the assets of the Trust Fund to the extent necessary to obtain reimbursement. To the extent the Trustee advances funds to the Trust for disbursements or to the effect the settlement of purchase transactions, the Trustee shall be entitled to collect from the Trust an amount equal to what would have been earned on the sums advanced (an amount approximating "federal funds" interest rate). Section 11. Resignation and Removal of the Trustee. (a) The Trustee may resign at any time by written notice to the Company and affected participants in the Plan, which shall be effective thirty (30) calendar days after receipt of such notice unless the Company and the Trustee agree otherwise. (b) The Trustee may be removed by the Company without cause or reason on sixty (60) calendar days' notice or upon shorter notice accepted by the Trustee. (c) Upon resignation or removal of the Trustee and appointment of a successor, all Trust Assets shall subsequently be transferred to the successor. The transfer shall be completed within ninety (90) calendar days after receipt of notice of resignation, removal or transfer, unless the Company extends the time limit. (d) If the Trustee resigns or is removed, a successor shall be appointed, in accordance with Section 12 hereof, prior to the effective date of resignation or removal under Section 11 (a) or (b) above. If no such appointment has been made, the Trustee may apply to a court of competent jurisdiction for 10 appointment of a successor or for instructions. All reasonable expenses of the Trustee in connection with the legal proceeding for appointment of a successor shall be allowed as administrative expenses of the Trust. Section 12. Appointment of Successor. (a) If the Trustee resigns or is removed in accordance with Section 11 (a) or (b) hereof, the Company shall appoint a successor, which successor must be a corporate fiduciary independent of the Company. The appointment shall be effective when accepted in writing by the new Trustee, who shall have all of the rights and powers of the former Trustee, including ownership rights in the Trust Assets. The former Trustee shall execute any instrument necessary or reasonably requested by the Company or the successor Trustee to evidence the transfer. (b) The successor Trustee need not examine the records and acts of any prior Trustee and may retain or dispose of existing Trust Assets, subject to Section 5 hereof. The successor Trustee shall not be responsible for, and the Company shall indemnify and defend the successor Trustee from, any claim or liability resulting from any action or inaction of any prior Trustee or from any other past event, or any condition existing at the time it becomes successor Trustee. Section 13. Amendment or Termination. (a) This Trust Agreement may be amended only by a written instrument executed by the Trustee and the Company. (b) The Trust shall not terminate until the date on which no Plan participant or beneficiary is entitled to payments under the Plan. Upon termination of the Trust, any assets remaining in the Trust shall be returned to the Company. Section 14. Miscellaneous. (a) Any provision of this Trust Agreement prohibited by law shall be ineffective to the extent of any such prohibition, without invalidating the remaining provisions hereof. (b) Benefits payable to Plan participants and their beneficiaries under this Trust Agreement may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution or other legal or equitable process. (c) Notwithstanding anything to the contrary contained elsewhere in this Trust Agreement, any reference to the Plan or Plan provisions which require knowledge or interpretation of the Plan shall impose a duty upon the Company to communicate such knowledge or interpretation to the Trustee. The Trustee shall 11 have no obligation to know or interpret any portion of the Plan and shall in no way be liable for any proper action taken contrary to the Plan. (d) This Trust Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania. Met-Pro Corporation and Mellon Bank, N.A. hereby expressly waive, to the full extent permitted by applicable law, any right to trial by jury with respect to any judicial proceeding arising from or related to this Agreement. (e) For purpose of the Trust, Change of Control shall be deemed to occur; (1) If any "person" or "group of persons", which person or group of persons are not part of present management and are acting in concert (as the term "person" is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Act")) becomes the "beneficial owner" (as defined in Rule 13 d-3 promulgated under the Act) directly or indirectly of securities of the Corporation representing thirty (30%) percent or more of the combined voting power of the Corporation's then outstanding securities; or (2) If at any time there shall be a change in the composition of the Corporation's Board of Directors resulting in a majority of such Directors as of the date hereof no longer constituting such a majority; provided, however, that in making any such determination as to change in composition, there shall be excluded any change where the new Director was elected by or upon recommendation of such present majority; or (3) If the approval by the stockholders of the Corporation of a reorganization, merger or consolidation, in each case, with respect to which persons who were stockholders of the Corporation immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than fifty (50%) percent of the combined voting power of the reorganized, merged or consolidated Corporation's then outstanding securities entitled to vote generally in the election of Directors or with respect to a liquidation or dissolution of the Corporation or the sale of all or substantially all of the Corporation's assets; or (4) At any time that the Board of Directors, in its sole discretion, determines that a change of control has occurred, regardless of whether such determination relates to any of the aforementioned events. The Company shall have the duty to inform the Trustee in writing upon the occurrence of a Change of Control. The Trustee shall be entitled to conclusively rely upon such written certification of the Company. 12 Section 15. Reliance of Representations. (a) The Company and the Trustee each acknowledge that the other will be relying, and shall be entitled to rely, on the representations, undertakings and acknowledgments of the other as set forth in this Agreement. The Company and the Trustee each agree to notify the other and affected participants in the Plan promptly if its representations, undertakings, or acknowledgments set forth in this Agreement ceases to be true. (b) The Company and the Trustee hereby each represent and warrant to the other that it has full authority to enter into this Agreement upon the terms and conditions hereof and that the individual executing this Agreement on their behalf has the requisite to bind the Company and the Trustee to this Agreement. Attest: Met-Pro Corporation /s/ Gary J. Morgan By: /s/ William L. Kacin -------------------------- -------------------------------- Secretary William L. Kacin Chairman, Chief Executive Officer and President (Corporate Seal) Attest: Mellon Bank, N.A. /s/ Raph C. Phellep By: /s/ Christine A. Bloom -------------------------- -------------------------------- Secretary Vice President (Corporate Seal) 13 EX-10 9 ex10x.txt EXHIBIT 10.X Exhibit (10.x) AMENDMENT NO. 1 TO DIRECTOR'S RETIREMENT PLAN TRUST AGREEMENT by and between MET-PRO CORPORATION and MELLON BANK, N.A. THIS AMENDMENT TO THE DIRECTOR'S RETIREMENT PLAN TRUST AGREEMENT is made and entered into this 24th day of February, 2003 ("Amendment"), by and between MET-PRO CORPORATION ("Company") and MELLON BANK, N.A. ("Trustee"). WITNESSETH: WHEREAS, Company and Trustee entered into the Director's Retirement Plan Trust Agreement ("Agreement") on February 11, 2000; and WHEREAS, Company wishes to amend the Agreement to revise the provisions of Section 1(b) of the Agreement to correspond to Section (b) of the Met-Pro Pension Restoration and Supplemental Executive Retirement Plan Trust Agreement; and WHEREAS, Company and Mellon now wish to amend the Agreement to make such change; NOW, THEREFORE, the parties hereto, intending to be legally bound, do hereby amend the Agreement as follows: 1. The definitions set forth above are incorporated herein by this reference thereto. 2. Section 1(b) is amended and restated to read as follows: "(b) Upon a Change of Control (as defined in Section 14 of the Trust), the Trustee shall, immediately upon the Change of Control, pay each Plans participant or beneficiaries thereof the benefits to which Plan participants or their beneficiaries would be entitled pursuant to the terms of the Plans as of the date on which the Change of Control occurred to the extent then funded under the Trust. In the event a Change of Control of the Company (as defined in Section 14 of the Trust) shall be deemed to occur (whenever such shall occur, and whether or not the Eligible Executive is then employed by the Company or shall be alive), all payments due to the Eligible Executive, his surviving spouse of other beneficiary under the Plans shall be accelerated and immediately paid in a lump sum payment in an amount determined in accordance with the provisions of the Plans." 3. Except as set forth herein, the Agreement is hereby ratified and confirmed and remains in full force and effect. IN WITNESS WHEREOF, the parties hereto, each intending to be legally bound hereby, have executed this Amendment as of the day and year first above written. The parties hereby each represent and warrant to the other that is has full authority to approve and adopt this Amendment and that the individual executing this Amendment on its behalf has the requisite authority to bind Company or Trustee to this Amendment. MELLON BANK, N.A. MET-PRO CORPORATION By: By: /s/ Raymond J. De Hont ------------------------ ----------------------- Name: Name: Raymond J. De Hont ----------------------- ---------------------- Title: Title: President --------------------- -------------------- EX-10 10 ex10y.txt EXHIBIT 10.Y Exhibit (10.y) AMENDMENT NO. 2 made effective the 24th day of February, 2003 (this "Amendment") to DIRECTORS' RETIREMENT PLAN TRUST AGREEMENT made the 11th day of February, 2000, by and between Met-Pro Corporation, a Delaware corporation (the "Company"), and Mellon Bank, N.A. ("Trustee"). WITNESSETH: WHEREAS, the Company and Trustee are party to an agreement entitled "Directors' Retirement Plan Trust Agreement" (the "Trust Agreement") made the 11th day of February, 2000 that established a Trust (as defined therein) with respect to the Company's Directors' Retirement Plan (the "Plan"). WHEREAS, the Company and Trustee reserved the power to amend the Trust by written instrument under Section 13(a) of the Trust Agreement. WHEREAS, the Company and Trustee now desires to amend the Trust Agreement to the extent and upon the terms set forth in this Amendment. NOW, THEREFORE, the parties hereto do hereby agree as follows: 1. All terms used but not defined in this Amendment shall have such meaning as is ascribed to them in the Trust Agreement. 2. Section 1(b) of the Trust Agreement is hereby restated as follows: "(b) Immediately prior to a Change of Control (as defined in Section 14 of the Trust Agreement), the Company shall contribute to the Trust that amount necessary to fully fund all benefits under the Plan without regard to the lump sum limitations provided for by Section 4(d) of the Plan, and the Trustee shall, immediately upon receipt of such contribution, pay each Plan participant or beneficiary thereof the benefits to which Plan participants or their beneficiaries are entitled pursuant to the terms of the Plan as of the date on which the Change of Control occurred." 3. Section 13(a) of the Trust Agreement is hereby restated as follows: "(a) This Trust Agreement may be amended only by a written instrument executed by the Trustee and the Company; provided, however, that no such amendment may adversely affect any right or interest of any Plan participant or beneficiary." 4. The Company agrees that should it fail to cure any breach of its obligations under this Trust Agreement in less than 30 days after receiving written notice of same from any beneficiary of the Trust, the Company (i) shall, on the 31st day following the date of such written notice, make an irrevocable contribution to the Trust in the amount provided for in Section 1(b) of this Trust Agreement, exactly as if a Change of Control had then occurred, and (ii) shall be liable to pay the reasonable attorneys' fees and expenses incurred by any such beneficiary in filing suit and prosecuting such claims should such beneficiary be the prevailing party in such litigation. 5. Except to the extent expressly set forth herein in this Amendment, the Trust Agreement is unmodified and in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute this Amendment as of the day and year first above written. MET-PRO CORPORATION BY:/s/ Raymond J. De Hont ATTEST: /s/ Gary J. Morgan -------------------------------- ---------------------------- Secretary MELLON BANK, N.A. BY: ATTEST: -------------------------------- ---------------------------- Secretary EX-10 11 ex10z.txt EXHIBIT 10.Z Exhibit (10.z) Met-Pro Corporation Pension Restoration and Supplemental Executive Retirement ----------------------------------------------------------------------------- Plan Trust Agreement -------------------- This Met-Pro Corporation Pension Restoration and Supplemental Executive Retirement Plan Trust Agreement (the "Trust Agreement") is made this 11th day of February, 2000, by and between Met-Pro Corporation, a Delaware corporation (the "Company"), and Mellon Bank, N.A. (the "Trustee"). WITNESSETH: WHEREAS, the Company adopted the Met-Pro Corporation Supplemental Executive Retirement Plan and the Met-Pro Corporation Pension Restoration Plan, (individually, a "Plan" and collectively, the "Plans"), a copy of which is attached hereto; and WHEREAS, the Company wishes to establish this trust (the "Trust") to fund its obligations under the Plans, with the assets held in the Trust to be subject to the claims of the Company's creditors in the event the Company becomes Insolvent (as defined in Section 3(a)) until paid to the Plans participants or their beneficiaries in such manner and at such times as specified in the Plans. WHEREAS, it is the intention of the parties that this Trust shall constitute an unfunded arrangement and shall not affect the status of the Plans as unfunded plans maintained for the purpose of providing deferred compensation for a select group of management or highly compensated employees for purposes of Title I of the Employee Retirement Income Security Act of 1974; and WHEREAS, it is the intention of the Company to make contributions to the Trust to provide the Trust with a source of funds to assist it in the meeting of the Company's liabilities under the Plans; NOW, THEREFORE, the parties do hereby establish the Trust and agree that the Trust shall be comprised, held and disposed of as follows: Section 1. Establishment of Trust. (a) The initial principal of the Trust, together with any future contributions to the Trust and any other assets held in the Trust, and earnings thereon, are collectively referred to herein as the "Trust Assets". The Company shall make contributions to the Trust in cash or other property acceptable to the Trustee. The Trustee shall hold, administer and distribute Trust Assets as provided in this Trust Agreement. The Company shall have the sole duty and responsibility for the determination of the accuracy or sufficiency of the contributions to be made under the Plans. 1 (b) Upon a Change of Control (as defined in Section 14 of the Trust), the Trustee shall, immediately upon the Change of Control, pay each Plans participants or beneficiaries thereof the benefits to which Plan participants or their beneficiaries would be entitled pursuant to the terms of the Plans as of the date on which the Change of Control occurred to the extent then funded under the Trust. In the event a Change of Control of the Company (as defined in Section 14 of the Trust) shall be deemed to occur (whenever such shall occur, and whether or not the Eligible Executive is then employed by the Company or shall be alive), all payments due to the Eligible Executive, his surviving spouse or other beneficiary under the Plans shall be accelerated and immediately paid in a lump sum payment in an amount determined in accordance with the provisions of the Plans. (c) The Trust hereby established shall be irrevocable except as explicitly provided to the contrary in Section 3 or 4. (d) The Trust is intended to be a "grantor trust", of which the Company is the grantor, within the meaning of subpart E; part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended (the "Code"), and shall be construed accordingly. (e) The Trust Assets shall be used exclusively to discharge the Company's obligations under the Plans, except as provided to the contrary in Section 3 or 4 hereof. Neither any Plan participant nor beneficiary thereof shall have a preferred claim on, or any beneficial ownership interest in, any of the Trust Assets. Each Plans participants' rights to benefits under the Plans and this Trust Agreement shall be mere unsecured contractual rights against the Company. Trust Assets are subject to the claims of the Company's general creditors to the extent provided under federal and state law if the Company becomes Insolvent. (f) The Company represents and warrants to Trustee that the Plan is not covered under Title I of ERISA. (g) The Company's Chief Financial Officer or such Officer's designee shall have authority to act for the Company under this Trust Agreement. Section 2. Payments to Plan Participants. (a) Pending the Company's funding of the Trust, the Company shall pay all benefits to the Plans participants as they become due under the Plans. After the Trust is funded, the Company may continue to make payment directly. In such case, the Company shall notify the Trustee of its decision to make payment directly prior to the time payment is due. In addition, if at any time the Trust Assets are not sufficient to make payment in accordance with the terms of the Plans, the Company shall make the balance of each such payment as it falls due. The Trustee shall notify the Company and affected participants in the Plan if Trust Assets are not sufficient to make a scheduled payment. 2 (b) After the Company funds the Trust, in advance of the time that any amounts are payable under the Plans, the Company shall deliver to the Trustee a schedule (the "Payment Schedule") that indicates with respect to each Participant (i) the amounts payable or provides a formula or other instructions acceptable to the Trustee for determining the amounts so payable, (ii) the form in which such amount is to be paid, and (iii) the time of commencement and duration for payment of such amounts. Except as otherwise provided herein, upon direction of the Company, the Trustee shall make payments in accordance with such Payment Schedule. It is the intent of the Company and the Trustee that the Company shall be responsible for determining and effecting all federal, state and local tax aspects of the Plans and the Trust, including without limitation income taxes payable on the Trust's income, if any, any required withholding of income or other payroll taxes in connection with the payment of benefits from the Trust pursuant to the Plans, and all reporting required in connection with any such taxes. To the extent that the Company is required by applicable law to pay or withhold such taxes or to file such reports, such obligation shall be a responsibility allocated to the Company, as the case may be, hereunder. To the extent the Trustee is required by applicable law to pay or withhold such taxes or to file such reports, the Company shall inform the Trustee of such obligation, shall direct the Trustee with respect to the performance of such obligations and shall provide the Trustee with all information required by the Trustee to meet such obligations. (c) The entitlement of a Plan participant or beneficiary thereof to benefits under the Plans shall be determined by the Company or such party as it shall designate under the Plans, and any claim for such benefits shall be considered and reviewed under the procedures set out in the Plans. Section 3. The Trustee's Responsibility Regarding Payments to Trust Beneficiaries when the Company is Insolvent. (a) The Trustee shall cease payment to the Plans participants or their beneficiaries if the Company becomes Insolvent. The Company shall be considered "Insolvent" for purposes of this Trust Agreement if (i) if the Company is unable to pay its debts as they become due or (ii) the Company is subject to a pending proceeding as a debtor under the United States Bankruptcy Code. (b) At all times during the continuance of this Trust, the Trust Assets shall be subject to claims of general creditors of the Company. (1) The Company shall have the duty to inform the Trustee and affected participants in the Plan in writing if the Company becomes Insolvent. If a person claiming to be a creditor of the Company alleges in writing to the Trustee that the Company has become Insolvent, the Trustee shall determine whether the Company is Insolvent and, pending such determination, the Trustee shall discontinue payment to the Plans participants and beneficiaries. In all 3 cases, the Trustee shall be entitled to conclusively rely upon the written certification of the Board of Directors or the Chief Executive Officer of the Company when determining whether the Company is Insolvent. (2) Unless the Trustee has actual knowledge that the Company is Insolvent or has received notice from the Company or a person claiming to be a creditor alleging the Company is Insolvent, the Trustee shall have no duty to inquire whether the Company is Insolvent. The Trustee may in all events rely on such evidence concerning the Company's solvency as may be furnished to the Trustee that provides the Trustee with a reasonable basis for making a determination concerning the Company's solvency. (3) If at any time the Trustee has determined that the Company is Insolvent, the Trustee shall discontinue payments to the Plans participants and their beneficiaries and shall hold the Trust Assets for the benefit of the Company's general creditors. Nothing in this Trust Agreement shall in any way diminish any rights of the Plans participants and their beneficiaries to pursue rights as a general creditor of the Company with respect to payments due under the Plans. (4) The Trustee shall resume payments in accordance with Section 2 of this Trust Agreement only after the Trustee has determined that the Company is not Insolvent (or no longer Insolvent). (c) Provided that there are sufficient assets, if the Trustee discontinues the payment of benefits from the Trust pursuant to Section 3 (a) hereof and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to the Plans participants or their beneficiaries under the terms of the Plans for the period of such discontinuance, less the aggregate amount of any payments made to them by the Company in lieu of the payments provided for hereunder during any such period of discontinuance, plus interest at the prime rate of interest announced from time to time by the Trustee. Section 4. Payments to the Company. Except as provided in Section 3 hereof, the Company shall have no right or power to direct the Trustee to return to the Company or to divert to others any of the Trust Assets before all payments required under the Plans have been made to the Plans participants and their beneficiaries. Section 5. Investment and Other Authority. The Company and the Trustee may formulate investment policies and standards for the investment of the Trust, which shall be broad guidelines and shall not restrict the Trustee's investment discretion with respect to the selection of Trust assets. Subject to the preceding sentence, the Trustee shall have the powers described below: (a) The Trustee may invest and reinvest the principal and income of the Trust and keep it invested, without distinction between principal and income, in 4 any security or property as it, in its sole discretion, deems advisable; provided, however, that in no event may the Trustee invest in (i) securities (including stock or rights to acquire stock) or obligations issued by the Company, other than a de minimis amount held in common investment vehicles in which the Trustee invests, (ii) any asset settled or held in safekeeping outside of the United States, or (iii) real estate. For this purpose, "real estate" includes, but is not limited to, real property, leaseholds, mineral interests, and any form of asset which is secured by any of the foregoing. All rights associated with assets of the Trust shall be exercised by the Trustee or the person designated by the Trustee, and shall in no event be exercisable by or rest with the Participants. (b) The Trustee may invest in securities (including stock or rights to acquire stock) or obligations issued by the Trustee. All rights associated with assets of the Trust shall be exercised by Trustee or the person designated by Trustee, and shall in no event be exercisable by or rest with the Plans participants. The Company shall have the right at anytime, and acceptable to the Trustee from time to time, in its sole discretion, to substitute assets of equal fair market value for any asset held by the Trust. This right is exercisable by Company in a nonfiduciary capacity without the approval or consent of any person in a fiduciary capacity. (c) In carrying out its responsibilities under Section 5, the Trustee is authorized: (1) To invest and reinvest the funds received hereunder, and any accretions thereto, without distinction between principal and income, in such securities or in such other property, wherever situate, whether or not income producing, including but not limited to stock, common or preferred, interests in registered investment companies, including registered investment companies for which the Trustee or an affiliate of the Trustee receives compensation for providing custodial, transfer agency, investment advisory or other services (The Company acknowledges that interest in such registered investment companies are not bank deposits and are not insured by, guaranteed by, obligations of, or otherwise supported by the United States of America, the Federal Deposit Insurance Corporation, Mellon Bank, N.A. or any bank or government entity), bonds and mortgages, and other evidences of indebtedness (including debt securities underwritten by the Trustee or any of its affiliates, whether individually or as a member of a divided or undivided syndicate), and deposits in a bank or other financial institution under state or Federal supervision, including the Trustee's banking department, which bear a reasonable rate of interest. In making such investment, the Trustee shall not be a restricted by any state law or statute designating investments eligible for trust funds. (2) To hold uninvested, from time to time, without liability for interest thereon, such amounts as are necessary for the cash requirements of the Plans; and to hold assets of the Trust in cash or equivalents, government securities, or straight debt securities in varying proportions when and for so long as, in the opinion of the Trustee, prevailing market and economic considerations indicate that it is in the best interest of the Trust to do so. 5 (3) To vote upon any stocks, bonds or other securities; to give general or special proxies or powers of attorney with or without power of substitution, to exercise any conversion privileges, subscription rights, or other options, and to make any payments incidental thereto, to oppose or to consent to, or otherwise participate in, corporate reorganizations or other changes affecting corporate securities, to delegate discretionary powers, and to pay any assessments or charges in connection therewith; and generally to exercise any of the powers of an owner with respect to stocks, bonds, securities, or other properties held as part of the Trust. (4) To settle, compromise, or submit to arbitration any claims, debts, or damage due or owing to or from the Trust, to commence or defend suits or legal or administrative proceedings, and to represent the Trust in all legal and administrative proceedings, provided, however, that the Trustee shall not be obligated to take any action or to appear and participate in any action which would subject it to expense or liability unless it is first indemnified in an amount and manner satisfactory to it, or its furnished with funds sufficient, in its sole judgement, to cover the same. (5) To purchase, enter, sell hold, and generally deal in any manner in and with contracts for the immediate or future delivery of financial instruments of any issuer or of any other property; the Trustee may also grant, purchase, sell, exercise, permit to expire, permit to be held in escrow, or otherwise acquire, dispose of, hold and generally deal in any manner with and in all forms of options or any combination thereof. (6) To take all action necessary to pay for authorized transactions, including borrowing or raising monies from any lender, including the Trustee, in its corporate capacity in conjunction with its duties under this Agreement and upon such terms and conditions as the Trustee may deem advisable to settle security purchases and securing the repayments thereof by pledging all or any part of the Account. (7) To appoint custodians, subcustodians or subtrustees (including affiliates of the Trustee), as to part or all of the Trust. The Trustee shall not be responsible or liable for any losses or damages suffered by the Company arising as a result of the insolvency of any custodian, subcustodian or subtrustee, except to the extent the Trustee was negligent in its selection or continued retention of such agent. (8) To hold property in nominee name, in bearer form, or in book entry form, in a clearinghouse corporation or in a depository (including an affiliate of the Trustee), so long as the Trustee's records clearly indicate that the assets held are a part of the Trust. The Trustee shall not be responsible for any losses resulting from the deposit or maintenance of securities or other property (in accordance with market practice, custom, or regulation) with any recognized clearing facility, book-entry system, centralized custodial depository, or similar organization. 6 (9) Generally to do all acts, whether or not expressly authorized, which the Trustee may reasonably deem necessary or desirable for the protection of the Trust. (d) Notwithstanding anything to the contrary, the Company may reserve to itself the exclusive authority to direct the Trustee as to the acquisition, retention or disposition of all or any portion of the assets of the Trust and, to the extent the Company reserves such authority, the Trustee shall not be responsible for the management and control of such assets other than to serve as custodian of them. Upon receipt by the Trustee of a written notice from the Company advising the Trustee that the Company has reserved such authority, the Trustee shall, pursuant to such notice, invest all or any portion of the Trust designated in such notice only in accordance with the instructions of the Company. The Trustee shall be under no duty to question any instruction of the Company. Any such instruction may be of continuing nature or otherwise and may be changed or revoked in writing by the Company at any time. In the absence of such a written direction, the Trustee shall have full authority as to the acquisition, retention or disposition of the assets of the Trust. The Company may revoke or amend the investment powers that it reserves to itself provided such revocation or amendment is in writing and is consented to in advance by the Trustee. Section 6. Contractual Settlement and Income; Market Practice Settlements. (a) In accordance with the Trustee's standard operating procedure, the Trustee shall credit the Trust with income and maturity proceeds on securities on contractual payment date net of any taxes or upon actual receipt. To the extent the Trustee credits income on contractual payment date, the Trustee may reverse such accounting entries to the contractual payment date if the Trustee reasonably believes that such amount will not be received. (b) In accordance with the Trustee's standard operating procedure, the Trustee will attend to the settlement of securities transactions on the basis of either contractual settlement date accounting or actual settlement date accounting. To the extent the Trustee settles certain securities transactions on the basis of contractual settlement date accounting, the Trustee may reverse to the contractual settlement date any entry relating to such contractual settlement if the Trustee reasonably believes that such amount will not be received. (c) Settlements of transactions may be effected in trading and processing practices customary in the jurisdiction or market where the transaction occurs. The Company acknowledges that this may, in certain circumstances, require the delivery of cash or securities (or other property) without the concurrent receipt of securities (or other property) or cash. In such circumstances, the Trustee shall have no responsibility for nonreceipt of payment (or late payment) or nondelivery of securities or other property (or late delivery) by the counterparty. 7 Section 7. Disposition of Income. During the term of this Trust, all income received by the Trust, net of expenses and taxes, shall be accumulated and reinvested. Section 8. Accounting by the Trustee. The Trustee shall keep accurate and detailed records of all investments, receipts, disbursements, and all other transactions required to be made, including such specific records as shall be agreed upon between the Company and the Trustee. Within ninety (90) days following the close of each calendar year and within ninety (90) days after the removal or resignation of the Trustee, the Trustee shall deliver to the Company and the affected participants in the Plan a written account of its administration of the Trust during such year or during the period from the close of the last preceding year to the date of such removal or resignation, setting forth all investments, receipts, disbursements and other transactions effected by it, including a description of all securities and investments purchased and sold with the cost or net proceeds of such purchases or sales (accrued and showing all cash, securities and other property held in the Trust at the end of such year or as of the date of such removal or resignation, as the case may be. If, within ninety (90) days after the Trustee mails to the Company a statement with respect to the Trust, the Company has not given the Trustee written notice of any exception or objection thereto, the statement shall be deemed to have been approved, and in such case, the Trustee shall not be liable for any matters reasonably apparent from the face of such statements. Section 9. Responsibility of the Trustee. (a) The Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, provided, however, that the Trustee shall incur no liability to any person for any action taken pursuant to the written direction, request or approval of the Company. In the event of a dispute between the Company and a third party, the Trustee may apply to a court of competent jurisdiction to resolve the dispute. (b) The Trustee is not a party to, and has no duties or responsibilities under, the Plans other than those that may be expressly contained in this Agreement. In any case in which a provision of this Agreement conflicts with any provision in the Plans, this Agreement shall control. (c) The Trustee shall not be responsible for the title, validity or genuineness of any property or evidence of title thereto received by it or delivered by it pursuant to this Agreement and shall be held harmless in acting upon any notice, request, direction, instruction, consent, certification or other instrument believed by it to be genuine and delivered by the proper party or parties. 8 (d) The Company agrees to indemnify and hold harmless the Trustee, its parent, subsidiaries and affiliates and each of their respective officers, directors, employees and agents from and against all liability, loss and expense, including reasonable attorneys' fees and expenses incurred by the Trustee or any of the foregoing indemnities arising out of or in connection with this Agreement, except as a result of the Trustee's own negligence or willful misconduct. This indemnification shall survive the termination of this Agreement. (e) If the Trustee undertakes or defends any litigation or other claim or action or participates in a negotiation resulting in a settlement prior to the commencement of litigation arising in connection with this Trust, the Company agrees to indemnify the Trustee against the Trustee's reasonable costs, expenses and liabilities (including, without limitation, attorneys' fees and expenses) relating thereto and to be primarily liable for such payments. This provision shall not apply, however, to any litigation claim or action where the Trustee's actions are determined to involve fraud, self-dealing or breach of the Trustee's duties hereunder. If the Company does not pay such costs, expenses and liabilities in a reasonably timely manner, the Trustee may obtain payment from the Trust. (f) The Trustee may consult with legal counsel (who may also be counsel for the Company generally) with respect to any of its duties or obligations hereunder and shall have no liability for any action or failure to act exclusively in reliance upon the reasonable written advice of such counsel. (g) The Trustee may hire agents, accountants, actuaries, investment advisors, financial consultants and other professionals to assist it in performing any of its duties or obligations hereunder. (h) The Trustee shall have, without exclusion, all powers conferred on trustees by applicable law, unless expressly provided otherwise herein, provided, however, that if an insurance policy is held as an asset of the Trust, Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor Trustee, or to loan to any person the proceeds of any borrowing against such policy. (i) Notwithstanding anything in this Agreement to the contrary contained herein, the Trustee shall not be responsible or liable for any losses to the Trust resulting from any event beyond the reasonable control of the Trustee, its agents or custodians, including but not limited to nationalization, strikes, expropriation, devaluation, seizure, or similar action by any governmental authority, de facto or de jure; or enactment, promulgation, imposition or enforcement by any such governmental authority of currency restrictions, exchange controls, levies or other charges affecting the Trust's property; or the breakdown, failure or malfunction or any utilities or telecommunications systems; or any order or regulation of any banking or securities industry including changes in market rules and market conditions affecting the execution or settlement of transactions; or acts of war, terrorism, insurrection or 9 revolution; or acts of God; or any other similar event. This Section shall survive the termination of this Agreement. (j) The Trustee shall not be liable for any act of omission of any other person in carrying out any responsibility imposed upon such person and under no circumstances shall the Trustee be liable for any indirect, consequential, or special damages with respect to its role as Trustee. (k) Notwithstanding any powers granted to the Trustee pursuant to this Trust Agreement or applicable law, the Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of Section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Code. Section 10. Compensation and Expenses of the Trustee. The Company shall pay all agreed upon administrative and Trustee's fees and reasonable expenses. If not so paid, the fees and expenses shall be paid from the Trust. The Trustee shall be entitled to fees for services as mutually agreed. The Company acknowledges that as part of the Trustee's compensation, the Trustee may earn interest on balances including disbursement balances and balances arising from purchase and sale transactions. If the Trustee advances cash or securities to the Trust for any purpose, or in the event that the Trustee shall incur or be assessed taxes, interest, charges, expenses, assessments, or other liabilities in connection with the performance of this Agreement, except such as may arise from its own negligent action, negligent failure to act or willful misconduct, any property at any time held in the Trust Fund shall be security therefor and the Trustee shall be entitled to collect from the Trust sufficient cash for reimbursement, and if such cash is insufficient, dispose of the assets of the Trust Fund to the extent necessary to obtain reimbursement. To the extent the Trustee advances funds to the Trust for disbursements or to the effect the settlement of purchase transactions, the Trustee shall be entitled to collect from the Trust an amount equal to what would have been earned on the sums advanced (an amount approximating "federal funds" interest rate). Section 11. Resignation and Removal of the Trustee. (a) The Trustee may resign at any time by written notice to the Company and affected participants in the Plan, which shall be effective thirty (30) calendar days after receipt of such notice unless the Company and the Trustee agree otherwise. (b) The Trustee may be removed by the Company without cause or reason on sixty (60) calendar days' notice or upon shorter notice accepted by the Trustee. (c) Upon resignation or removal of the Trustee and appointment of a successor, all Trust Assets shall subsequently be transferred to the successor. The transfer shall be completed within ninety (90) calendar days after receipt of notice of resignation, removal or transfer, unless the Company extends the time limit. 10 (d) If the Trustee resigns or is removed, a successor shall be appointed, in accordance with Section 12 hereof, prior to the effective date of resignation or removal under Section 11 (a) or (b) above. If no such appointment has been made, the Trustee may apply to a court of competent jurisdiction for appointment of a successor or for instructions. All reasonable expenses of the Trustee in connection with the legal proceeding for appointment of a successor shall be allowed as administrative expenses of the Trust. Section 12. Appointment of Successor. (a) If the Trustee resigns or is removed in accordance with Section 11 (a) or (b) hereof, the Company shall appoint a successor, which successor must be a corporate fiduciary independent of the Company. The appointment shall be effective when accepted in writing by the new Trustee, who shall have all of the rights and powers of the former Trustee, including ownership rights in the Trust Assets. The former Trustee shall execute any instrument necessary or reasonably requested by the Company or the successor Trustee to evidence the transfer. (b) The successor Trustee need not examine the records and acts of any prior Trustee and may retain or dispose of existing Trust Assets, subject to Section 5 hereof. The successor Trustee shall not be responsible for, and the Company shall indemnify and defend the successor Trustee from, any claim or liability resulting from any action or inaction of any prior Trustee or from any other past event, or any condition existing at the time it becomes successor Trustee. Section 13. Amendment or Termination. (a) This Trust Agreement may be amended only by a written instrument executed by the Trustee and the Company. (b) The Trust shall not terminate until the date on which no Plan participant or beneficiary is entitled to payments under the Plans. Upon termination of the Trust, any assets remaining in the Trust shall be returned to the Company. Section 14. Miscellaneous. (a) Any provision of this Trust Agreement prohibited by law shall be ineffective to the extent of any such prohibition, without invalidating the remaining provisions hereof. (b) Benefits payable to the Plans participants and their beneficiaries under this Trust Agreement may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution or other legal or equitable process. 11 (c) Notwithstanding anything to the contrary contained elsewhere in this Trust Agreement, any reference to the Plans or Plan provisions which require knowledge or interpretation of the Plans shall impose a duty upon the Company to communicate such knowledge or interpretation to the Trustee. The Trustee shall have no obligation to know or interpret any portion of the Plans and shall in no way be liable for any proper action taken contrary to the Plans. (d) This Trust Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania. Met-Pro Corporation and Mellon Bank, N.A. hereby expressly waive, to the full extent permitted by applicable law, any right to trial by jury with respect to any judicial proceeding arising from or related to this Agreement. (e) For purpose of the Trust, Change of Control shall be deemed to occur; (1) If any "person" or "group of persons", which person or group of persons are not part of present management and are acting in concert (as the term "person" is used in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Act")) becomes the "beneficial owner" (as defined in Rule 13 d-3 promulgated under the Act) directly or indirectly of securities of the Corporation representing thirty (30%) percent or more of the combined voting power of the Corporation's then outstanding securities; or (2) If at any time there shall be a change in the composition of the Corporation's Board of Directors resulting in a majority of such Directors as of the date hereof no longer constituting such a majority; provided, however, that in making any such determination as to change in composition, there shall be excluded any change where the new Director was elected by or upon recommendation of such present majority; or (3) If the approval by the stockholders of the Corporation of a reorganization, merger or consolidation, in each case, with respect to which persons who were stockholders of the Corporation immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than fifty (50%) percent of the combined voting power of the reorganized, merged or consolidated Corporation's then outstanding securities entitled to vote generally in the election of Directors or with respect to a liquidation or dissolution of the Corporation or the sale of all or substantially all of the Corporation's assets; or (4) At any time that the Board of Directors, in its sole discretion, determines that a change of control has occurred, regardless of whether such determination relates to any of the aforementioned events. The Company shall have the duty to inform the Trustee in writing upon the occurrence of a Change of Control. The Trustee shall be entitled to conclusively rely upon such written certification of the Company. 12 Section 15. Reliance of Representations. (a) The Company and the Trustee each acknowledge that the other will be relying, and shall be entitled to rely, on the representations, undertakings and acknowledgments of the other as set forth in this Agreement. The Company and the Trustee each agree to notify the other and affected participants in the Plan promptly if its representations, undertakings, or acknowledgments set forth in this Agreement ceases to be true. (b) The Company and the Trustee hereby each represent and warrant to the other that it has full authority to enter into this Agreement upon the terms and conditions hereof and that the individual executing this Agreement on their behalf has the requisite to bind the Company and the Trustee to this Agreement. 13 Attest: Met-Pro Corporation /s/ Gary J. Morgan By: /s/ William L. Kacin - ------------------------- ---------------------------------- Secretary William L. Kacin Chairman, Chief Executive Officer and President (Corporate Seal) Attest: Mellon Bank, N.A. /s/ Ralph C. Phellep By: /s/ Christine A. Bloom - ------------------------- ------------------------------- Secretary Vice President (Corporate Seal) 14 EX-10 12 ex10aa.txt EXHIBIT 10.AA Exhibit (10.aa) AMENDMENT NO. 1 made effective the 24th day of February, 2003 (this "Amendment") to PENSION RESTORATION AND SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN TRUST AGREEMENT made the 11th day of February, 2000, by and between Met-Pro Corporation, a Delaware corporation (the "Company"), and Mellon Bank, N.A. ("Trustee"). WITNESSETH: WHEREAS, the Company and Trustee are party to an agreement entitled "Pension Restoration and Supplemental Executive Retirement Plan Trust Agreement" (the "SERP Trust Agreement") made the 11th day of February, 2000 that established a Trust (as defined therein) with respect to the Company's Pension Restoration Plan and Supplemental Executive Retirement Plan (collectively the "Plans" and each a "Plan"). WHEREAS, the Company and Trustee reserved the power to amend the SERP Trust Agreement by written instrument under Section 13(a) of the SERP Trust Agreement. WHEREAS, the Company and Trustee now desires to amend the SERP Trust Agreement to the extent and upon the terms set forth in this Amendment. NOW, THEREFORE, the parties hereto do hereby agree as follows: 1. All terms used but not defined in this Amendment shall have such meaning as is ascribed to them in the SERP Trust Agreement. 2. Section 1(b) of the SERP Trust Agreement is hereby restated as follows: "(b) Immediately prior to a Change of Control (as defined in Section 14 of the Trust Agreement), the Company shall contribute to the Trust that amount necessary to fully fund all benefits under the Plan and the Trustee shall, immediately upon receipt of such contribution, pay each Plan participant or beneficiary thereof the benefits to which Plan participants or their beneficiaries are entitled pursuant to the terms of the Plan as of the date on which the Change of Control occurred." 3. Section 13(a) of the Trust Agreement is hereby restated as follows: "(a) This Trust Agreement may be amended only by a written instrument executed by the Trustee and the Company; provided, however, that no such amendment may adversely affect any right or interest of any Plan participant or beneficiary." 4. The Company agrees that should it fail to cure any breach of its obligations under the SERP Trust Agreement in less than 30 days after receiving written notice of same from any beneficiary of the Trust, the Company will be liable to pay the reasonable attorneys' fees and expenses incurred by any such beneficiary in filing suit and prosecuting such claims should such beneficiary be the prevailing party in such litigation. 5. Except to the extent expressly set forth herein in this Amendment, the SERP Trust Agreement is unmodified and in full force and effect. IN WITNESS WHEREOF, the parties hereto, hereunder bound, do hereby execute this Amendment as of the day and year first above written. MET-PRO CORPORATION BY: Raymond J. De Hont ATTEST: Gary J. Morgan ------------------------ ------------------------- Secretary MELLON BANK, N.A. BY: ATTEST: ------------------------ ------------------------- Secretary EX-23 13 ex23.txt EXHIBIT 23 Exhibit (23) CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report dated February 21, 2003 included or incorporated by reference in this annual report on Form 10-K, into the Company's previously filed: Form S-8 Registration Statement, File Number 333-44471; Form S-3 Registration Statement, File Number 333-13929; and Form S-3 Registration Statement, File Number 333-74481. /s/ Margolis & Company P.C. ---------------------------- Margolis & Company P.C. Certified Public Accountants Bala Cynwyd, Pennsylvania April 11, 2003 EX-99 14 ex99_1.txt EXHIBIT 99.1 Exhibit (99.1) MET-PRO CORPORATION CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report on Form 10-K for the fiscal year ended January 31, 2003 of Met-Pro Corporation (the "Company") as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Raymond J. De Hont, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Raymond J. De Hont - -------------------------------- Raymond J. De Hont Chief Executive Officer April 28, 2003 EX-99 15 ex99_2.txt EXHIBIT 99.2 Exhibit (99.2) MET-PRO CORPORATION CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report on Form 10-K for the fiscal year ended January 31, 2003 of Met-Pro Corporation (the "Company") as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Gary J. Morgan, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Gary J. Morgan - -------------------------------- Gary J. Morgan Chief Financial Officer April 28, 2003 -----END PRIVACY-ENHANCED MESSAGE-----