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ITEM 5: AUTHORIZATION TO ADOPT A PLAN FOR PAYMENT OF ACCRUED VACATION BENEFITS TO EMPLOYEES WITH COMPANY STOCKOn February 11, 1986, the board of directors of the Company adopted, subject to approval by the shareholders, the Wetterau Incorporated Employee Vacation Pay Stock Compensation Plan (the "Vacation Pay Plan" or the "Plan"). The Vacation Pay Plan is intended to provide employees of the Company and certain of its subsidiaries with the opportunity to acquire stock ownership in the Company and thereby to participate in its success. A complete text of the Vacation Pay Plan is set forth in Exhibit D to this proxy statement. The following summary of certain provisions of the Vacation Pay Plan is qualified by reference to the text thereof. All employees of the Company and its eligible subsidiaries may participate in the Vacation Pay Plan if they are over the age of twenty-one, are actively employed on a full-time basis by the Company or its eligible subsidiaries and are not covered by any collective bargaining agreement to which the Company or any of its eligible subsidiaries is a party. The Vacation Pay Plan will be administered by the Employee Benefits Committee (the "Committee"). The Committee wil l have complete authority to make all determinations necessary or advisable for the administration of the Plan. The Plan assets will be managed by an institutional fiduciary (the "Trustee"). The Vacation Pay. Plan provides that after the close of each calendar year the Company will compensate all eligible employees for all unused current vacation days with shares of the Company's common stock based on the conversion formulas set forth in the Plan. The Committee then will inform the Trustee of the number of full and fractional shares of common stock to be credited to the share account of each participating employee. Until an employee requests that the Trustee distribute to him or her all shares of common stock held in his or her share account, the shares of common stock will be held by and in the name of the Trustee. The employee will enjoy voting rights through the Trustee as shareholder of record. Dividends, if any, declared by the Company on shares of common stock held by the Trustee will be paid to the Trustee for the employees' benefit. Stock dividends will be credited to the employee's account-, cash dividends will be reinvested in the Company's common stock which will be credited to the employee's account. The Committee may not in any year issue (or transfer from the treasury) an aggregate number of shares of common stock that exceeds three percent of the then outstanding common stock. The board of directors of the Company may modify, suspend or discontinue the Vacation Pay Plan and may change or eliminate all rights thereunder, except with respect to common stock and dividends already credited to an employee's account. Without approval by the shareholders of the Company, there may not be any material increase in the number of shares of common stock authorized for use under the Plan, material increase in the benefits accruing to eligible employees or material modification of the requirements for eligibility. As to tax consequences of compensation received under the Vacation Pay Plan, the Company may currently deduct for tax purposes an amount equal to the ordinary income realized by the employee participating in the Vacation Pay Plan. Each eligible employee realizes ordinary income to the extent of the value of compensation for unused vacation days as of the Calculation Date as defined in the Plan. Appropriate withholding tax deductions will be made by the Company in calculating the number of shares to be credited to the account of each participating employee pursuant to Plan procedures. The number of shares that may be delivered in any calendar year depends upon the number of unused vacation days of eligible employees, possible elections by eligible employees to forego redemptions, the hourly rates of participating employees and the market price of the common stock. Approval by the affirmative vote of the holders of a majority of the outstanding shares of common stock present in person or represented by proxy and entitled to vote at the annual meeting is required for the adoption and approval of the Vacation Pay Plan. The board of directors recommends a vote FOR the adoption of the Vacation Pay Plan. EXHIBIT D WETTERAU INCORPORATED EMPLOYEE VACATION PAY STOCK COMPENSATION PLAN 1. Purpose. The Wetterau Incorporated Employee Vacation Pay Stock Compensation Plan (the "Plan") is intended to extend to employees of Wetterau Incorporated and its eligible subsidiaries the benefit of initial or additional opportunities to acquire stock ownership in Wetterau Incorporated (the "Corporation"), and thereby to participate in its success. The Corporation's management recognizes that such opportunities are of value to the Corporation and to all of its shareholders. This Plan is not intended to grant to any employee an "Incentive" Stock Option within the meaning of the Internal Revenue Code. 2. Administration. The Plan shall be administered by the Employee Benefits Committee of the Corporation (the "Committee"), as such Committee may be constituted from time to time. The Committee is authorized to prescribe, amend and rescind rules, forms and regulations under the Plan; to interpret the Plan and matters undertaken pursuant thereto; and to make all other determinations necessary or advisable for the administration of the Plan, and such actions shall be final and binding on all persons. The officers and other employees of the Corporation and its subsidiaries shall cooperate with the Committee in carrying out the Plan. The aggregate number of treasury and authorized but unissued shares of the Corporation's common stock, $1.00 par value per share ("Common Stock"), which may be issued pursuant to this Plan shall not for any year exceed three percent of all of the Corporation's outstanding Common Stock at the close of that year. 3. Eligibility. All employees of the Corporation and its eligible subsidiaries who are at least 21 years of age, who are not covered by any collective bargaining agreement and who are actively employed on a full-time basis by the Corporation or any of its eligible subsidiaries shall be eligible to participate in the Plan. For purposes of this Plan, .. eligible subsidiaries" shall be those subsidiaries designated by the Committee from time to time. Any person meeting the foregoing requirements shall hereinafter be referred to as an "Eligible Employee". The rights of Eligible Employees under this Plan may not be transferred or assigned. 4. Participation. For each Eligible Employee who at the close of any calendar year beginning December 31, 1986 has current unused vacation days or unused carryover vacation days that are not eligible for forfeiture under the Company's then existing vacation policy ("Available Vacation Days"), the Committee shall redeem those Available Vacation Days for the Corporation's Common Stock pursuant to the provisions of paragraph 5 of this Plan. Not- withstanding the foregoing, an Eligible Employee may elect, on or before October 31 of each year, to carry over any or all of his or her Available Vacation Days to the following year, subject to the then existing vacation policy of the Corporation regarding the maximum permissible number of carryover vacation days. Each Eligible Employee who has Available Vacation Days at the close of any calendar year and has not elected to treat all of those Available Vacation Days as carryover vacation days shall be deemed to be a "Participating Employee". 5. Calculation of Shares to be Credited. For each calendar year the Committee shall calculate t he redemption value of the Available Vacation Days to be redeemed for each Participating Employee as of the first trading day of the next succeeding year (the "Calculation Date"). The redemption value shall be the Participating Employee's annual rate of compensation as of the Calculation Date divided by 2,080, or his hourly rate of compensation as of the Calculation Date, as the case may be, with the resulting "hourly rate" multiplied by 8 times the number of Available Vacation Days to be redeemed. From the redemption value so calculated, the Committee shall make necessary deductions as may be required for federal, Social Security, state and local tax withholding purposes to arrive at the "Net Redemption Value". The number of shares of Common Stock to be credited to the Participating Employee shall be calculated by dividing the Net Redemption Value for that employee by the closing sale price of the Common Stock on NASDAQ's National Market System (the "Market Price") on the Calculation Date. For the purpose of applying the foregoing sentence, if on any applicable trading day there are no reported sales of the Common Stock, then the average of the closing bid and asked prices for that day shall be deemed to be the Market Price. 6. Trustee. The Plan assets will be managed by Centerre Trust Company ("Trustee"). Pursuant to the instructions of the Committee, the Trustee shall credit the number of full and fractional shares for each Participating Employee to a share account. An account will be maintained by the Trustee for each Participating Employee and will reflect all full and fractional shares credited to that employee under this Plan, less any shares distributed to him or her pursuant to paragraph 7. A statement reflecting the Participating Employee's shares will be provided to the Participating Employee as soon after each Calculation Date as is reasonably practicable. At any time after shares of Common Stock have been credited by the Trustee to the Participating Employee's share account, the Participating Employee may request distribution pursuant to paragraph 7. Unless and until the Participating Employee makes such a request, the Corporation shall pay dividends, if any, on such shares to the Trustee for the benefit of the account of the Participating Employee. To the extent such dividends are paid in stock of the Corporation, the Trustee shall credit such additional shares to the Participating Employee's share account. To the extent such dividends are paid in cash, the Trustee shall use such cash to purchase for the Participating Employee's share account additional shares of Common Stock, either from the Company at the then Market Price or on the open market. Whole shares of Common Stock credited to the account of a Participating Employee may be voted by the trustee only as such Participating Employee may direct. The Trustee shall vote fractional interests in shares of the Common Stock in accordance with the wishes of the Participating Employees as represented by the Participating Employees' directions with respect to whole shares. 7. Distribution of Common Stock. Upon the written request of a Participating Employee, all shares in the participating Employee's share account will be distributed to him or her by the Trustee within 45 calendar days after receipt of the request. At the Committee's discretion, only one distribution per participant per calendar year will be allowed. Fractional shares will be paid in cash and be determined based on the Market Price of the Common Stock quoted on the tenth trading day after receipt of the request for distribution. 8. Termination of Employment. The Plan shall not impose any obligation on the corporation or its subsidiaries to continue the employment of any Eligible Employee, nor shall it impose any obligation on the part of any Eligible Employee to remain in the employ of the Corporation or its subsidiaries. In the event of termination of employment for any reason other than normal retirement, the right to participate in the Plan shall immediately terminate. The Trustee will thereupon distribute to the Participating Employee in accordance with paragraph 7 all shares of Common Stock, if any, then in his or her share account. In the event of the normal retirement of an Eligible Employee before the Calculation Date for the year in which he or she retires, such Eligible Employee will remain eligible, at his or her option, to participate in the Plan up to and including that Calculation Date; provided that no additional vacation days shall accrue to such Eligible Employee following the date of retirement; and provided further, that for purposes of making the calculation provided for in paragraph 5, such Eligible Employee's annual rate of compensation at the date of retirement shall be used to calculate the redemption value of the Available Vacation Days to be redeemed. 9. Securities Laws Compliance. Each participating employee shall, upon request, and upon the receipt of Common Stock, furnish the Committee with such documentation as may be required by the corporation in form satisfactory to the Committee for the purposes of complying with applicable securities laws. 10. Amendments and Discontinuance. The Board of Directors may modify, suspend or discontinue this Plan at any time or times and may change or eliminate all rights hereunder except with respect to Common Stock and dividends already credited to a Participating Employee's account with the Trustee, and except that the Board may not without shareholder ratification materially increase the number of shares authorized for issuance under this Plan or the benefits accruing to Eligible Employees or materially modify the requirements for eligibility. 11. Privileges of Stock Ownership. Eligible Employees shall not be entitled to the privileges of stock ownership as to any shares of Common Stock before such shares have been credited to his or her share account. Wetterau Incorporated 7/17/86