-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, GcO/YXrXjCRMKuyrr8WfCZiMnBAVc+Zq6hMCOMArM4Lanq1LqAJ/jHuahG5j93Ub ucADbnOc1anehdSFbYIAQA== 0000062418-94-000003.txt : 19940531 0000062418-94-000003.hdr.sgml : 19940531 ACCESSION NUMBER: 0000062418-94-000003 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19940228 FILED AS OF DATE: 19940524 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARK IV INDUSTRIES INC CENTRAL INDEX KEY: 0000062418 STANDARD INDUSTRIAL CLASSIFICATION: 3823 IRS NUMBER: 231733979 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08862 FILM NUMBER: 94530067 BUSINESS ADDRESS: STREET 1: 501 JOHN JAMES AUDUBON PKWY STREET 2: P O BOX 810 CITY: AMHERST STATE: NY ZIP: 14226 BUSINESS PHONE: 7166894972 FORMER COMPANY: FORMER CONFORMED NAME: MARK FOUR HOMES INC DATE OF NAME CHANGE: 19770921 10-K 1 FORM 10-K FOR YEAR ENDED 2/28/94 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended February 28, 1994 Commission File No. 1-8862 MARK IV INDUSTRIES, INC. __________________________________________________________________________ (Exact name of Registrant as specified in its charter) Delaware 23-1733979 ______________________________ ___________________________________ (State or other jurisdiction of (IRS employer Identification number) incorporation or organization) 501 John James Audubon Pkwy., P.O. Box 810, Amherst, NY 14226-0810 _______________________________________________________ __________ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (716) 689-4972 Securities registered pursuant to Section 12(b) of the Act: Name of exchange on Title of Class which registered ______________ ___________________ Common Stock, $.01 par value New York Stock Exchange 6-1/4% Convertible Subordinated Debentures due February 15, 2007 New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None 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 this Form 10-K or any amendment to this Form 10-K. 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 . The aggregate market value of the voting stock of the Registrant held by non-affiliates of the Registrant based on the closing price of the Common Stock on May 18, 1994 on the New York Stock Exchange was $564,880,881. As of May 18, 1994, the number of outstanding shares of Registrant's Common Stock, $.01 par value, was 42,743,594 shares. Documents Incorporated By Reference Portions of the Registrant's definitive proxy statement to be filed pursuant to Regulation 14A not later than 120 days after the end of the fiscal year are incorporated by reference into Part III. 2 MARK IV INDUSTRIES, INC. INDEX TO ANNUAL REPORT ON FORM 10-K PART I Page Item 1: Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Item 2: Properties . . . . . . . . . . . . . . . . . . . . . . . . . . .15 Item 3: Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . .16 Item 4: Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . . .16 PART II Item 5: Market for the Company's Common Stock and Related Security Holder Matters . . . . . . . . . . . . . . . .17 Item 6: Selected Financial Data. . . . . . . . . . . . . . . . . . . . .18 Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . .20 Item 8: Financial Statements and Supplementary Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26 Item 9: Disagreement on Accounting and Financial Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . .53 PART III Item 10: Directors and Executive Officers of the Registrant. . . . . . . . . . . . . . . . . . . . . . . . . . .53 Item 11: Executive Compensation . . . . . . . . . . . . . . . . . . . . .53 Item 12: Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . . . . . . . . . .53 Item 13: Certain Relationships and Related Transactions. . . . . . . . . . . . . . . . . . . . . . . . . .53 PART IV Item 14: Exhibits, Financial Statement Schedules and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . .54 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . .63 Exhibit Index. . . . . . . . . . . . . . . . . . . . . . . . . 64 3 PART I ITEM 1. BUSINESS General Mark IV Industries, Inc. ("Mark IV", or "the Company") is a diversified manufacturer of a wide variety of proprietary and other products which are primarily grouped into three core businesses: Power and Fluid Transfer; Transportation; and Professional Audio. Many of Mark IV's product groups have a significant, and in certain instances the leading share of their respective markets. Its products principally serve specialized needs in markets in which relatively few manufacturers compete. The products are sold directly, and through independent distributors, to other manufacturers and commercial users in the United States and Europe, and to a lesser extent in Canada and the Far East. Mark IV operates 52 separate manufacturing facilities and employs approximately 12,500 people. Mark IV's business strategy in fiscal 1992 and 1993 was focused on the accelerated reduction of debt and the enhancement of its three core businesses. By February 28, 1993, Mark IV had significantly reduced the amount of its outstanding long-term debt (by $220,500,000) from the beginning of fiscal 1992, bringing the Company's long-term debt as a percentage of total capitalization from 80.8% at February 28, 1991 to 59.0% at February 28, 1993. Having accomplished significant debt reductions by the end of fiscal 1993, the Company's emphasis shifted to building its core businesses by expanding their product coverages and increasing their global presence. In fiscal 1994, the Company announced the discontinuance of its non-core businesses, and completed the sale of certain of those businesses for cash proceeds of approximately $35,000,000. In June 1993, the Company acquired Pirelli Trasmissioni Industriali S.p.A (PTI) for a cash purchase price of $65,000,000 and the assumption of PTI bank indebtedness of $50,000,000. Financing for the PTI acquisition was provided by the Company's new credit agreements, as well as the proceeds from the sale of discontinued operations. PTI's operations are based in Italy, and include manufacturing and distribution centers in 5 other Western European countries and in the U.S. 4 Segment Information As a result of the Company's discontinuance and sale of certain of its non-core businesses in fiscal 1994 and 1993, and its PTI acquisition in June 1993, the Company has modified its industry segment definitions and descriptions for fiscal 1994. The company now classifies its operations into the following three core business segments: (i) Power and Fluid Transfer, which includes the design and manufacture of automotive aftermarket and OEM belts, hose, couplings, accessory drive systems and fluid transfer assemblies; industrial belts, hose and fittings, and garden hose. (ii) Transportation, which includes the design and manufacture of products and systems for mass transit, such as door systems, lighting, and informational display devices and applications for bus and rail transit vehicles; traffic, such as advanced traffic control and management systems, directional information and warning signs for roads and highways, and automatic (intelligent) vehicle identification for toll collection and traffic control; and commercial aviation, such as aircraft interior lighting and air-diffusion, and aircraft emergency lighting and night vision compatibility. (iii) Professional Audio, which includes the design and manufacture of products and systems used primarily in the high-performance professional audio market, such as professional performance microphones, speakers, mixers, and amplifiers; high-fidelity public address and musical instrument loudspeaker systems; audio signal processors, sound reinforcement equipment, and sound enhancement and noise canceling equipment. 5 Summary financial information concerning the Company's business segments for fiscal 1994 follows. The comparative information for fiscal 1993 and 1992 has been restated to exclude discontinued operations and to recognize the effects of adopting SFAS No. 109, Accounting For Income Taxes. The summary information has been derived from the more detailed information regarding industry segments in accordance with generally accepted accounting principles as presented in Note 15 to the Company's audited consolidated financial statements included elsewhere herein. Such summary information is as follows (dollars in thousands): 1994 1993 1992 ________________ ________________ ________________ (As Restated) (As Restated) Percent Percent Percent Amount of Sales Amount of Sales Amount of Sales ______ ________ ______ ________ ______ _______ NET SALES TO CUSTOMERS Power and Fluid Transfer $ 852,100 68.5% $ 709,400 65.3% $ 635,200 63.3% Transportation 218,600 17.6% 199,500 18.4% 199,900 19.9% Professional Audio 173,500 13.9% 176,800 16.3% 169,200 16.8% Total net sales to customers $1,244,200 100.0% $1,085,700 100.0% $1,004,300 100.0% OPERATING INCOME (1) Power and Fluid Transfer $ 97,800 11.5% $ 79,200 11.2% $ 67,000 10.5% Transportation 27,000 12.4% 24,900 12.5% 27,100 13.6% Professional Audio 21,900 12.6% 22,000 12.4% 23,900 14.1% Total operating income $ 146,700 11.8% $ 126,100 11.6% $ 118,000 11.7% (1) Operating income represents income from continuing operations before corporate expenses, interest expense, securities transactions and taxes.
6 A description of the Company's three business segments follows: Power and Fluid Transfer Mark IV's largest business group, the Power and Fluid Transfer segment, is a global business, primarily operating under the name of Dayco. Around the world, Dayco's products can be identified by their many registered trademarks, including: Dayco, Dayflex, Gold Label, Isoran, Petroflex, Poly-Rib, Stecko, Swan, and Top Cog. Mark IV entered the power and fluid transfer business through the acquisition in October 1988 of Armtek Corporation, of which Dayco was a principal component. Dayco's business expanded significantly with its November 1990 acquisition of Anchor Swan. At the time of its acquisition, Anchor Swan manufactured and distributed garden hoses, general purpose air, water and agricultural spray, air compressor and other hose products; Dayco produced many of the same hose products, plus industrial belts, industrial, hydraulic and appliance hoses and fittings and belts and hoses for original equipment manufacturers (OEMs) and the automotive aftermarket. The Power and Fluid Transfer segment was further expanded by the Company's acquisitions in June 1991 of System Stecko Limited, a United Kingdom-based manufacturer of hose couplings used primarily for high pressure industrial applications, and its June 1992 acquisition of Tecaflex International S.p.A., an Italian manufacturer primarily of hoses for automotive applications. Dayco's acquisition of the power transmission business of Pirelli Trasmissioni Industriali, S.p.A. (PTI) in June 1993, significantly expanded the company's presence in Europe, by adding highly automated manufacturing capacity and a research and development center in Europe, as well as experienced management, a strong market presence, and brand name recognition. In North America, the addition of PTI significantly enhanced Dayco's belt product line. The Power and Fluid Transfer segment accounted for about 68% of Mark IV's total revenue and 67% of its operating income (before corporate expenses) in fiscal 1994. Also included in this business segment is Protective Closures, which manufactures plastic and metal caps, plugs, seals and protective netting sold to a broad base of industrial and automotive OEM customers; and Mokon, which produces oil and water-based temperature control systems. The segment has been divided into three, market-focused sub-groups - - - - Industrial, Automotive OEM, and Automotive Aftermarket -- each of which is unique in terms of its products, markets, customers and strengths. Therefore, despite the overall size of this segment, no single business, market or customer has dominant influence over the Company's operations. 7 Industrial Approximately 44% of the Power and Fluid Transfer group's sales are to Industrial customers, making it the largest sub-group within this segment. The Industrial group supplies a variety of belts, hose, tensioners, pulleys, couplings and assemblies for a variety of markets, including agricultural, oil field, mining, lawn and garden, food and beverage handling, construction, environmental, chemical and specialty applications. Many of the Industrial group's products are sold to OEMs for use in products such as snowmobiles, washing machines, golf carts, vacuum cleaners, outboard motors, lawn mowers and farm equipment. The balance of the group's sales are divided between distributors of industrial replacement belts and hose, and lawn and garden product distributors, such as hardware chains, home centers, mass merchandisers, and lawn and garden retailers. Concern for the environment and environmental legislation are among the key factors in the growth of the segment's Industrial business. One of the fastest growing product lines is vapor recovery hose systems, which capture gasoline fumes released while refueling, and return them to an underground storage tank. Currently, 74 metropolitan areas and 32 states in the U.S. mandate the use of vapor recovery systems, with an opportunity for continued growth. Competition is increasing, but with its early entry into the market and innovative products, such as new hose compounds formulated to handle the newer gasoline additives, Dayco is well-positioned for the future. In addition, Dayco's vapor recovery hose is lighter and easier to use than many competing products. Environmental concerns also are propelling growth in underground fuel storage systems. Dayco is the exclusive supplier of the "hose within a hose" used by Total Containment, Inc. in its EnviroflexTM flexible underground piping system. This system is designed to capture any fluid that might leak from an underground piping system, and is used together with a detection system to reduce the risk of damage to the environment. Several states now require the use of secondary containment systems, and many more are expected to follow suit in order to meet the 1998 deadline for compliance with the Underground Tank Storage Regulations Act. Total Containment has introduced a similar product in Europe in response to increasing environmental regulations there, which should also increase demand for this product. The acquisition of PTI has provided Dayco with the opportunity to produce a full line of high-torque synchronous belts and sprockets for the industrial OEM and replacement markets. This line of more efficient timing belts is referred to as RPPTM (Reinforced Parabolic Profile) belts. These belts are used in situations where timing is critical, such as on large conveyor systems or copy machines, or to prevent slippage of the belt in a drive system, such as on a motorcycle or a large-scale industrial fan. The marketing strategies for this product line include targeting new OEM customers, and introducing this line of belts to current Dayco distributors. 8 Dayco's position as a leading manufacturer of garden hose in North America will be further enhanced through the introduction of several new products under the SWAN(R) brand. Dayco is scheduled to introduce the PERFECT GARDENERTM brand of premium garden hose. This hose offers greater kink- resistance, flexibility, soil resistance and coiling capabilities than any competing brand. Also in this market, a new line of packaging for Dayco's higher-quality SWAN garden hose products will be introduced in August 1994, for the 1995 garden hose season. The new DURA-DISCTM vinyl boards -- circular packaging placed on the coils of hose -- will replace traditional cardboard packaging. DURA-DISC boards are expected to maintain their "like-new" appearance throughout the entire selling season, thus benefitting our retail distributors. Automotive OEM Approximately 32% of the Power and Fluid Transfer segment's sales are to Automotive OEM customers. Dayco participates in the worldwide automotive OEM market by supplying an extensive array of automotive systems and assemblies, including entire accessory drive, cam drive, fuel, air conditioning; and power steering systems; and radiator, heater, fuel, engine and transmission oil cooler assemblies, consisting of various hose, belts, tensioners, brackets, pulleys, canisters and sprockets. Revenues in this group are split about evenly between automotive belt and hose products and systems. In fiscal 1994, Dayco's Automotive OEM sub group was reorganized into a single global business unit to better meet the needs of its worldwide customers. Such reorganization has helped Dayco to eliminate useless duplication, increase efficiencies, and maximize the use of its resources on a global basis. At its research and development center near Detroit, Dayco engineers and technical support personnel work hand-in-hand with OEM customers during the design phase, to develop complete power or fluid transfer systems from individual components, for a specific vehicle. In Europe, Dayco's research and development facility in Turin, Italy, is also involved in the design of automotive systems, including fuel, air conditioning and power steering systems developed for use in European-made vehicles. Dayco does business with virtually all major automobile manufacturers around the world. Growth in the automotive OEM market will be boosted by Dayco's increasing activity with the U.S. operations of foreign-based automotive OEMs. Dayco is currently selling to -- or has an active product development program with -- most of the leading foreign-based OEMs, including Diamond Star (Mitsubishi), Auto Alliance (Mazda), Nissan, Toyota, Isuzu and BMW. Looking ahead, Dayco has multiple development programs with the Detroit OEMs and most of the major European automotive manufacturers, as well as with the foreign-based OEMs. 9 Automotive Aftermarket The Automotive Aftermarket accounted for roughly 24% of the Power and Fluid Transfer segment's sales in fiscal 1994. The products in this group include a vast array of automotive belts, hose and accessories sold to automotive warehouse distributors, oil companies, retail and auto parts chains, mass merchandisers, farm and fleet stores, and hardware distributors. Products include multiple-ribbed belts, V-belts, snowmobile and timing belts; radiator, automotive service, fuel line and heater hose and assemblies; as well as fan clutches, transmission and oil coolers, fan blades, electric fans, tensioners, couplings and pulleys. Of primary importance in the Automotive Aftermarket is the distribution of products. When vehicle owners need a replacement belt or hose to make their engine run, availability is of significant importance. The Dayco distribution centers ship to a warehouse distributor, who is the direct Dayco customer, and the one who pays for the product. The next level on the distribution chain is a "jobber." The jobber sells to a walk-in do-it- yourselfer, or to a garage mechanic, either of whom actually puts the belt or hose on the vehicle. Automotive Aftermarket products aren't really "consumed" until they are installed on a vehicle. Dayco's support is provided at every level of this distribution chain. Dayco has made major investments in its primary distribution center in Waynesville, North Carolina, to upgrade both the facility and the distribution process. The Automotive Aftermarket strategy for growth includes widening its product offerings within current lines in order to gain market share. As part of this strategy, Dayco has leveraged its position as a supplier to the automotive OEMs, to introduce new products into the aftermarket. For instance, a new heater hose assembly developed for the OEM market, has been subsequently introduced to Dayco's aftermarket customers. Not all of the products supplied to the aftermarket carry the Dayco brand name. Some customers prefer to have their own, or a private label (other than Dayco), on their products. This is one of the fastest growing areas in the aftermarket, and Dayco is well-positioned to take advantage of this growth. Also, as the average age of vehicles on the road continues to rise, and with the number of miles driven increasing for the 12th straight year, the need for aftermarket parts is growing. 10 Transportation Mark IV's Transportation business segment supplies products and systems for the Mass Transit, Traffic Management, and Commercial Aviation markets. Customers include OEMs of mass transit bus and rail vehicles and commercial aircraft, as well as state and local highway and transportation agencies. Products in this segment are also sold to the aftermarket. Mark IV entered the transportation business in 1984 through its LFE acquisition (traffic signals and highway signs) as supplemented by its 1986 acquisition of Gulton Industries, Inc., through which Mark IV acquired its Luminator businesses. Mark IV enhanced its international presence in the mass transit and traffic control business through several strategic acquisitions which expanded the Company's product lines in this segment. In August 1990, the Company acquired a Canadian-based manufacturer of electromagnetic display devices for use in destination signs, gasoline pumps and other information displays (F-P Electronics). In December 1990, the Company acquired a manufacturer of door systems and certain electrical controls for buses and rail cars, with operations in both Canada and the U.S. (Vapor). In January 1993, Mark IV acquired a French company which supplies passenger information, display and automatic bus location systems to the European market (SLE). The Transportation segment is predominantly contract driven, with many of the contracts spanning one or more years. At times, there are delays in the completion of contracts which are beyond the Company's control -- a problem which affected the market for the Company's bus and rail products in the latter half of fiscal 1994. This can cause fluctuations in the timing of revenues, and allow inventories to build. Also inherent to this business are backlogs -- firm orders for products which are to be delivered at a future date. As of February 28, 1994, the Transportation business segment's backlog of orders believed to be firm was approximately $141,000,000, of which, approximately $80,000,000 is expected to be shipped during fiscal 1995. The Transportation business segment's backlog as of February 28, 1993 was approximately $127,200,000. The Company's Transportation products are sold primarily in North America and Europe, with 34% of total segment revenue coming from outside of the U.S. In fiscal 1994, this segment accounted for 18% of both the consolidated sales and operating income (before corporate expenses) of Mark IV. The segment is divided into three sub-groups, each of which is unique in terms of its products, markets, customers and strengths. 11 Mass Transit The Mass Transit group -- the largest group within the Transportation segment -- provides door systems, electronic controls, vehicle information systems, interior lighting, and passenger information display systems and components, for mass transit buses and rail cars. While most of the products in this group are sold directly to vehicle manufacturers, there is also a large market for replacement parts used to repair or upgrade mass transit vehicles. The Company's marketing efforts are directed primarily at OEMs, but are also focused on transit agencies, who can specify that Mark IV products be included in their mass transit systems. Through Vapor, the Company has a commanding lead in the bus and rail vehicle door closure market, supplying complete door systems as well as basic components to the North American transit industry. Vapor is known for its innovative design capabilities, reliability and quality of performance. Vapor Canada supplies complete door systems for the London Underground Limited (LUL), the largest subway system in the world, and has already delivered three-quarters of a 700-subway car order it received for the LUL Central Line. Vapor was recently awarded another contract to supply door systems for 354 cars on the LUL's Jubilee Line extension running to Canary Wharf. Also included in the Mass Transit group is Luminator Mass Transit, a leading producer of interior lighting and passenger information systems, air diffusers, overhead storage racks and accessories for transit buses and passenger rail cars. Together with its sister companies in Europe, LLE and SLE, Luminator is a significant worldwide supplier of electronic passenger information displays for public transportation vehicles. F-P Electronics, a significant worldwide manufacturer of electro- mechanical display components used in airport, bus and rail passenger information displays -- both on the vehicle (mobile) and in the station (fixed) -- is also a part of the Mass Transit group. Its customers include manufacturers of mass transit equipment and gasoline dispensing pumps, as well as commercial sign companies. F-P's products are also used for programmable highway, time and temperature, scoreboard, stock exchange and other commercial displays. 12 Traffic Management The Traffic Management portion of the Transportation segment provides traffic control and management systems, traffic controllers and signals; automatic toll collection and vehicle identification systems; and highway information displays. These products, which are sold to state and local governments as well as transportation agencies primarily in the U.S. and Canada, help to reduce traffic congestion, pollution and gridlock on highways, city streets and at toll booths. Automatic Signal/Eagle Signal is a leading, full-line supplier of traffic control equipment and systems in the U.S. Its range of products includes traffic lights, which control vehicular and pedestrian traffic; pre- timed and traffic-adjusted controllers (boxes at intersections programmed to control the operation of an individual traffic light); and complete traffic management systems. Its MONARCTM system, a fully computerized transportation management and control system, is in use at a number of locations in the U.S. This system can coordinate and control all of the traffic lights and various traffic information signs in an entire metropolitan area. The MONARC also is able to control video surveillance equipment within a transportation network, and can be fully integrated with other Intelligent Vehicle Highway Systems (IVHS) technologies. Mark IV is an active participant in the rapidly growing IVHS market. In March 1994, Mark IV IVHS equipment was selected by the Interagency Group (IAG) - - -- a group representing seven toll authorities in New Jersey, New York and Pennsylvania -- for use on the new E-ZPasssm electronic toll collection system. The Company's equipment has now been recommended to the governing boards of each of the individual agencies within the IAG, and a contract was recently signed with MTA Bridges and Tunnels (formerly the Triborough Bridge and Tunnel Authority). Mark IV IVHS will provide the tag and reader equipment for the E-ZPasssm system, which is designed to eliminate the need for motorists to exchange cash, tokens, or tickets at toll booths. Tolls will be paid electronically, as vehicles pass through the booths, reducing congestion, increasing accuracy in toll collection, and improving driver convenience on toll roads, bridges and tunnels. In addition to an increase in automated toll systems, the group is also seeing significant growth in the market for electronic variable message displays, which are produced by F-P Electronics. These systems can be found on the highway in applications such as overhead message, speed limit and lane control signs, and in toll collection stations. F-P Electronics also has a new line of high light intensity fiber optic traffic displays, specifically designed to improve visibility on the highway. Also serving the Traffic Management market is the company's Interstate Highway Sign operation -- a leading manufacturer of reflective directional, informational, regulatory and warning signs for the nation's highways and other roadways. Interstate Highway Signs is also producing new signs using exterior light that provide better visibility and are easier to maintain. 13 Commercial Aircraft Luminator Aircraft Products supplies interior lighting and other passenger comfort systems for commercial aircraft, including the MD-11 and new MD-90, and every other McDonnell Douglas aircraft produced since the DC-3. In addition, Luminator provides components for several Boeing aircraft models. Luminator also supplies aircraft panel, navigation, landing and emergency lights to general aviation customers, such as Beechcraft and Cessna, and makes a comprehensive line of night vision compatible interior and exterior lighting used in military applications. Luminator's interior aircraft products include fluorescent cabin lighting, overhead reading lights, emergency lighting, and "Exit", "No Smoking" and other passenger information signs, as well as self- powered light sources used to illuminate these displays. Professional Audio The Professional Audio business segment accounted for approximately 14% of Mark IV's total revenue and 15% of its operating income (before corporate expenses) in fiscal 1994. This group of companies, known in the marketplace as "Mark IV Audio," provides a comprehensive range of high-quality, high- performance audio products used by professional musicians, broadcast and recording studios, touring bands, and in sound system installations of all types -- from stadiums to churches, theaters to airports, and amusement parks to factories. Mark IV entered the professional audio business in 1986 through its acquisition of Gulton Industries, Inc., which had two operations engaged in the audio business -- Electro-Voice and Altec Lansing. Since that time, Mark IV has made four additional strategic acquisitions of companies engaged in the manufacture of audio equipment for commercial and professional use, thereby giving this segment a manufacturing and distribution presence in many parts of the world. Mark IV Audio produces a full-line of the components required in sound systems, which has enabled it to align itself with retailers, contractors and distributors around the world. The Mark IV Audio group includes some of the industry's oldest and most prestigious brand names, and is the leader in many segments of the professional audio market. EV's recently-introduced System 200 has set a new standard for performance in a compact, portable loudspeaker system, and is gaining market share in live music and audio-visual applications. EV microphones are a significant brand among leading radio personalities and television news people. Electro-Voice products are also used in movie theaters and large sports venues. 14 Altec Lansing was a pioneer in the market for installed engineered sound systems. Sound contractors around the world continue to look to Altec Lansing for products and technical support for the audio systems they install in airports, theme parks, hotels, churches, theaters, convention centers, and other locations where sound quality and speech intelligibility are important. Altec's products can be found at Euro Disneyland, in France, and at the new Cancun Convention Center, Mexico's largest convention center. The Mark IV Audio group's Vega microphones were used at the recent Academy Awards presentations. Klark Teknik's signal processing electronics are used where performance demands are critical in studio, touring and fixed installation applications around the world. Its Midas XL3 mixing console has been established as a clear choice for mid-sized systems in touring and live theater applications. Another Mark IV Audio company, DDA, produces consoles for use in live sound, post-production for videos, and fixed installations. Using EV's established distribution network, the group's Dynacord products from Germany are being introduced to musicians in North America, under a new brand name -- EV/Dynacord. Dynacord is also prominent in the fixed installation market in Europe, working in conjunction with the Altec, EV and University brands to present a full line of products to sound contractors. Approximately 59% of Mark IV Audio's sales are to customers outside of the United States. The group has company-owned distributors in Australia, Canada, France, Hong Kong, Japan and Switzerland, as well as in the countries where Mark IV Audio products are manufactured, which include the U.S., Germany and the U.K. Recently, Mark IV Audio made some major changes to its organizational structure, in order to better focus its widely diversified strengths in technology, brand recognition, geographic distribution, and manufacturing. General administration, research and development, and manufacturing responsibilities have now been centralized for all Mark IV Audio companies, enabling the group to more effectively coordinate and utilize its resources. These changes have been implemented in order to increase the rate of technological innovation, reduce lead-time on new product development, maintain world-class quality and competitive costs in production, and shorten lines of communication within the organization. Also as part of this reorganization, marketing, sales and other business development activities have been divided into three regions -- The Americas, Europe (including the Middle East, Africa and part of Asia), and The Pacific (Australia, Southeast Asia, Japan and China). Each region is structured with a business development team whose mission is to identify and aggressively pursue growth opportunities within its territory. All Mark IV Audio products will be available for sale in each region. With its regional decision-making, this new strategy will enable Mark IV Audio to provide products, pricing and programs tailored to the specific needs of customers in each area, with an understanding of the cultures, conditions and business practices of the given region. 15 Marketing and Competition Mark IV's products are marketed primarily in the United States and Europe, and to a lesser extent in Canada and the Far East. The Company uses its own sales engineers and other sales personnel, independent distributors and sales representatives to market its products. A majority of the Company's products have a significant and in many instances the leading market share in their respective markets. Most of the markets for the Company's products are characterized by a limited number of competitors. However, competition in certain of those markets is intense. Some of the Company's competitors are substantially larger than Mark IV and have greater financial resources. The Company competes on the basis of price, quality, technical innovation and its ability to fill orders promptly, with the relative importance of each factor depending on the market for the particular product. Backlog The Company does not believe that the backlog of orders for any of its products is material to the Company as a whole. However, as discussed previously, backlogs are a significant factor in the Transportation business segment. Patents and Trademarks Although a number of patents and trademarks have been issued to the Company and its subsidiaries, the Company believes its competitive position is more dependent on its technical knowledge and processes than on patent or trademark protection. The Company believes, however, that its trademarks and tradenames used in connection with certain products may be significant to its business. 16 Research and Development The Company is engaged in ongoing research and development in connection with new and existing products. Research and development expenditures are expensed as incurred, and amounted to $30,900,000; $26,100,000; and $24,900,000 in the Company's continuing operations in fiscal 1994, 1993 and 1992, respectively. Raw Materials and Supplies The materials and supplies used to produce the Company's products are generally obtained from a wide variety of suppliers, and the Company has not experienced any shortages. Although certain materials used in the manufacture of flip-dots, electrostatic control equipment, self-illuminating lights and smoke-detector ionization elements are readily available from only a few suppliers, the Company does not anticipate any significant difficulties in obtaining any of these raw materials in the foreseeable future. Government Regulation Certain of the Company's process control systems, electrostatic control devices, smoke-detector ionization elements and self-illuminating lights have radioactive components, the production, storage and transportation of which are subject to federal, state and local laws and regulations. Federal and state regulations also limit the amount of exposure the Company's employees may have to such radioactive materials. The Company has obtained all licenses and approvals required for its businesses and believes it is in material compliance with all applicable regulations concerning radioactive materials and employee safety. A portion of the Company's business is conducted pursuant to U.S. Government contracts or sub-contracts. Generally, government contracts and sub-contracts contain provisions permitting termination at any time at the convenience of the Government upon payment to the Company of costs incurred plus a profit related to the work performed to the date of termination. Substantially all of the Company's government contracts and sub-contracts contain these provisions. The Company, as a government contractor, is subject to various statutes and regulations governing defense contracts. Other than as described above with respect to radioactive components, the Company is not subject to any particular environmental laws or regulations which are not generally applicable to all manufacturing companies. The Company believes that it is in material compliance with all applicable environmental laws and regulations. Mark IV does not anticipate having to incur material capital expenditures for environmental compliance in fiscal 1995 or fiscal 1996. 17 Employees The Company currently employs approximately 12,500 persons, of whom approximately 8,700 are production employees, with the remainder serving in executive, administrative, engineering or sales capacities. Approximately 3,400 production employees are covered by nine (9) collective bargaining agreements which expire at various times through June 1999. The Company believes its relationship with its employees is good. Other Mark IV was incorporated in Delaware in 1970 and its executive offices are at 501 John James Audubon Parkway, Amherst, New York 14228. Its telephone number is (716) 689-4972. ITEM 2. PROPERTIES The table below summarizes the approximate floor space of the Company's corporate office and principal manufacturing facilities by business segment. Approximate Floor Space (In Thousands of Square Feet) Owned Leased Total Corporate Office - 23 23 Power and Fluid Transfer (1) 4,975 538 5,513 Mass Transit and Traffic Control (2) 684 914 1,598 Professional Audio (3) 490 192 682 (1) Consisting of the following twenty-seven facilities: North American facilities (approximately 4,505,000 square feet): Waynesville, NC; Springfield, MO; Walterboro, SC; Williston, SC; Ocala, FL; Fort Scott, KS; Fort Worth, TX; Alliance, NE; Eldora, IA; McCook, NE; Fayetteville, AR; Red Wing, MI; Weston, Ontario, Canada; Walnut, CA; Rock Island, IL; Easley, SC; Bucyrus, OH; Lexington, TN; Buffalo, NY; Vero Beach, FL. European Facilities (approximately 1,008,000 square feet): Halesowen, U.K.; Torino, Italy; Barcelona, Spain; Baudour, Belgium; Chieti, Italy; Manopello, Italy (2). (2) Consisting of the following fourteen facilities: North American facilities (approximately 1,548,000 square feet): Plano, TX; Montreal, Quebec, Canada; Niles, IL; Mississauga, Ontario, Canada (2); Cobourg, Ontario, Canada; Little Rock, AR; Denton, TX; Austin, TX; Grand Island, NY; Clinton, MA; Hudsonville, MI. European facilities (approximately 50,000 square feet): Rastatt, Germany and Nice, France. 18 (3) Consisting of the following eleven facilities: North American facilities (approximately 535,000 square feet): Buchanan, MI; Newport, TN; Sevierville, TN; Mishawaka, IN; Oklahoma City, OK; Sun Valley, CA; El Monte, CA. European facilities (approximately 147,000 square feet): Straubing, West Germany; Hohenwarth, West Germany; Kidderminster, Worchester, U.K.; Hounslow, Middlesex, U.K. The Company also owns or leases various small production facilities, sales offices and distribution centers which are not included in the above list of properties. The Company believes that its existing facilities have sufficient capacity to meet its anticipated needs in each of its industry segments for the foreseeable future. ITEM 3. LEGAL PROCEEDINGS A subsidiary of the Company was the defendant in a patent infringement case which was tried in the latter part of fiscal 1994. The decision of the Court was reached in April 1994 in favor of the plaintiff, awarding them damages and issuing an injunction which prohibits the Company from any further use of the technology at issue. Prior to the court's decision, the Company had stopped using the technology in question; therefore, the injunction will have no impact on the Company's future sales and marketing efforts. If the judgement for the plaintiff is upheld on appeal, the after-tax cost to the Company could be in the range of $2,300,000. Management of the Company has been advised by its legal counsel as to the merits of its arguments, and continues to believe it has not infringed on the plaintiff's patent. In view of the above, management has directed its legal counsel to pursue the appeal process as diligently as possible. Management believes the ultimate conclusions of law will be decided upon by the appeals court in favor of the Company. However, in view of the trial court's findings, an accrual has been established to provide for the cost of the resolution of this issue in the event the Company is not successful. The litigation accrual did not have an effect on income, since the effects of establishing it have been offset by the reversal of accrued liabilities related to an acquisition in fiscal 1991 which management has determined are no longer required. The Company is involved in various other legal and environmental related claims or disputes in the ordinary course of business. In the opinion of management, the ultimate cost to resolve these matters will not have a material adverse effect on the Company's financial position. 19 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. PART II ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS The Company's Common Stock is listed on the New York Stock Exchange (Symbol: IV). The following table sets forth, for the fiscal periods indicated, the high and low closing sale prices per share of the Company's Common Stock as reported by the New York Stock Exchange. All amounts have been adjusted for the 5% stock dividend paid in April 1994. Fiscal 1994 Fiscal 1993 Low High Low High 1st Quarter $15.65 $18.81 $11.88 $14.04 2nd Quarter $18.93 $22.02 $11.45 $13.39 3rd Quarter $17.98 $24.52 $11.11 $14.06 4th Quarter $17.14 $20.00 $13.61 $17.57 As of February 28, 1994, the approximate number of holders of record of the Company's Common Stock was 2,500. The Company declared total cash dividends of $.098 and $.084 per share during fiscal 1994 and 1993, respectively. 20 ITEM 6. SELECTED FINANCIAL DATA The following table sets forth selected consolidated financial information of the Company for each of the five fiscal years in the period ended February 28, 1994. This table should be read in conjunction with the audited consolidated financial statements of the Company and the related notes thereto included elsewhere herein.
FIVE YEAR SUMMARY OF OPERATIONS (Amounts in thousands, except per share data) Fiscal Year Ended the Last Day of February, ______________________________________________________ 1994 (1) 1993 (2) 1992 (2) 1991 (2) 1990 (2) ________ ________ ________ ________ _______ Income Statement Data: Net sales $1,244,200 $1,085,700 $1,004,300 $ 789,700 $ 672,700 ========== ========== ========== ========== ========= Operating income (3) $ 131,800 $ 113,600 $ 108,600 $ 88,000 $ 77,700 Interest expense 50,100 51,600 64,700 60,600 51,200 __________ __________ _________ __________ _________ Operating income, net of interest expense $ 81,700 $ 62,000 $ 43,900 $ 27,400 $ 26,500 ========== ========== ========== ========== ========== Income from continuing operations: Before securities transactions $ 51,100 $ 39,100 $ 28,400 $ 17,000 $ 16,300 Securities transactions - - (1,600) 600 3,600 __________ __________ __________ _________ _________ Total from continuing operations 51,100 39,100 26,800 17,600 19,900 Discontinued operations - 3,600 2,000 4,700 39,800 Extraordinary items (21,700) (3,700) (4,500) 700 10,000 Cumulative effect of accounting change (26,000) - - - - __________ __________ __________ __________ ________ NET INCOME $ 3,400 $ 39,000 $ 24,300 $ 23,000 $ 69,700 ========== ========== ========== ========== ========== Primary income per share (4): Continuing operations: Before securities transactions $ 1.20 $ .93 $ .86 $ .68 $ .58 Securities transactions - - (.05) .02 .13 __________ __________ __________ __________ _________ Total from continuing operations 1.20 .93 .81 .70 .71 Discontinued operations - .09 .06 .18 1.41 Extraordinary items (.51) (.09) (.14) .03 .36 Cumulative effect of accounting change (.61) - - - - __________ __________ __________ __________ __________ NET INCOME $ .08 $ .93 $ .73 $ .91 $ 2.48 ========== ========== ========== ========== ========== 21 1994 (1) 1993 (2) 1992 (2) 1991 (2) 1990 (2) ------- -------- -------- -------- -------- Fully-diluted income per share (4): Continuing operations: Before securities transactions $ 1.09 $ .87 $ .78 $ .59 $ .52 Securities transactions - - (.04) .02 .10 _________ __________ _________ __________ __________ Total from continuing operations 1.09 .87 .74 .61 .62 Discontinued operations - .07 .05 .14 1.09 Extraordinary items (.43) (.07) (.12) .02 .28 Cumulative effect of accounting change (.51) - - - - __________ __________ __________ __________ _________ NET INCOME $ .15 $ .87 $ .67 $ .77 $ 1.99 ========== ========== ========== ========== ========= Weighted average number of shares outstanding (4): Primary 42,481 41,993 33,140 25,256 28,153 Fully-diluted 50,747 50,325 38,358 33,351 36,283 Balance Sheet Data: Working capital $ 312,800 $ 275,400 $ 285,500 $ 345,100 $ 262,300 Total assets $1,282,300 $1,124,800 $1,104,500 $1,100,100 $ 872,100 Long-term debt $ 567,200 $ 497,100 $ 525,400 $ 717,600 $ 544,200 Stockholders' equity (5) $ 345,400 $ 345,600 $ 311,900 $ 170,000 $ 159,700 22 ____________________________ (1) Includes the results of operations of the PTI business from its June 1993 acquisition date, and excludes the results of discontinued operations. (2) Income Statement data has been restated to reflect the effects of the adoption of SFAS #109, Accounting For Income Taxes, and to exclude the results of discontinued operations. Balance Sheet Data has been restated to reflect the adoption of SFAS #109. (3) Represents income from continuing operations before interest expense, securities transactions and taxes. (4) Adjusted to reflect the three-for-two stock distributions in April 1992 and November 1989, and the 5% stock dividends paid in April 1994, May 1993, July 1992, April 1991 and July 1990. (5) The Company declared cash dividends of approximately $.098; $.084; $.066 and $.058 per share in fiscal 1994, 1993, 1992 and 1991, respectively. No cash dividends were paid in years preceding fiscal 1991.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Financial Condition In early fiscal 1992, management stated its intention to significantly reduce long-term debt levels by the application of cash generated through earnings, reductions in working capital requirements, and the sale of non-core businesses and non-operating assets. At the end of fiscal 1993, long-term debt had been reduced by approximately $220,500,000 (31%) from the $717,600,000 level at February 28, 1991 to $497,100,000 at February 28, 1993. The reduction brought the Company's level of long-term debt as a percentage of total capitalization from 80.8% at February 28, 1991 to 59.0% at February 28, 1993. Having accomplished significant debt reductions by the end of fiscal 1993, the Company's emphasis shifted to building its core businesses by expanding their product coverage and increasing their global presence. 23 In June 1993, the Company completed its acquisition of Pirelli Trasmissioni Industriali S.p.A. (PTI) for a cash purchase price of $65,000,000 and the assumption of PTI bank indebtedness of $50,000,000. Financing for the PTI acquisition was provided by the Company's new credit agreements, as well as the proceeds from the sale of discontinued operations, as discussed below. PTI's operations are based in Italy, and include manufacturing and distribution centers in 5 other Western European countries, and in the U.S. In fiscal 1994, the Company announced the discontinuance of its non- core businesses, and completed the sale of certain of those businesses for cash proceeds of approximately $35,000,000. In March 1993, the Company commenced a tender offer to purchase its 13-3/8% Subordinated Debentures for a cash price of $1,137.50 per $1,000 principal amount, plus accrued interest. As a result of the tender offer and certain open-market purchases, the Company acquired approximately $138,000,000 principal amount of these debentures. The Company then completed an "in- substance defeasance" in which approximately $60,400,000 was deposited in an irrevocable trust to cover both the remaining outstanding principal amount ($52,000,000) and related interest expense requirements of these debentures. In March 1993, the Company also completed a public offering of $258,000,000 principal amount of its 8-3/4% Senior Subordinated Notes due April 1, 2003. A substantial portion of the net proceeds from the sale of the notes was used to fund the retirement of the Company's outstanding 13-3/8% Subordinated Debentures referred to above. In May 1993, the Company entered into a revolving credit agreement ("Multi-Currency Agreement") providing for a five year multi-currency revolving credit facility with a group of financial institutions in the U.S. and Europe. The Multi-Currency Agreement provides for a revolving loan commitment for the first two years of the equivalent of $100,000,000. The commitment declines by $12,500,000 at each of six semi-annual dates beginning in June 1995, with the remaining $25,000,000 of commitment expiring in May 1998. Interest rates on borrowings under the Multi-Currency Agreement are subject to change based on a specified pricing grid which increases from LIBOR plus 0.625% to LIBOR plus 1.375% per annum based on the Company's senior debt rating (as defined in the Multi-Currency Agreement). The Company is currently paying interest at LIBOR plus 1.25% on borrowings under the Multi-Currency Agreement. The Multi-Currency Agreement also contains certain affirmative and negative covenants customary in an agreement of this nature. 24 In July 1993, the Company entered into a Credit Agreement providing for a $300,000,000 five year revolving credit facility with a group of financial institutions. A portion of the credit facility was used to repay amounts outstanding under the Company's revolving credit facility dated June 19, 1990, which was then canceled. Interest on the Credit Agreement is based on a pricing grid which is either prime per annum or, under a LIBOR option, LIBOR plus 0.375% to LIBOR plus 1.375% per annum based on the Company's senior unsecured long-term debt ratings (as defined in the Credit Agreement). The Company is currently paying interest at LIBOR plus 0.75% on borrowings under the Credit Agreement. The Credit Agreement contains certain affirmative and negative covenants customary in an agreement of this nature and is secured by a pledge of the stock of certain of the Company's subsidiaries. As a result of the above, net cash provided from earnings of continuing operations was $91,200,000 in fiscal 1994, a 46% increase over the $62,600,000 provided in fiscal 1993. As of February 28, 1994, the Company had working capital of $312,800,000 and borrowing availability under its primary credit agreements of $211,000,000 and additional availability under its various domestic and foreign demand lines of credit of approximately $51,700,000. The Company's long-term debt as a percentage of total capitalization was 62.1% at February 28, 1994. If the Company's $114,200,000 of 6-1/4% Convertible Subordinated Debentures, which are callable in February 1995, were considered to have been converted at February 28, 1994, long-term debt as a percentage of total capitalization would be approximately 49.6% at that date. Despite the recent increase in long-term debt resulting from the Company's PTI acquisition, management will continue to emphasize the reduction of long-term debt as a percentage of its total capital. It is anticipated that debt reductions will continue to be achieved through a combination of the application of cash generated from operations and reduced working capital requirements in the Company's existing businesses. Management believes that cash generated from operations should be sufficient to support working capital requirements and anticipated capital expenditures for the foreseeable future. Results of Operations The Company classifies its operations in three core business segments: Power and Fluid Transfer, Transportation, and Professional Audio. The Company's current business strategy is focused upon the enhancement of its three core business segments through internal growth, cost control, and quality improvement programs and selective, strategic acquisitions, with an emphasis on expanding the Company's international presence. The results of operations of PTI have been included in the Company's results of operations for fiscal 1994 from its June 2, 1993 acquisition date. The Company's results of operations for fiscal 1993 and 1992 have been restated to exclude the results of operations of the Company's discontinued businesses and to recognize the effects of the Company's retroactive adoption of SFAS No. 109, Accounting for Income Taxes. 25 In reviewing the Company's sales performance, the following results by segment should be considered for each of the fiscal years presented (dollars in thousands):
1994 1993 1992 _________________ ________________ ____________ (As Restated) (As Restated) % Increase % Increase Over Prior Over Prior Amount Year Amount Year Amount ______ __________ _______ _________ ______ NET SALES TO CUSTOMERS Power and Fluid Transfer $ 852,100 20.1% $ 709,400 11.7% $ 635,200 Transportation 218,600 9.6% 199,500 (0.2)% 199,900 Professional Audio 173,500 (1.9)% 176,800 4.5% 169,200 __________ __________ ___________ Total net sales to customers $1,244,200 14.6% $1,085,700 8.1% $1,004,300 ========== ========== ==========
The increase in the Power and Fluid Transfer sales in fiscal 1994 is the result of internal growth of approximately $41,000,000 (5.8%), and the inclusion of the PTI operations. Excluding PTI and the negative effect of foreign currency movements, the internal growth was approximately $57,900,000 (8.2%), with $36,200,000 (5.1%) of such growth generated from the segment's U.S. operations and the balance from its foreign based operations. In fiscal 1993, the $74,200,000 (11.7%) increase over fiscal 1992 resulted from a combination of increased unit sales and the inclusion of the results of operations for the full year of a business acquired in the second half of fiscal 1992. The effects of foreign currency movements in fiscal 1993 were not significant in comparison to the amounts reported for fiscal 1992. 26 The sales increase in the Transportation segment in fiscal 1994 is the result of internal growth of approximately $16,600,000 (8.3%), and the SLE acquisition at the end of fiscal 1993, net of certain negative effects of foreign currency movements in fiscal 1994. The sales increase was most significantly generated by the segment's foreign operations. Slower sales growth than anticipated was experienced in the segment's U.S. operations in fiscal 1994 as a result of delays in the development of the IVHS (Intelligent Vehicle Highway System) toll collection and traffic control markets. Sales in fiscal 1993 remained comparable to fiscal 1992, with increases in the segment's foreign operations substantially offset by declines in the segment's U.S. operations. Sales in the Professional Audio segment in fiscal 1994 remained comparable to fiscal 1993, with a slight increase in U.S. sales being offset by a decline in the segment's foreign operations. The modest increase in the Professional Audio segment's fiscal 1993 sales over fiscal 1992 was equally split between its U.S. and foreign operations. The Cost of Products Sold as a percentage of consolidated net sales was 64.6%, 64.4%, and 64.0% in fiscal 1994, 1993, and 1992, respectively. This consistent level of costs reflects the positive effects of the Company's cost control programs, which have helped to substantially offset the negative pressures on the margins experienced by each of the Company's three business segments. The slightly higher costs in fiscal 1994 are also caused by the contract delays referred to above and economic weakness experienced in our European markets. Selling and Administration costs as a percentage of consolidated net sales were 19.0%, 19.8%, and 20.0% in fiscal 1994, 1993, and 1992, respectively. The reduction in fiscal 1994 is primarily the result of operating synergies achieved from the combination of the PTI business with the previously existing European operations of the Power and Fluid Transfer business segment. The relatively consistent level of costs indicates the Company's continued emphasis on cost control has been successful in substantially offsetting the impact of inflation on such costs. Research and Development costs increased by $4,800,000 (18.4%) in fiscal 1994 over fiscal 1993, which in turn increased by $1,200,000 (4.8%) over fiscal 1992. The increase in fiscal 1994 is primarily caused by the PTI acquisition. As a percentage of consolidated net sales, such costs were approximately 2.5% in each of fiscal 1994, 1993, and 1992. This consistent level of investment reflects the Company's continuing emphasis on new product development. Depreciation and Amortization expense increased by $9,600,000 (29.9%) in fiscal 1994 over fiscal 1993, which in turn increased by $3,800,000 (13.4%) over fiscal 1992. The increase in fiscal 1994 is primarily attributable to the PTI acquisition. The fiscal 1994 amount also includes $800,000 related to the restricted stock grants made in fiscal 1994. The remaining increases are primarily the result of increased capital equipment expenditures. 27 The above sales and operating expense movements result in the following operating income for each of the fiscal years presented (dollars in thousands):
1994 1993 1992 ______________ _______________ _______________ (As Restated) (As Restated) % of % of % of Related Related Related Amount Sales Amount Sales Amount Sales ________ _______ ______ _______ ________ ______ OPERATING INCOME Power and Fluid Transfer $ 97,800 11.5% $ 79,200 11.2% $ 67,000 10.5% Transportation 27,000 12.4% 24,900 12.5% 27,100 13.6% Professional Audio 21,900 12.6% 22,000 12.4% 23,900 14.1% Total operating income 146,700 11.8% 126,100 11.6% 118,000 11.7% General corporate (14,900) (1.2)% (12,500) (1.1)% (9,400) (0.9)% Continuing operations, before interest, securities transactions, and taxes $131,800 10.6% $113,600 10.5% $108,600 10.8% ======== ===== ======== ===== ======== =====
In spite of the increased interest cost resulting from the PTI acquisition, interest expense of continuing operations in fiscal 1994 was down $1,500,000 (2.9%) from the amount incurred in fiscal 1993, which in turn was down $13,100,000 (20.3%) from fiscal 1992. The reduction in fiscal 1994 was primarily the result of the Company's repurchase and in-substance defeasance of its 13-3/8% subordinated debentures at the beginning of the fiscal year, which was refinanced with the issuance of the Company's 8-3/4% Senior Subordinated Notes. The reduction in fiscal 1993 was accomplished primarily as a result of the Company's debt reduction program in fiscal 1993 and 1992, which substantially reduced the outstanding amounts of high interest rate debt. The Company's improved financial position at the end of fiscal 1992, as well as the overall reduction in the economic interest rate as compared to fiscal 1992, also contributed to lower interest costs in fiscal 1993. The interest expense amounts reported for continuing operations also reflect the allocation of $2,200,000; $5,00,000; and $6,400,000 to discontinued operations in fiscal 1994, 1993, and 1992, respectively, since the proceeds from the disposal of these businesses have been utilized to reduce indebtedness, and therefore related interest expense as well. The loss on securities transactions in fiscal 1992 reflects costs of $2,100,000 related to the Company's conversion of its 7% Convertible Subordinated Debentures, as well as the net effects of the Company's sale of certain other investments and idle assets. 28 The Company's provision for income tax as a percentage of the pre-tax accounting income was approximately 37.5%, 37.0%, and 35.4% in fiscal 1994, 1993, and 1992, respectively. The succeeding higher rates in fiscal 1994 and 1993 are primarily the result of increased income in foreign locations with higher statutory tax rates than in the U.S. The effective tax rate in fiscal 1994 was not quite as high as previously anticipated, due to certain one-time permanent tax differences. However, the rate is expected to increase in fiscal 1995 as a result of the increased foreign income as a percentage of total consolidated income. As a result of all of the above, the Company's income from continuing operations in fiscal 1994 increased $12,000,000 (30.7%) over fiscal 1993. In turn, fiscal 1993 income from continuing operations increased $12,300,000 (45.9%), most notably by the reduction in interest expense over fiscal 1992. As a result of the debt extinguishment referred to above, the Company incurred extraordinary losses, net of related tax benefits, of $21,700,000; $3,700,000; and $4,500,000 in fiscal 1994, 1993, and 1992, respectively. Additionally, the Company's adoption of SFAS No. 106 in fiscal 1994 resulted in the recognition of a net of tax charge of $26,000,000 as the cumulative effect of the accounting change in fiscal 1994. The above extraordinary items and one-time charge resulted in significantly reduced net income of $3,400,000 in fiscal 1994 in comparison to the $39,000,000 earned in fiscal 1993. Since the discontinued operations and extraordinary charges were comparable in fiscal 1993 and 1992, the net income reported in those years is consistent with the reported income from continuing operations discussed above. Impact of Inflation Generally, the Company has been able to pass on or offset inflation- related cost increases; consequently, inflation has had no material impact on income from operations. Recently Issued Accounting Standards In November 1992, the Financial Accounting Standards Board issued Statement No 112, Employers' Accounting for Postemployment Benefits (SFAS No. 112), which requires that accrual accounting be used to value the cost of benefits provided to former or inactive employees who have not yet retired. The benefits covered by the statement include salary continuation, disability, severance, and health care. The statement will be effective for the Company's 1995 fiscal year, and could require a cumulative catch-up charge against income, measured as of the beginning of fiscal 1995. The Company is currently evaluating the impact of this statement; however, it is not expected to be significant. 29 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Financial Statements Page Report of Independent Accountants for each of the three fiscal years in the period ended February 28, 1994. . . . . . . . . . . . . . . . . . . . . .27 Financial Statements: Consolidated Balance Sheets at February 28, 1994 and 1993 . . . . . . . . .28 Consolidated Statements of Income for each of the three fiscal years in the period ended February 28, 1994. . . . . . . . . . . . . . . . . . . . . . . . . . . . .29 Consolidated Statements of Stockholders' Equity for each of the three fiscal years in the period ended February 28, 1994. . . . . . . . . . . . . . . . . . . . . . . . . .30 Consolidated Statements of Cash Flows for each of the three fiscal years in the period ended February 28, 1994 . . . . . . . . . . . . . . . . . . . .31 Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . . .32 30 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of Mark IV Industries, Inc. We have audited the accompanying consolidated balance sheets of Mark IV Industries, Inc. and subsidiaries as of February 28, 1994 and 1993, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three fiscal years in the period ended February 28, 1994. 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 generally accepted auditing standards. 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 consolidated financial position of Mark IV Industries, Inc. and subsidiaries as of February 28, 1994 and 1993, and consolidated results of its operations and its cash flows for each of the three fiscal years in the period ended February 28, 1994, in conformity with generally accepted accounting principles. As discussed in Notes 10 and 12 to the consolidated financial statements, the Company changed its method of accounting for income taxes and postretirement benefits other than pensions, in accordance with statements of the Financial Accounting Standards Board. COOPERS & LYBRAND Rochester, New York March 29, 1994, except as to the information presented in the first and second paragraphs of Note 13 and in the first paragraph of Note 14, for which the date is April 8, 1994 31
MARK IV INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS FEBRUARY 28, 1994 AND 1993 (Dollars in Thousands) ASSETS 1994 1993 ____ ____ (As Restated) Current Assets: Cash $ 500 $ 2,700 Accounts receivable 275,100 228,100 Inventories 265,000 243,800 Other current assets 42,100 21,800 Total current assets 582,700 496,400 Pension related and other non-current assets 126,300 114,100 Property, plant and equipment, net 365,300 318,300 Cost in excess of net assets acquired and deferred charges 208,000 196,000 TOTAL ASSETS $1,282,300 $1,124,800 LIABILITIES & STOCKHOLDERS' EQUITY Current Liabilities: Notes payable and current maturities of debt $ 45,000 $ 34,800 Accounts payable 99,700 77,600 Compensation related liabilities 43,100 39,600 Accrued interest 13,600 14,200 Accrued expenses and other liabilities 67,000 45,100 Income taxes payable 1,500 9,700 Total current liabilities 269,900 221,000 Long-Term Debt: Senior debt 195,000 194,300 Subordinated debt 372,200 302,800 Total long-term debt 567,200 497,100 Other non-current liabilities 99,800 61,100 Stockholders' Equity: Common stock - $.01 par value; Authorized 100,000,000 shares; Issued 42,697,864 shares in 1994 and 42,188,178 shares in 1993 400 400 Additional paid-in capital 261,500 219,300 Retained earnings 88,600 128,300 Foreign currency translation adjustment (5,100) (2,400) Total stockholders' equity 345,400 345,600 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $1,282,300 $1,124,800 ========== ========== The accompanying notes are an integral part of these financial statements.
32
MARK IV INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF INCOME YEARS ENDED THE LAST DAY OF FEBRUARY 1994, 1993 and 1992 (Amounts in Thousands, Except Per Share Data) 1994 1993 1992 ____ _____ ____ (As Restated) (As Restated) Net sales $1,244,200 $1,085,700 $1,004,300 Operating costs: Cost of products sold 803,500 698,800 641,900 Selling and administration 236,300 215,100 200,600 Research and development 30,900 26,100 24,900 Depreciation and amortization 41,700 32,100 28,300 Total operating costs 1,112,400 972,100 895,700 Operating income 131,800 113,600 108,600 Interest expense 50,100 51,600 64,700 Loss on securities transactions - - 2,400 Income from continuing operations before provision for taxes 81,700 62,000 41,500 Provision for taxes 30,600 22,900 14,700 Income from continuing operations 51,100 39,100 26,800 Income from discontinued operations, net of tax - 3,600 2,000 Income before extraordinary items and cumulative effect of accounting change 51,100 42,700 28,800 Extraordinary loss from early extinguishment of debt, net of tax benefit of $12,300; $2,000; and $2,500 (21,700) (3,700) (4,500) Cumulative effect of a change in accounting principle (26,000) - - NET INCOME $ 3,400 $ 39,000 $ 24,300 ========== ========== ========== Net income per share of common stock: Primary: Income from continuing operations $ 1.20 $ .93 $ .81 Income from discontinued operations - .09 .06 Extraordinary loss (.51) (.09) (.14) Cumulative effect of a change in accounting principle (.61) - - NET INCOME $ .08 $ .93 $ .73 ========== ========== ========== Fully-diluted: Income from continuing operations $ 1.09 $ .87 $ .74 Income from discontinued operations - .07 .05 Extraordinary loss (.43) (.07) (.12) Cumulative effect of a change in accounting principle (.51) - - NET INCOME $ .15 $ .87 $ .67 ========== ========== ========== Weighted average shares outstanding: Primary 42,481 41,993 33,140 ========== ========== ========== Fully-diluted 50,747 50,325 38,358 ========== ========== ========== The accompanying notes are an integral part of these financial statements.
33
MARK IV INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY YEARS ENDED THE LAST DAY OF FEBRUARY 1994, 1993 AND 1992 (Dollars in Thousands Except Per Share Data) Retained Foreign Additional Earnings Currency Common Paid-in (As Translation Stock Capital Restated) Adjustment ______ ________ ________ __________ Balance at February 28, 1991 $ 300 $ 66,400 $134,600 $ 3,600 Net income for fiscal 1992 24,300 Cash dividends of $.066 per share (2,400) Retirement of treasury stock (100) (34,800) Public sale of common stock at $7.50 per share 100 60,400 Sale of common stock to Pension Plan at $9.79 per share 6,800 Conversion of 7% Convertible Debentures 100 55,900 Exercise of stock options 100 Translation adjustments (3,400) Balance at February 29, 1992 400 154,800 156,500 200 Net income for fiscal 1993 39,000 Cash dividends of $.084 per share (3,600) Stock dividend of 5% issued in July 1992 27,900 (27,900) Stock dividend of 5% issued in May 1993 35,700 (35,700) Exercise of stock options 900 Translation adjustments (2,600) Balance at February 28, 1993 400 219,300 128,300 (2,400) Net income for fiscal 1994 3,400 Cash dividends of $.098 per share (4,200) Stock dividend of 5% issued in April 1994 38,900 (38,900) Restricted stock grants, net 800 Conversion of 6-1/4% Convertible Debentures 100 Exercise of stock options, including related tax benefits 2,400 Translation adjustments (2,700) Balance at February 28, 1994 $ 400 $261,500 $ 88,600 $ (5,100) ===== ======== ======== ======== The accompanying notes are an integral part of these financial statements.
34
MARK IV INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED THE LAST DAY OF FEBRUARY 1994, 1993 AND 1992 (Dollars in Thousands) 1994 1993 1992 ____ ____ ____ (As Restated) (As Restated) Cash flows from operating activities: Income from continuing operations $ 51,100 $ 39,100 $ 26,800 Items not affecting cash: Depreciation and amortization 41,700 32,100 28,300 Pension and compensation related (12,400) (12,500) (10,700) Deferred income taxes 10,800 3,900 2,200 Net cash provided by earnings 91,200 62,600 46,600 Changes in assets and liabilities, net of effects of businesses acquired and discontinued: Accounts receivable (27,200) (12,000) 25,600 Inventories (7,700) 1,300 22,300 Other assets (5,700) 6,000 1,900 Accounts payable (2,600) 3,800 3,800 Other liabilities (8,400) (21,400) (15,400) Net cash provided by continuing operations 39,600 40,300 84,800 Discontinued operations, before non-cash items 1,100 8,800 7,200 Extraordinary items, before deferred charges (30,100) (4,900) (6,200) Net cash provided by operating activities 10,600 44,200 85,800 Cash flows from investing activities: Acquisitions (65,000) (4,000) (9,300) Divestitures 35,000 12,200 - Purchase of plant and equipment, net (38,000) (32,900) (19,200) Proceeds from sale of assets - 1,300 23,000 Net cash used in investing activities (68,000) (23,400) (5,500) Cash flows from financing activities: Credit agreement borrowings, net (30,000) 65,000 (116,500) Multi-currency credit agreement borrowings, net 48,400 - - Purchases of senior and subordinated debt (190,200) (62,800) (121,700) Issuance of subordinated debt 258,000 - 114,300 Other changes in long-term debt, net (18,900) (33,600) (18,600) Changes in short-term bank borrowings (8,300) 11,700 (3,800) Common stock transactions 800 900 67,400 Cash dividends paid (4,100) (3,300) (2,400) Net cash provided by (used in) financing activities 55,700 (22,100) (81,300) Effect of exchange rate fluctuations (500) (600) (300) Net decrease in cash (2,200) (1,900) (1,300) Cash and cash equivalents: Beginning of the year 2,700 4,600 5,900 End of the year $ 500 $ 2,700 $ 4,600 ======== ======== ======== The accompanying notes are an integral part of these financial statements.
35 MARK IV INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of the Company and all of its subsidiaries. All significant intercompany transactions have been eliminated. Foreign Currency The assets and liabilities of the Company's foreign subsidiaries are translated at year-end exchange rates. Translation gains and losses are not included in determining net income, but are accumulated in a separate component of stockholders' equity. Foreign currency transactions are included in income as realized, and amounted to gains (losses) of $300,000; ($700,000) and $300,000 in fiscal 1994, 1993, and 1992, respectively. During fiscal 1994, the Company entered into foreign currency forward contracts, of which the notional amount outstanding was $27,000,000 at February 28, 1994. The forward contracts hedge transactions in existing non-U.S. dollar denominated inter-company receivables and payables. Net Income Per Share of Common Stock Primary net income per share is calculated on the basis of the weighted average number of shares outstanding during each period, adjusted for subsequent stock distributions. Common stock equivalents which would arise from the exercise of stock options, using the treasury stock method, were not significant and have not been included in the calculation. Fully-diluted net income per share, in addition to the weighted average determined above, includes common stock equivalents which would arise from the exercise of stock options using the treasury stock method, and assumes the conversion of the Company's 6-1/4% and 7% Convertible Subordinated Debentures (for the periods outstanding), as well as the elimination of related interest expense, net of income tax effects. All income per share amounts have been calculated as if the stock split distributed in April 1992, and the stock dividends distributed in April 1994, May 1993 and July 1992 had occurred on March 1, 1991, the beginning of fiscal 1992. The weighted average number of shares outstanding have been determined as if shares issued pursuant to the stock distributions had been issued at that date and income per share amounts for fiscal 1993 and 1992 have been restated accordingly. 36 MARK IV INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Changes in Accounting Policies As discussed in Note 10, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes, effective March 1, 1993, the beginning of fiscal 1994. The Company adopted SFAS No. 109 by restating prior years' financial statements for all years back to and including fiscal 1986. As discussed in Note 12, the Company also adopted SFAS No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, as of March 1, 1993. The Company adopted SFAS No. 106 by the immediate recognition of its accumulated benefit obligation. Statements of Cash Flows For purposes of cash flows, the Company considers overnight investments as cash equivalents. Interest and investment earnings are netted against interest expense and amounted to approximately $400,000; $300,000; and $700,000 in fiscal 1994, 1993 and 1992, respectively. The Company paid interest of approximately $52,900,000; $58,700,000; and $74,100,000 in fiscal 1994, 1993 and 1992, respectively. Such amounts include $2,200,000; $5,000,000 and $6,400,000 allocated to the costs of discontinued operations in fiscal 1994, 1993 and 1992, respectively. The Company paid income taxes of approximately $13,700,000; $11,800,000; and $7,700,000 in fiscal 1994, 1993 and 1992, respectively. Liabilities recorded in connection with businesses acquired, excluding bank indebtedness, amounted to approximately $82,000,000; $3,600,000; and $63,800,000 in fiscal 1994, 1993 and 1992, respectively. 2. Acquisition On June 2, 1993, the Company purchased the stock and assets comprising Pirelli Trasmissioni Industriali S.p.A. ("PTI"), the power transmission business of Pirelli S.p.A., for approximately $115,000,000. PTI is a manufacturer of a variety of timing belts, v-belts, v-ribbed belts and hydraulic hose sold to customers in automotive and industrial markets. PTI has manufacturing, distribution, engineering and marketing operations in six Western European countries and the United States, and employs approximately 1,500 people worldwide. PTI is a significant addition to the Company's Power and Fluid Transfer business segment. The purchase price consisted of $65,000,000 in cash and the assumption of approximately $50,000,000 of existing bank indebtedness of PTI and its subsidiaries. The funding for the transaction was provided substantially by borrowings under the Company's multi-currency credit agreement. 37 MARK IV INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The acquisition has been accounted for under the purchase method, and the results of operations of PTI are included in the Company's results of operations from the date of acquisition. The Company has made a determination and allocation of the purchase price as of the acquisition date, consisting of the following (dollars in thousands): Accounts receivable $37,000 Inventories 34,600 Other current assets 6,700 Current notes payable to banks (18,600) Accounts payable and other current liabilities (52,800) Net working capital acquired 6,900 Fixed assets 77,200 Cost in excess of net assets acquired 33,000 Long-term indebtedness to banks (32,300) Other non-current items, net (19,800) Cash purchase price paid at closing $65,000 An independent appraisal firm has been retained by the Company to determine the fair market value of all of the fixed assets included in the PTI acquisition. The above amounts are based upon the preliminary results of such appraisal, and are subject to adjustment to the extent the final valuation differs from the preliminary determination. The financial position of PTI as of February 28, 1994 has been included in the accompanying consolidated balance sheet of the Company as of that date based upon the allocation identified above. The cost in excess of net assets will be amortized over 40 years. The following table presents the pro-forma consolidated condensed results of operations for the fiscal years ended February 28, 1994 and 1993. The pro- forma amounts give effect to the acquisition of PTI as if it had occurred on March 1, 1992, the beginning of fiscal 1993. The pro-forma amounts do not purport to be indicative of the results that actually would have been obtained had the acquisition taken place on March 1, 1992, nor are they intended to be a projection of future results (dollars in thousands, except per share data): 1994 1993 (Unaudited) Net Sales $1,286,700 $1,243,300 Income from continuing operations $ 52,100 $ 42,800 Earnings per share from continuing operations: Primary $ 1.23 $ 1.02 Fully-diluted $ 1.11 $ .94 38 MARK IV INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3. Discontinued Operations Effective May 31, 1993 (the "measurement date") the Company decided to sell its non-core business units. Such units have been accounted for as discontinued operations, and their results of operations have been excluded from continuing operations in the consolidated statement of income for fiscal 1994. The consolidated statements of income for fiscal 1993 and 1992 have been restated to exclude the discontinued operations in a similar manner. In June 1993, the Company sold certain of its non-core instruments businesses for cash consideration of approximately $35,000,000. The businesses sold had sales of approximately $54 million for the Company's fiscal year ended February 28, 1993. The proceeds from the sale were used to repay a portion of the debt incurred to finance the acquisition of PTI, as discussed in Note 2. The remaining net assets of discontinued operations as of February 28, 1994 amount to approximately $28,100,000. Such amounts have been segregated in the balance sheet and offset by a corresponding amount of long-term debt, on the assumption that the net sale proceeds will equal or exceed the net asset amount, and all such proceeds will be utilized to offset existing borrowings of the Company. The results of operations of these discontinued businesses in fiscal 1993 and 1992 were as follows (dollars in thousands): 1993 1992 Sales $136,300 $141,300 Income before provision for taxes $ 5,600 $ 3,100 Provision for taxes 2,000 1,100 Income from discontinued operations $ 3,600 $ 2,000 Sales of the discontinued operations in fiscal 1994 were $26,800,000 through the measurement date, and approximately $42,300,000 from the measurement date through February 28, 1994. The related income from these operations has been deferred until the ultimate disposition of the businesses, which is expected to occur in fiscal 1995. 4. Accounts Receivable Accounts receivable are reflected net of allowances for doubtful accounts of $17,600,000 and $13,000,000 at February 28, 1994 and 1993, respectively. The amount at February 28, 1993 includes $800,000 related to discontinued operations. 39 MARK IV INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 5. Inventories Inventories include contracts in process, and are stated at the lower of cost or market. The cost of inventories is determined primarily on the last-in, first-out (LIFO) method. As a result of the fair value determination of inventories required by the purchase method of accounting for acquired companies as of their acquisition date, LIFO costs exceed FIFO costs by approximately $35,000,000 and $39,800,000 at February 28, 1994 and 1993, respectively. The excess at February 28, 1993 includes $2,800,000 related to discontinued operations. Inventories consist of the following at February 28, 1994 and 1993 (dollars in thousands): 1994 1993 (As Restated) Raw materials, parts, and sub-assemblies $ 67,700 $ 70,300 Work-in-process 43,500 62,400 Finished goods 157,100 123,500 268,300 256,200 Less progress billings 3,300 12,400 Inventories $265,000 $243,800 The amount at February 28, 1993 includes $21,100,000 related to discontinued operations, which is net of related progress billings of $10,900,000. 6. Property, Plant and Equipment Property, plant and equipment is stated at cost and consists of the following at February 28, 1994 and 1993 (dollars in thousands): 1994 1993 (As Restated) Land and land improvements $ 35,700 $ 31,800 Buildings 115,700 99,600 Machinery and equipment 324,700 296,700 Total property, plant and equipment 476,100 428,100 Less accumulated depreciation 110,800 109,800 Property, plant and equipment, net $365,300 $318,300 The cost of property, plant and equipment retired or otherwise disposed of, and the accumulated depreciation thereon, are eliminated from the asset and related accumulated depreciation accounts, and any resulting gain or loss is reflected in income. The net amount at February 28, 1993 includes $31,000,000 related to discontinued operations. 40 MARK IV INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company provides for depreciation of plant and equipment on methods and rates designed to amortize the cost of such plant and equipment over its useful life. Depreciation is provided principally on the straight-line method and amounted to approximately $33,200,000; $29,800,000; and $26,900,000 in fiscal 1994, 1993 and 1992, respectively. Of such amounts, approximately $4,000,000 and $3,600,000 relates to discontinued operations in fiscal 1993 and 1992, respectively. 7. Cost in Excess of Net Assets Acquired and Deferred Charges Cost in excess of net assets acquired, net of accumulated amortization, amounted to approximately $196,100,000 and $187,800,000 at February 28, 1994 and 1993 respectively. The change in fiscal 1994 includes approximately $33,000,000 related to the Company's PTI acquisition, and also reflects the elimination of approximately $18,200,000 related to the Company's discontinued operations. The costs related to continuing operations are being amortized on the straight-line method over 40-year periods from the acquisition dates of the respective businesses, and resulted in amortization expense of approximately $5,700,000; $4,700,000 and $3,900,000 in fiscal 1994, 1993 and 1992, respectively. Accumulated amortization of such costs was approximately $22,700,000 and $17,000,000 at February 28, 1994 and 1993, respectively. Deferred charges, net of accumulated amortization, amounted to approximately $11,900,000 and $8,200,000 at February 28, 1994 and 1993, respectively. Such amounts include costs incurred in connection with the issuance of the Company's credit agreements and the sale of subordinated debentures, and are being amortized over their respective terms. 8. Long-Term Debt Long-term debt consists of the following at February 28, 1994 and 1993 (dollars in thousands): 1994 1993 Senior debt: Credit Agreement $140,000 $170,000 Multi-Currency Agreement 48,400 - Other items 40,500 30,200 Total 228,900 200,200 Less current maturities (5,800) (5,900) Less amounts allocated to discontinued operations (28,100) - Net senior debt 195,000 194,300 Subordinated debt: 8-3/4% Senior Subordinated Notes 258,000 - 6-1/4% Convertible Subordinated Debentures 114,200 114,300 13-3/8% Subordinated Debentures - 188,500 Total subordinated debt 372,200 302,800 Total long-term debt $567,200 $497,100 41 MARK IV INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In July 1993, the Company entered into a Credit Agreement providing for a $300,000,000 five-year revolving credit facility with a group of financial institutions. A portion of the credit facility was used to repay amounts outstanding under the Company's revolving credit facility dated June 19, 1990, which was then canceled. Interest on the Credit Agreement is based on a pricing grid which is either prime per annum or, under a LIBOR option, LIBOR plus 0.375% to LIBOR plus 1.375% per annum based on the Company's senior unsecured long-term debt ratings (as defined in the Credit Agreement). The Company is currently paying interest at LIBOR plus 0.75% on borrowings under the Credit Agreement. The Credit Agreement contains certain affirmative and negative covenants customary in an agreement of this nature, and is secured by the stock of certain of the Company's subsidiaries. In May 1993, the Company entered into a revolving credit agreement ("Multi- Currency Agreement") providing for a five year multi-currency revolving credit facility with a group of financial institutions in the U.S. and Europe. The Multi-Currency Agreement provides for a revolving loan commitment for the first two years of the equivalent of $100,000,000. The commitment declines by $12,500,000 at each of six semi-annual dates beginning in June 1995, with the remaining $25,000,000 of commitment expiring in May 1998. Interest rates on borrowings under the Multi-Currency Agreement are subject to change based on a specified pricing grid which increases from LIBOR plus 0.625% to LIBOR plus 1.375% per annum based on the Company's senior debt rating (as defined in the Multi-Currency Agreement). The Company is currently paying interest at LIBOR plus 1.25% on borrowings under the Multi-Currency Agreement. The Multi- Currency Agreement also contains certain affirmative and negative covenants customary in an agreement of this nature. In March 1993, the Company completed a public offering of $258,000,000 principal amount of its 8-3/4% Senior Subordinated Notes due April 2003. A substantial portion of the net proceeds from the sale of the notes was used to fund the retirement of the Company's 13-3/8% Subordinated Debentures. There are no sinking fund requirements on the Senior Subordinated Notes and they may not be redeemed until April 1998. At such date they are redeemable at 104.375% of principal amount, and thereafter at an annually declining premium over par until April 2001 when they are redeemable at par. The Indenture limits the payment of dividends and the repurchase of capital stock, and includes certain other restrictions and limitations customary with subordinated indebtedness of this type. The 6-1/4% Convertible Subordinated Debentures are convertible into shares of the Company's common stock at a conversion price of $14.37 per share, subject to adjustment. The Company is required to make sinking fund payments commencing February 2002, calculated to retire 50% of the debentures prior to their February 2007 maturity. The debentures may not be redeemed until February 1995. At such date they are redeemable at 104.375% of principal amount, and thereafter at an annually declining premium over par until February 2002, when they are redeemable at par. 42 MARK IV INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In March 1993, the Company offered to purchase its 13-3/8% Subordinated Debentures for a cash price of $1,137.50 per $1,000 principal amount, plus accrued interest. As a result of the offer, and certain open-market purchases, the Company acquired approximately $138,000,000 principal amount of these debentures. The Company then completed an "in-substance defeasance" in which approximately $60,400,000 was deposited in an irrevocable trust to cover both the remaining outstanding principal amount ($52,000,000) and the related interest expense requirements of these debentures. The Company recognized an extraordinary loss, net of tax, of approximately $21,700,000 as a result of the extinguishment of this debt in fiscal 1994. The Company also acquired or defeased approximately $63,000,000 and $122,000,000 of its indebtedness and recognized an extraordinary loss, net of tax, of $3,700,000 and $4,500,000 in fiscal 1993 and 1992, respectively. The fair value of the 6-1/4% Convertible Subordinated Debentures exceeds their recorded value by approximately $48,000,000 as of February 28, 1994, based upon the quoted market value of the debentures as of that date. The fair value of the 8-3/4% Senior Subordinated Notes exceeds their recorded value by approximately $6,000,000 as of February 28, 1994, based upon the quoted market value of such notes as of that date. Since the rest of the Company's notes payable and senior debt are primarily floating rate debt, their recorded amounts approximate their fair values as of February 28, 1994. The recorded amounts for other financial instruments, such as cash and accounts receivable, approximate their fair value. Annual maturities of the Company's long-term debt for the next five fiscal years are: 1995-$5,800,000; 1996-$18,200,000; 1997-$4,000,000; 1998- $26,900,000; and 1999-$138,200,000. 9. Leases The Company has operating leases which expire at various dates through 2002 with, in some instances, renewal privileges. Certain leases provide for escalation of the rentals primarily for increases in maintenance costs and property taxes. Total rental expense for continuing operations under operating leases was $15,900,000; $15,900,000; and $15,400,000 in fiscal 1994, 1993 and 1992, respectively. Minimum rental payments under operating leases of continuing operations and having an initial or remaining noncancellable term in excess of 12 months are: 1995-$13,200,000; 1996-$11,200,000; 1997-$10,100,000; 1998-$9,100,000; 1999-$7,400,000; 2000 and thereafter $22,100,000. 43 MARK IV INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 10. Income Taxes The company adopted Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes (SFAS No. 109), in fiscal 1994. The adoption of this standard changed the Company's method of accounting for income taxes from the deferred method to the liability method. The Company adopted SFAS No. 109 retroactively by restating prior years' financial statements for all years back to and including fiscal 1986. Income from continuing operations and the related provision for taxes under SFAS No. 109 for fiscal 1994, 1993 and 1992 consists of the following (dollars in thousands): 1994 1993 1992 (As Restated) (As Restated) Income from continuing operations before provision for taxes: United States $45,800 $41,400 $27,800 Foreign 35,900 20,600 13,700 Total income from continuing operations before provision for taxes $81,700 $62,000 $41,500 Provision for taxes on income from continuing operations: Currently payable: United States $14,500 $10,900 $ 6,900 Foreign 5,300 8,100 5,600 Total currently payable 19,800 19,000 12,500 Deferred: United States 3,600 4,200 2,800 Foreign 7,200 (300) (600) Total deferred 10,800 3,900 2,200 Total provision for taxes $30,600 $22,900 $14,700 The cumulative effect of the January 1993 increase in the U.S. statutory tax rate was not significant. As a result of the exercise of certain employees' incentive stock options, the Company realized a tax benefit of $1,700,000 which has been recognized as a direct increase in additional paid-in capital. 44 MARK IV INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The tax effects of temporary differences which give rise to a significant portion of deferred tax assets (liabilities) consist of the following at February 28, 1994 and 1993 (dollars in thousands): 1994 1993 ____ ____ Current: Accounts receivable $ 3,900 $ 3,000 Inventories (9,500) (9,500) Compensation related 3,400 3,100 Tax credit and net operating loss carryforwards 9,000 - Other items 7,500 800 Total current asset (liability) 14,300 (2,600) Valuation allowance (4,000) - Net current asset (liability) $ 10,300 $ (2,600) Non-current: Fixed and intangible assets $(39,500) $(47,800) Pension and other benefit plans (21,400) (31,800) Tax credit and net operating loss carryforwards 29,400 35,900 Capital loss carryforwards 11,300 19,300 All other items 19,600 23,400 Total non-current liability (600) (1,000) Valuation allowance (16,800) (19,300) Net non-current liability $(17,400) $(20,300) The net current amount is included in other current assets at February 28, 1994, and in income taxes payable at February 28, 1993. The net non-current amount is included in other non-current liabilities at February 28, 1994 and 1993. The current valuation allowance offsets foreign tax benefits established in the PTI acquisition which may not be realized. To the extent the benefits are realized, the valuation allowance will be reversed with a corresponding reduction in the cost in excess of net assets acquired resulting from the PTI acquisition. The non-current valuation allowance is primarily attributable to the capital loss carryforwards, which are available to use primarily through fiscal 1996. The change in the non-current valuation allowance relates to capital loss carryforward benefits realized in discontinued operations. 45 MARK IV INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Management of the Company has determined, based on the Company's history of prior operating earnings and its expectations for the future, that operating income will more likely than not be sufficient to utilize the tax credit and net operating loss carryforwards in their carryforward periods, which run substantially through fiscal 2007. The undistributed earnings of the Company's foreign subsidiaries have been reinvested in each country, and are not expected to be remitted back to the parent company. Accordingly, no federal income taxes have been provided on such earnings as of February 28, 1994. The determination of the possible tax effect relating to such reinvested income is not practicable. The provision for taxes on income from continuing operations for fiscal 1994, 1993, and 1992 differs from the amount computed using the United States statutory income tax rate as follows (dollars in thousands): 1994 1993 1992 ____ ____ ____ (As Restated) (As Restated) Expected tax at United States statutory income tax rate $28,600 $21,100 $14,100 Permanent differences 1,200 900 400 State and local income taxes 1,200 600 700 Tax credits (500) (400) (800) Foreign tax rate differences 100 700 300 Total provision for taxes $30,600 $22,900 $14,700 As a result of prior acquisitions, the retroactive adoption of SFAS No. 109 resulted in increases in property, plant and equipment of $17,800,000; cost in excess of net assets acquired of $43,000,000; deferred tax assets of $19,000,000 and deferred tax liabilities of $79,800,000. The adoption of SFAS No. 109 also resulted in a cumulative decrease in stockholders' equity as of February 28, 1991 of $7,800,000, which adjustment included increased tax expense for preceding years through fiscal 1991 of $800,000. The increase in property, plant and equipment and cost in excess of net assets acquired resulted in increased depreciation and amortization in prior years of approximately $2,500,000 per year, of which $2,000,000 relates to continuing operations, and $500,000 relates to discontinued operations. The effects of this accounting change on the results of continuing operations for fiscal 1993 and 1992 are as follows (dollars in thousands, except per share data): 1993 1992 ____ ____ Income from continuing operations before provision for taxes $(2,000) $(2,000) Provision for taxes (600) 300 Income from continuing operations $(2,600) $(1,700) Income per share from continuing operations: Primary $ (.06) $ (.05) Fully-diluted $ (.05) $ (.04) 46 MARK IV INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 11. Pension and Profit Sharing Plans The Company has a variety of defined benefit plans covering both union and non-union employees. Under the union plans, employee benefits are computed based on a dollar amount multiplied by the number of years of service. Benefits under the non-union plans are computed in a similar manner for certain plans, and based on the employees' earnings in other plans. The following table sets forth the funded status of the defined benefit plans and the amounts recognized in the Company's consolidated balance sheets at February 28, 1994 and 1993 (dollars in thousands): 1994 1993 ____ ____ (As Restated) Actuarial present value of benefit obligations: Vested $(233,300) $(202,900) Accumulated $(236,100) $(204,800) Projected $(241,900) $(211,100) Plan assets at fair value 314,300 300,100 Plan assets in excess of projected benefit obligation 72,400 89,000 Unrecognized net loss and differences in assumptions 36,400 6,800 Unrecognized prior service costs 3,100 2,600 Prepaid pension cost recognized in the consolidated balance sheets $ 111,900 $ 98,400 ========= ========= The plans' assets consist of corporate and government bonds, guaranteed investment contracts, listed common stocks and real estate investments. Included in the plans' assets are common stock of the Company with a market value of approximately $16,500,000 and the Company's 6-1/4% and 8-3/4% subordinated debentures with a market value of $11,800,000 at February 28, 1994. Net pension income for the defined benefit plans in fiscal 1994, 1993, and 1992 includes the following components (dollars in thousands): 1994 1993 1992 (As Restated) (As Restated) Service cost-benefits earned during the period $ (2,900) $ (2,700) $ (2,500) Interest cost on projected benefit obligation (18,200) (17,300) (16,900) Actual return on assets 32,100 36,600 36,400 Net amortization and deferral 2,500 (4,100) (6,300) Net pension income $ 13,500 $ 12,500 $ 10,700 ======== ======== ======== 47 MARK IV INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following assumptions were utilized to measure net pension income for each of the fiscal years presented, as well as the projected benefit obligation as of the end of the fiscal years: 1994 1993 1992 ____ ____ ____ Discount rate 7.75% 9.00% 9.00% Expected long-term rate of return 12.00% 12.00% 12.00% Average increase in compensation 5.00% 5.00% 5.00% As a result of the change in the discount rate, the projected benefit obligation as of February 28, 1994 is approximately $25,000,000 more than it would have been using the previous 9% discount rate. The change had no effect on net pension income in fiscal 1994, and is expected to reduce pension income in fiscal 1995 by approximately $500,000. The Company also has defined contribution pension and profit sharing plans for a significant number of its salaried and hourly employees. The Company's contributions to these plans is based on various percentages of compensation, and in some instances is based upon the amount of the employees' contributions to the plans. The annual cost of these plans amounted to approximately $6,700,000; $6,600,000; and $6,000,000 in fiscal 1994, 1993 and 1992, respectively. 12. Postretirement Benefits The Company currently provides health and life insurance benefits to a number of existing retirees from certain of its operations under the provisions of a number of different plans. Contributions currently required to be paid by the retirees towards the cost of such plans range from zero to 100%. The Company also has a number of active employees who might receive such benefits upon their retirement. The plans which relate to retirees and active non-union employees include provisions which allow the Company to increase the cost to participants, or otherwise modify or terminate them as determined by management. The plans which relate to active union employees are subject to modification in the same manner as are all other compensation and benefits matters in the process of the Company's negotiations of contracts covering its union employees. The cash cost incurred by the Company for its retirees amounted to approximately $4,600,000; $3,600,000; and $3,300,000 in fiscal 1994, 1993 and 1992, respectively. Through fiscal 1993, the Company accounted for the cost of these postretirement benefits on the cash basis as they were paid. 48 MARK IV INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Financial Accounting Standards Board (FASB) issued Statement No. 106, Employers Accounting for Postretirement Benefits Other Than Pensions (SFAS No. 106) in December 1990. SFAS No. 106 requires the estimated present-value of the Company's liability for its commitments to provide health and life insurance benefits to its retirees to be included in the balance sheet, either entirely as of the date of adoption, or over a transition period. Such liability is referred to as the Accumulated Benefit Obligation (ABO). The related expense is required to be recognized on the accrual method over the remaining years of the employees' active service, up to the dates of individual eligibility to retire and begin receiving the benefit. The Company adopted this new accounting rule as of March 1, 1993, the beginning of fiscal 1994. Prior to its adoption of SFAS No. 106, the Company advised the participants of certain plan design changes, including the establishment of caps on the amount of annual expense to be incurred by the Company. The participants are now required to pay 100% of the excess of costs incurred over the established annual caps, in addition to whatever contribution percent is required of the retirees for amounts incurred up to the amount of the caps. Actuarial calculations indicate the Company's actual costs are not expected to reach the substantial majority of the caps until fiscal 1996, and assume an annual health-care cost trend rate of 10% until that time. The Company adopted SFAS No. 106 by recognizing the ABO entirely in fiscal 1994. The ABO was calculated on an actuarial basis using a 9% discount rate, and amounted to approximately $40,000,000 as of the March 1, 1993 adoption date. Since the Company also adopted SFAS No. 109 - Accounting for Income Taxes at the same date, the Company recognized a deferred tax asset of $14,000,000 representing the future tax benefits to be received related to the ABO. The resulting net charge of $26,000,000 ($.51 per fully diluted share) from the adoption of SFAS No. 106 has been included as the cumulative effect of a change in accounting principle in the consolidated statement of income for fiscal 1994. The company continues to fund such costs on the cash-basis, and such cash costs for these plans in fiscal 1994 have been charged against the ABO. The ABO for fiscal 1994, and the reconciliation to the amount provided in the consolidated balance sheet, is comprised of the following elements (dollars in thousands): Fiscal 1994 _______________________ End Beginning of the year of the year ___________ ___________ Accumulated post-retirement benefit obligation: Retirees and beneficiaries receiving benefits $34,700 $29,300 Active employees, fully eligible for benefits 4,600 4,900 Active employees, not fully eligible for benefits 6,500 5,800 Total accumulated benefit obligation 45,800 40,000 Unrecognized net loss (6,600) - Post-retirement benefit liability recognized in the balance sheet $39,200 $40,000 ======= ======= 49 MARK IV INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company's postretirement benefit expense for fiscal 1994 on the accrual method was $3,800,000. The expense is made up of a service cost for active employees of $400,000 and interest on the ABO of $3,400,000. Such cost was approximately $800,000 less than the cash-basis expense for the year, or $500,000 after tax effects ($.01 per share). The unrecognized net loss is primarily the result of a change in the discount rate from 9% at the beginning of the year to 7-3/4% at the end of the year, plus the excess of the cash- basis expense over the accrual basis expense. The change in the discount rate and the amortization of the unrecognized net loss will not have a significant effect on the Company's postretirement benefit expense for fiscal 1995. As a result of the cost caps, a 1% change in the health-care cost trend rate would have a nominal effect on the Company's ABO and annual cost. 13. Legal Proceedings A subsidiary of the Company was the defendant in a patent infringement case which was tried in the latter part of fiscal 1994. The decision of the Court was reached in April 1994 in favor of the plaintiff, awarding them damages and issuing an injunction which prohibits the Company from any further use of the technology at issue. Prior to the court's decision, the Company had stopped using the technology in question; therefore, the injunction will have no impact on the Company's future sales and marketing efforts. If the judgement for the plaintiff is upheld on appeal, the after-tax cost to the Company could be in the range of $2,300,000. Management of the Company has been advised by its legal counsel as to the merits of its arguments, and continues to believe it has not infringed on the plaintiff's patent. In view of the above, management has directed its legal counsel to pursue the appeal process as diligently as possible. Management believes the ultimate conclusions of law will be decided upon by the appeals court in favor of the Company. However, in view of the trial court's findings, an accrual has been established to provide for the cost of the resolution of this issue in the event the Company is not successful. The litigation accrual did not have an effect on income, since the effects of establishing it have been offset by the reversal of accrued liabilities related to an acquisition in fiscal 1991 which management has determined are no longer required. The Company is involved in various other legal and environmental related issues. In the opinion of the Company's management, the ultimate cost to resolve these matters will not have a material adverse effect on the Company's financial position. 14. Stockholders' Equity and Stock Options The Company's Board of Directors declared five percent stock dividends which were distributed in April 1994, May 1993 and July 1992, and a three-for-two stock split in fiscal 1992. All earnings per share amounts have been calculated as if the stock distributions had occurred on March 1, 1991, the beginning of fiscal 1992. As a result of these stock distributions, the conversion price of the Company's 6-1/4% Convertible Subordinated Debentures is $14.37 per share and approximately 7,944,000 shares have been reserved for such conversion. 50 MARK IV INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In December 1993, the Company's Board of Directors authorized the repurchase of approximately 4,200,000 shares, or approximately 10 percent of the Company's outstanding common stock. This authorization, in addition to authorizations remaining from previous years, gives the Company the authority to repurchase a total of 6,400,000 additional shares, or 15% of its outstanding common stock as of February 28, 1994. The Company did not acquire any of its common stock in fiscal 1994 or fiscal 1993. The Company's Incentive Stock Option Plans provide for granting officers and other key employees options to purchase the Company's common stock at an exercise price equal to 100% of the market price on the date of grant. The options may be exercised in cumulative annual increments of 25% commencing one year after the date of grant, and have a maximum duration of seven to ten years. There were 1,449,467 and 1,447,735 shares reserved for the future granting of options at February 28, 1994 and 1993. The following table summarizes the Company's stock option transactions for fiscal 1994, 1993 and 1992: 1994 1993 1992 _________________ ________________ _______________ Average Average Average Option Option Option Option Option Option Shares Price Shares Price Shares Price ______ ______ ______ _____ ______ ______ Balance at beginning of year 737,285 $ 7.65 843,097 $ 4.25 526,175 $2.94 Activity during the year: Granted 13,650 $19.29 233,399 $13.05 342,078 $6.26 Exercised (167,314) $ 3.88 (335,738) $ 3.00 (24,941) $2.65 Canceled (15,383) $ 9.64 (3,473) $ 6.19 (215) $3.49 Balance at end of year: Outstanding 568,238 $ 8.98 737,285 $ 7.65 843,097 $4.25 ======= ======= ======= Exercisable 255,050 $ 7.17 258,841 $ 4.12 486,661 $2.90 ======= ======= ======= The Company's Board of Directors established a Restricted Stock Plan in fiscal 1993. In fiscal 1994, the Company granted certain executives restricted stock awards with respect to 336,262 shares at $.01 par value per share. As a result, common stock and additional paid-in capital have been increased by a total of $6,600,000 based upon the market value of the stock as of the grant date. The restrictions on the stock lapse after a five year period, or sooner if certain performance measurements of the Company are achieved. Therefore, the expense will be recognized as it is earned over the restriction period, with $800,000 recognized as an expense in fiscal 1994. The unearned balance of $5,800,000 as of February 28, 1994 has been presented as an offset to additional paid-in capital. Approximately 50,000 shares remain available for issuance under this plan as of February 28, 1994. 51 MARK IV INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS At a special meeting of the company's stockholders in December 1991, the Company's Certificate of Incorporation was amended to increase the authorized shares of the Company's common stock, from 25,000,000 to 100,000,000 and to increase the authorized shares of the Company's preferred stock, from 1,000,000 to 10,000,000. There are no shares of preferred stock outstanding at the present time. 15. Industry Segments and Geographic Areas As a result of the Company's discontinuance and sale of certain of its non- core businesses in fiscal 1994 and 1993, and its PTI acquisition in June 1993, it has modified its industry segment definitions and descriptions for fiscal 1994. The Company now classifies its operations into the following three core business segments: (i) Power and Fluid Transfer, which includes the design and manufacture of automotive aftermarket and OEM belts, hose, couplings, accessory drive systems and fluid transfer assemblies; industrial belts, hose and fittings, and garden hose. (ii) Transportation, which includes the design and manufacture of products and systems for mass transit, such as door systems, lighting, and informational display devices and applications for bus and rail transit vehicles; traffic, such as advanced traffic control and management systems, directional information and warning signs for roads and highways, and automatic (intelligent) vehicle identification for toll collection and traffic control; and commercial aviation, such as aircraft interior lighting and air- diffusion, and aircraft emergency lighting and night vision compatibility. (iii) Professional Audio, which includes the design and manufacture of products and systems used primarily in the high-performance professional audio market, such as professional performance microphones, speakers, mixers, and amplifiers; high-fidelity public address and musical instrument loudspeaker systems; audio signal processors, sound reinforcement equipment, and sound enhancement and noise canceling equipment. 52 MARK IV INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The continuing operations and classifications for fiscal 1993 and 1992 have been presented in a manner consistent with the information presented for fiscal 1994. All sold or discontinued operations have been excluded from the following industry segment and geographic information, and included in the Corporate category where applicable. Information concerning the Company's business segments for fiscal 1994, 1993 and 1992 is as follows (dollars in thousands): 1994 1993 1992 __________ ____________ ____________ (As Restated) (As Restated) NET SALES TO CUSTOMERS Power and Fluid Transfer $ 852,100 $ 709,400 $ 635,200 Transportation 218,600 199,500 199,900 Professional Audio 173,500 176,800 169,200 Total net sales to customers $1,244,200 $1,085,700 $1,004,300 ========== ========== ========== OPERATING INCOME Power and Fluid Transfer $ 97,800 $ 79,200 $ 67,000 Transportation 27,000 24,900 27,100 Professional Audio 21,900 22,000 23,900 Total operating income 146,700 126,100 118,000 General corporate (14,900) (12,500) (9,400) Interest expense and loss on securities transactions (50,100) (51,600) (67,100) Income from continuing operations, before provision for taxes $ 81,700 $ 62,000 $ 41,500 ========== ========== ========== IDENTIFIABLE ASSETS Power and Fluid Transfer $ 826,000 $ 622,500 $ 618,400 Transportation 236,100 220,600 194,900 Professional Audio 162,700 158,900 159,400 General corporate 57,500 122,800 131,800 Total identifiable assets $1,282,300 $1,124,800 $1,104,500 ========== ========== ========== DEPRECIATION AND AMORTIZATION Power and Fluid Transfer $ 27,500 $ 19,100 $ 16,500 Transportation 7,100 6,700 5,600 Professional Audio 4,500 4,400 4,300 General corporate 2,600 1,900 1,900 Total depreciation and amortization $ 41,700 $ 32,100 $ 28,300 ========== ========== ========== CAPITAL OUTLAYS Power and Fluid Transfer $ 31,900 $ 25,800 $ 13,100 Transportation 7,000 6,800 4,300 Professional Audio 2,500 1,700 1,600 General corporate - 1,200 1,700 Total capital outlays $ 41,400 $ 35,500 $ 20,700 ========== ========== ========== 53 MARK IV INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Operating income represents total revenues less operating expenses, and excludes general corporate expenses, interest expense and income taxes. Litigation costs are considered to be corporate expenses. Identifiable assets are those assets employed in each segment's operation, including an allocated value to each segment of cost in excess of net assets acquired. Corporate assets consist primarily of cash, marketable securities, investments and assets not employed in production and net assets of discontinued operations. The Company's foreign operations are located primarily in Europe, and to a lesser extent in Canada and the Far East. Information concerning the Company's operations by geographic area for fiscal 1994, 1993 and 1992 is as follows (dollars in thousands): 1994 1993 1992 __________ _____________ ____________ (As Restated) (As Restated) NET SALES TO CUSTOMERS United States $ 884,500 $ 815,200 $ 798,500 Foreign 359,700 270,500 205,800 Total net sales to customers $1,244,200 $1,085,700 $1,004,300 ========== ========== ========== OPERATING INCOME United States $ 105,700 $ 102,100 $ 99,700 Foreign 41,000 24,000 18,300 Total operating income $ 146,700 $ 126,100 $ 118,000 ========== ========== ========== IDENTIFIABLE ASSETS United States $ 898,700 $ 916,800 $ 873,400 Foreign 383,600 208,000 231,100 Total identifiable assets $1,282,300 $1,124,800 $1,104,500 ========== ========== ========== The net sales to customers reflect the sales of the operating units in each geographic area to unaffiliated customers. Export sales from the United States to unaffiliated customers were $71,300,000; $67,800,000 and $66,500,000 in fiscal 1994, 1993, and 1992, respectively. Inter-segment sales are not material. Sales between geographic areas are accounted for at prices which are competitive with prices charged to unaffiliated customers. 54
MARK IV INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 16. Quarterly Financial Data and Information (Unaudited) The following table sets forth the unaudited quarterly results of operations for each of the fiscal quarters in the years ended February 28, 1994 and 1993. As a result of the decision to discontinue the Company's non-core businesses and the adoption of SFAS No. 109, the Company's results of operations for each of its fiscal quarters in the year ended February 28, 1993 have been restated (dollars in thousands, except per share data): First Second Third Fourth Total Fiscal 1994 Quarter Quarter Quarter Quarter Year ___________ _______ _______ _______ _______ _____ Net sales $287,800 $316,600 $320,000 $319,800 $1,244,200 Gross profit (a) $102,000 $110,800 $113,800 $114,100 $ 440,700 Income from continuing operations $ 13,600 $ 13,100 $ 12,800 $ 11,600 $ 51,100 Extraordinary items (21,700) - - - (21,700) Cumulative effect of accounting change (26,000) - - - (26,000) ________ _________ ________ _________ __________ Net income $(34,100) $ 13,100 $ 12,800 $ 11,600 $ 3,400 ======== ========= ======== ========= ========== Income per share (b) (c): Primary: Continuing operations $ .32 $ .31 $ .30 $ .27 $ 1.20 Extraordinary items (.51) - . - (.51) Cumulative effect of accounting change (.62) - - - (.61) ________ _________ ________ _________ __________ Net income $ (.81) $ .31 $ .30 $ .27 $ .08 ======== ========= ======== ========= ========== Fully-diluted: Continuing operations $ .29 $ .28 $ .27 $ .25 $ 1.09 Extraordinary items (.43) - - - (.43) Cumulative effect of accounting change (.51) - - - (.51) ________ _________ ________ _________ __________ Net income $ (.65) $ .28 $ .27 $ .25 $ .15 ======== ========= ======== ========= ========== Fiscal 1993 ___________ Net sales $271,000 $268,600 $270,700 $ 275,400 $1,085,700 Gross profit (a) $ 97,200 $ 95,100 $ 98,000 $ 96,600 $ 386,900 Income from continuing operations $ 10,300 $ 8,900 $ 10,800 $ 9,100 $ 39,100 Income from discontinued operations 1,300 2,400 500 (600) 3,600 Extraordinary items - (400) (1,600) (1,700) (3,700) ________ ________ ________ _________ _________ Net income $ 11,600 $ 10,900 $ 9,700 $ 6,800 $ 39,000 ======== ======== ======== ========= ========= Income per share (b) (c): Primary: Continuing operations $ .25 $ .21 $ .26 $ .22 $ .93 Discontinued operations .03 .06 .01 (.02) .09 Extraordinary items - (.01) (.04) (.04) (.09) ________ ________ ________ _________ _________ Net income $ .28 $ .26 $ .23 $ .16 $ .93 ======== ======== ======== ========= ========= Fully-diluted: Continuing operations $ .23 $ .20 $ .24 $ .20 $ .87 Discontinued operations .02 .05 .01 (.01) .07 Extraordinary items - (.01) (.03) (.03) (.07) ________ ________ ________ _________ _________ Net income $ .25 $ .24 $ .22 $ .16 $ .87 ======== ======== ======== ========= ========= 55 MARK IV INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ___________________________________ (a) Excluding depreciation expense. (b) The sum of the quarterly amounts do not equal the total as a result of the common stock transactions discussed in Note 14. The impact of those transactions on the determination of the weighted average number of shares outstanding is different in each quarter, and for the year in total. (c) Restated to reflect the five percent stock dividend issued in April 1994.
56 ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III Items 10-13 The information required for Items 10, 11, 12 and 13 has been omitted as such information will be set forth in the definitive Proxy Statement for the Company's 1994 Annual Meeting of Stockholders which will be filed with the Securities and Exchange Commission not later than 120 days after February 28, 1994, which information is incorporated herein by reference. PART IV ITEM 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K Page (a) (1) Financial Statements Report of Independent Accountants for each of the three fiscal years in the period ended February 28, 1994. . . . . . . . . . . . . . . . . . .27 Financial Statements: Consolidated Balance Sheets at February 28, 1994 and 1993 . . . . .28 Consolidated Statements of Income for each of the three fiscal years in the period ended February 28, 1994 . . . . . . . . . . . . . . . . . . . . . . . .29 Consolidated Statements of Stockholders' Equity for each of the three fiscal years in the period ended February 28, 1994 . . . . . . . . . . . . . . . . . . . . .30 Consolidated Statements of Cash Flows for each of the three fiscal years in the period ended February 28, 1994. . . . . . . . . . . . . . . .31 Notes to Consolidated Financial Statements. . . . . . . . . . . . .32 (2) Financial Statement Schedules Report of Independent Accountants for each of the three fiscal years in the period ended February 28, 1994. . . . . . . . . . . . . . . . . .58 Financial Statement Schedules: V. Property, plant and equipment cost . . . . . . . . . . . . .59 VI. Accumulated depreciation and amortization of property, plant and equipment. . . . . . . . . . . . . .60 VIII. Valuation and qualifying accounts. . . . . . . . . . . . . .61 X. Supplementary income statement information . . . . . . . . .62 All other schedules and statements have been omitted as the required information is inapplicable or is presented in the financial statements or notes thereto. 57 (b) Reports on Form 8-K No reports on Form 8-K were required to be filed pertaining to events occurring during the quarter ended February 28, 1994. (c) Exhibits 2.1 Share Purchase Agreement dated April 29, 1993 among Mark IV Industries, Inc., a Delaware Corporation, and its indirect wholly-owned subsidiary, Dayco Italy, S.p.A., an Italian Corporation, and Pirelli S.p.A., an Italian Corporation (incorporated by reference to exhibit 2.1 to the Company's Current Report on Form 8-K dated May 27, 1993, as filed on June 17, 1993). All schedules and other attachments to this exhibit, as identified on the last page of the exhibit, have been omitted. 3.1 Certificate of Incorporation, as amended (incorporated by reference to Exhibit 28.1 to the Company's Registration Statement No. 33-45215 on Form S-3, as filed with the SEC on January 24, 1993). 4.1 Indenture dated as of March 15, 1989 between the Company and the First National Bank of Boston, as Trustee (including the form of 13-3/8% Subordinated Debentures due March 15, 1999) (incorporated by reference to Exhibit 4.10 to the Company's Current Report on Form 8-K, dated May 23, 1989). 4.2 Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.11 to Amendment No. 1 to the Registrant's Registration Statement No. 33-41553 on Form S-3 dated August 6, 1991). 4.3 By-Laws of the Registrant (incorporated by reference to Exhibit 4.12 To Amendment No. 1 to the Registrant's Registration Statement No. 33-41553 on Form S-3, dated August 6, 1991). 4.4 Conformed copy of the Indenture, dated as of February 13, 1992, between Mark IV Industries, Inc. and Marine Midland Bank, N.A., including the form of 6-1/4% Convertible Subordinated Debentures due February 15, 2007 (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated February 13, 1992). 4.5 Conformed copy of the Indenture, dated as of March 15, 1993, between Mark IV Industries, Inc. and Citibank, N.A.; including the form of Senior Subordinated Notes due April 1, 2003 (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated March 29, 1993). 58 Executive Compensation Plans and Arrangements (10.1 -10.9) 10.1 Employment Agreements dated May 1, 1989 between the Company and each of Sal Alfiero, Clement R. Arrison, Gerald S. Lippes, William P. Montague, John J. Byrne and Frederic L. Cook (incorporated by reference to Exhibit 10.27 to the Company's Form 10-K for the fiscal year ended February 28, 1989). 10.2 Employment Agreement dated July 1, 1989 between the Company and Richard L. Grenolds (incorporated by reference to Exhibit 10.33 to the Company's Form 10-Q for the fiscal quarter ended May 31, 1989). 10.3 Amendment and Restatement of Mark IV Industries, Inc. and Subsidiaries Incentive Stock Option Plan, as of February 8, 1988 (incorporated by reference to Exhibit 10.13.1 to the Company's Registration Statement No. 33-42307 on Form S-8 dated August 19, 1991). 10.4* Amendment and Restatement of the Mark IV Industries, Inc. and Subsidiaries 1992 Incentive Stock Option Plan Effective March 30, 1994. 10.5* Amendment and Restatement of the Mark IV Industries, Inc. 1992 Restricted Stock Plan Effective March 30, 1994. 10.6 Mark IV Industries, Inc. Executive Bonus Plan (incorporated by reference to Exhibit 10.8 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1991). 10.7 First Amendment and Restatement of the Mark IV Industries, Inc. Enhanced Executive Incentive Plan (incorporated by reference to Exhibit 10.16 to the Company's Annual Report on Form 10-K dated February 29, 1992). 10.8* Third Amendment and Restatement of the Non-Qualified Plan of Deferred Compensation of Mark IV Industries, Inc. Effective September 1, 1993. 10.9* First Amendment and Restatement of the Non-Qualified Plan of Deferred Compensation for Non-Employee Directors of Mark IV Industries, Inc. Effective December 1, 1993. 59 Other Material Contract Exhibits 10.10 Revolving Credit Facility Agreement dated May 27, 1993, among Mark IV Industries, Inc., a Delaware Corporation, Dayco Italy S.p.A., an Italian Corporation, Bank of America National Trust and Savings Association, Chemical Investment Bank Limited, and Citibank, N.A. and Chase Manhattan Bank N.A., as co-agents for various financial institutions that are signatories thereto (incorporated by reference to the Company's Current Report on Form 8-K dated May 27, 1993 as filed on June 17, 1993). All schedules and other attachments to this exhibit, as identified on page v of the exhibit, have been omitted. 10.11 Credit Agreement dated July 20, 1993 among Mark IV Industries, Inc., and certain of its subsidiaries and Bank of America National Trust and Savings Association, Continental Bank N.A., Citibank, N.A., The Bank of Nova Scotia, The Bank of New York, The Chase Manhattan Bank, N.A., and certain other banks (incorporated by reference to the Company's Current Report on Form 8-K dated July 20, 1993 as filed on August 4, 1993). All schedules and exhibits listed on page v of this exhibit have been omitted. 11* Statement regarding computation of per share earnings. 21* Subsidiaries of the Registrant. 23* Consent of Independent Accountants. ______________________ * Filed herewith by direct transmission pursuant to the EDGAR program. 60 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of Mark IV Industries, Inc. Our report on the consolidated financial statements of Mark IV Industries, Inc. is included in Item 8 of this Form 10-K. In connection with our audit of such financial statements, we have also audited the related financial statement schedules listed in Item 14 of this Form 10-K. In our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information required to be included therein. COOPERS & LYBRAND Rochester, New York March 29, 1994 61
MARK IV INDUSTRIES, INC. SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT COST Balance at Changes Balance at Beginning Add (Deduct) End of Classifications of Period Additions(a) Retirements (b)(c)(d) Period _______________ _________ ____________ ___________ ____________ ________ Year ended February 28, 1994 Land and land improvements $ 31,800,000 $ 9,000,000 $ (100,000) $ (5,000,000) $ 35,700,000 Buildings 99,600,000 27,200,000 (400,000) (10,700,000) 115,700,000 Machinery and equipment 296,700,000 82,400,000 (6,800,000) (47,600,000) 324,700,000 $428,100,000 $118,600,000 $ (7,300,000) $(63,300,000) $476,100,000 Year ended February 28, 1993 Land and land improvements $ 32,100,000 $ 100,000 $ (300,000) $ (100,000) $ 31,800,000 Buildings 100,500,000 2,300,000 (3,200,000) - 99,600,000 Machinery and equipment 275,900,000 33,100,000 (6,700,000) (5,600,000) 296,700,000 $408,500,000 $ 35,500,000 $(10,200,000) $ (5,700,000) $428,100,000 Year ended February 29, 1992 Land and land improvements $ 26,600,000 $ 400,000 $ - $ 5,100,000 $ 32,100,000 Buildings 107,000,000 3,300,000 (2,200,000) (7,600,000) 100,500,000 Machinery and equipment 261,500,000 30,000,000 (6,600,000) (9,000,000) 275,900,000 $395,100,000 $ 33,700,000 $ (8,800,000) $(11,500,000) $408,500,000 (a) Includes property, plant and equipment of subsidiaries acquired as follows: 1994 1993 1992 Land and land improvements $ 9,000,000 $ - $ 400,000 Buildings 22,800,000 - 2,300,000 Machinery and equipment 45,400,000 200,000 10,300,000 $ 77,200,000 $ 200,000 $13,000,000 (b) Includes foreign currency adjustments of $(14,400,000), $(8,500,000) and $(2,500,000) for fiscal 1994, 1993 and 1992, respectively. (c) Includes purchase price adjustments related to fiscal 1992 and 1991 acquired companies of $2,800,000 and $(9,000,000) for fiscal 1993 and 1992, respectively. (d) Includes amounts related to discontinued operations of $(48,900,000) for fiscal 1994.
62 MARK IV INDUSTRIES, INC. SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT Balance at Changes Balance at Beginning Add (Deduct) End of Classifications of Period Additions Retirements (a)(b) Period _______________ _________ _________ ___________ ___________ __________ Year ended February 28, 1994 Land improvements $ 500,000 $ 100,000 $ - $ (200,000) $ 400,000 Buildings 15,300,000 3,500,000 (100,000) (3,900,000) 14,800,000 Machinery and equipment 94,000,000 29,600,000 (3,600,000) (24,400,000) 95,600,000 $109,800,000 $ 33,200,000 $ (3,700,000) $(28,500,000) $110,800,000 Year ended February 28, 1993 Land improvements $ 300,000 $ 200,000 $ - $ - $ 500,000 Buildings 12,800,000 3,600,000 (800,000) (300,000) 15,300,000 Machinery and equipment 76,000,000 26,000,000 (4,500,000) (3,500,000) 94,000,000 $ 89,100,000 $ 29,800,000 $(5,300,000) $(3,800,000) $109,800,000 Year ended February 29, 1992 Land improvements $ 200,000 $ 100,000 $ - $ - $ 300,000 Buildings 10,100,000 3,700,000 (900,000) (100,000) 12,800,000 Machinery and equipment 56,300,000 23,100,000 (2,700,000) (700,000) 76,000,000 $ 66,600,000 $ 26,900,000 $ (3,600,000) $ (800,000) $89,100,000 (a) Includes foreign currency adjustments of $(7,300,000), $(3,800,000) and $(800,000) for fiscal 1994, 1993 and 1992, respectively. (b) Includes amounts related to discontinued operations of $(21,200,000) for fiscal 1994.
63
MARK IV INDUSTRIES, INC. SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS Additions Charged Deductions Beginning (Credited) Accounts Ending Classifications Balance to Expense Charged Off Other Balance _______________ _________ __________ ___________ _____ _______ Year ended February 28, 1994 Allowance for doubtful accounts $ 13,000,000 $ 3,000,000 $ (3,100,000) $ 4,700,000(a) $ 17,600,000 Year ended February 28, 1993 Allowance for doubtful accounts $ 13,300,000 $ 2,700,000 $ (3,000,000) $ - $ 13,000,000 Year ended February 29, 1992 Allowance for doubtful accounts $ 11,100,000 $ 2,700,000 $ (1,200,000) $ 700,000(b) $ 13,300,000 (a) Represents the following Reserve at date of acquisition of subsidiary $3,900,000 Net change in reserve for customer returns and allowances 2,000,000 Reclassification from other reserves 300,000 Reserves of discontinued operations at February 28, 1993 (800,000) Foreign currency translation adjustment (700,000) $4,700,000 (b) Represents reserve at date of acquisition of subsidiaries.
64
MARK IV INDUSTRIES, INC. SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION (Dollars in Thousands) February 28, February 28, February 29, 1994 1993 1992 ___________ ___________ ___________ Repairs and maintenance $21,505,000 $19,961,000 $17,981,000 Advertising Costs $13,567,000 $12,981,000 $11,278,000
65 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MARK IV INDUSTRIES, INC. By: /s/ Sal H. Alfiero ______________________________ Sal H. Alfiero, Chairman of the Board and Chief Executive Officer Dated: May 24, 1994 Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons in the capacities and on the date indicated. Signature Title Date /s/ Sal H. Alfiero Chairman of the Board May 24, 1994 Sal H. Alfiero and Chief Executive Officer /s/ Clement R. Arrison President, Director May 24, 1994 Clement R. Arrison /s/ William P. Montague Executive Vice President May 24, 1994 William P. Montague and Chief Financial Officer /s/ Frederic L. Cook Senior Vice President- May 24, 1994 Frederic L. Cook Administration /s/ John J. Byrne Vice President-Finance May 24, 1994 John J. Byrne /s/ Richard L. Grenolds Vice President - May 24, 1994 Richard L. Grenolds Chief Accounting Officer /s/ Gerald S. Lippes Secretary and Director May 24, 1994 Gerald S. Lippes /s/ Joseph G. Donohoo Director May 24, 1994 Joseph G. Donohoo /s/ Herb Roth, Jr. Director May 24, 1994 Herb Roth, Jr. 66 Exhibit Index 2.1 Share Purchase Agreement dated April 29, 1993 among Mark IV Industries, Inc., a Delaware Corporation, and its indirect wholly-owned subsidiary, Dayco Italy, S.p.A., an Italian Corporation, and Pirelli S.p.A., an Italian Corporation (incorporated by reference to exhibit 2.1 to the Company's Current Report on Form 8-K dated May 27, 1993, as filed on June 17, 1993). All schedules and other attachments to this exhibit, as identified on the last page of the exhibit, have been omitted. 3.1 Certificate of Incorporation, as amended (incorporated by reference to Exhibit 28.1 to the Company's Registration Statement No. 33-45215 on Form S-3, as filed with the SEC on January 24, 1993). 4.1 Indenture dated as of March 15, 1989 between the Company and the First National Bank of Boston, as Trustee (including the form of 13-3/8% Subordinated Debentures due March 15, 1999) (incorporated by reference to Exhibit 4.10 to the Company's Current Report on Form 8-K, dated May 23, 1989). 4.2 Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.11 to Amendment No. 1 to the Registrant's Registration Statement No. 33-41553 on Form S-3 dated August 6, 1991). 4.3 By-Laws of the Registrant (incorporated by reference to Exhibit 4.12 To Amendment No. 1 to the Registrant's Registration Statement No. 33-41553 on Form S-3, dated August 6, 1991). 4.4 Conformed copy of the Indenture, dated as of February 13, 1992, between Mark IV Industries, Inc. and Marine Midland Bank, N.A., including the form of 6-1/4% Convertible Subordinated Debentures due February 15, 2007 (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated February 13, 1992). 4.5 Conformed copy of the Indenture, dated as of March 15, 1993, between Mark IV Industries, Inc. and Citibank, N.A.; including the form of Senior Subordinated Notes due April 1, 2003 (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated March 29, 1993). 67 Executive Compensation Plans and Arrangements (10.1 -10.9) 10.1 Employment Agreements dated May 1, 1989 between the Company and each of Sal Alfiero, Clement R. Arrison, Gerald S. Lippes, William P. Montague, John J. Byrne and Frederic L. Cook (incorporated by reference to Exhibit 10.27 to the Company's Form 10-K for the fiscal year ended February 28, 1989). 10.2 Employment Agreement dated July 1, 1989 between the Company and Richard L. Grenolds (incorporated by reference to Exhibit 10.33 to the Company's Form 10-Q for the fiscal quarter ended May 31, 1989). 10.3 Amendment and Restatement of Mark IV Industries, Inc. and Subsidiaries Incentive Stock Option Plan, as of February 8, 1988 (incorporated by reference to Exhibit 10.13.1 to the Company's Registration Statement No. 33-42307 on Form S-8 dated August 19, 1991). 10.4* Amendment and Restatement of the Mark IV Industries, Inc. and Subsidiaries 1992 Incentive Stock Option Plan Effective March 30, 1994. Beginning on Page 67. 10.5* Amendment and Restatement of the Mark IV Industries, Inc. 1992 Restricted Stock Plan Effective March 30, 1994. Beginning on Page 78. 10.6 Mark IV Industries, Inc. Executive Bonus Plan (incorporated by reference to Exhibit 10.8 to the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 1991). 10.7 First Amendment and Restatement of the Mark IV Industries, Inc. Enhanced Executive Incentive Plan (incorporated by reference to Exhibit 10.16 to the Company's Annual Report on Form 10-K dated February 29, 1992). 10.8* Third Amendment and Restatement of the Non-Qualified Plan of Deferred Compensation of Mark IV Industries, Inc. Effective September 1, 1993. Beginning on Page 86. 10.9* First Amendment and Restatement of the Non-Qualified Plan of Deferred Compensation for Non-Employee Directors of Mark IV Industries, Inc. Effective December 1, 1993. Beginning on Page 125. 68 Other Material Contract Exhibits 10.10 Revolving Credit Facility Agreement dated May 27, 1993, among Mark IV Industries, Inc., a Delaware Corporation, Dayco Italy S.p.A., an Italian Corporation, Bank of America National Trust and Savings Association, Chemical Investment Bank Limited, and Citibank, N.A. and Chase Manhattan Bank N.A., as co-agents for various financial institutions that are signatories thereto (incorporated by reference to the Company's Current Report on Form 8-K dated May 27, 1993 as filed on June 17, 1993). All schedules and other attachments to this exhibit, as identified on page v of the exhibit, have been omitted. 10.11 Credit Agreement dated July 20, 1993 among Mark IV Industries, Inc., and certain of its subsidiaries and Bank of America National Trust and Savings Association, Continental Bank N.A., Citibank, N.A., The Bank of Nova Scotia, The Bank of New York, The Chase Manhattan Bank, N.A., and certain other banks (incorporated by reference to the Company's Current Report on Form 8-K dated July 20, 1993 as filed on August 4, 1993). All schedules and exhibits listed on page v of this exhibit have been omitted. 11* Statement regarding computation of per share earnings. Beginning on Page 151. 21* Subsidiaries of the Registrant. Beginning on Page 153. 23* Consent of Independent Accountants. Beginning on Page 156. ______________________ * Filed herewith by direct transmission pursuant to the EDGAR program. EX-10.4 2 STOCK OPTION PLAN Exhibit 10.4 MARK IV INDUSTRIES, INC. AND SUBSIDIARIES, 1992 INCENTIVE STOCK OPTION PLAN ______________________________ Amendment and Restatement Effective March 30, 1994 ______________________________ WHEREAS, Mark IV Industries, Inc., a Delaware corporation with offices at One Towne Centre, 501 John James Audubon Parkway, Amherst, New York (the "Company"), by resolution of the Company's Board of Directors adopted on September 3, 1992, adopted an incentive stock option plan known as the "Mark IV Industries, Inc. and Subsidiaries 1992 Incentive Stock Option Plan (the "Plan") to provide a tool to the Company's management to attract, retain and motivate highly skilled employees of the Company and its subsidiaries; and WHEREAS, on December 16, 1992, the Plan was amended to provide that the Plan would be administered by the Compensation Committee of the Company's Board of Directors in order to comply with the provisions of Rule 16b promulgated under the Securities Exchange Act of 1934; and WHEREAS, as contemplated by Section 422 of the Internal Revenue Code, on August 17, 1993, the Plan was approved by the Company's shareholders; and WHEREAS, the Company, amended the Plan effective November 11, 1993, to provide Optionees that are employed by a division of the Company, a Subsidiary (as hereinafter defined) or a division of a Subsidiary, the immediate right to exercise their options in the event the Optionee's employment with the Company or such Subsidiary is terminated in connection with a sale of all or substantially all the assets of the division or Subsidiary by which the Optionee is employed or in the event that all or substantially all the stock of the Subsidiary by whom the Optionee is employed is sold; and WHEREAS, the Company, as permitted by Section 11 of the Plan, desires to amend the Plan to permit key employees and officers which own more than ten percent (10%) of the outstanding stock of the Company to receive options under the terms of the Plan; and WHEREAS, the Company, as permitted by Section 11 of the Plan, desires to amend the Plan to permit Optionees to pay the purchase price for shares of common stock of the Company which may be acquired pursuant to options granted under this Plan with previously acquired shares of the Company's common stock and to make certain other technical corrections to the Plan; NOW, THEREFORE, in consideration of the foregoing, Mark IV Industries, Inc. hereby adopts the following Amendment and Restatement of the Mark IV Industries, Inc. and Subsidiaries 1992 Incentive Stock Option Plan effective March 30, 1994: 1. Purpose of Plan; Current Status of the Plan. The Mark IV Industries, Inc. and Subsidiaries, 1992 Incentive Stock Option Plan (hereinafter called the "Plan") is intended to provide officers and other key employees of Mark IV Industries, Inc., a Delaware corporation (hereinafter called the "Company") and officers and other key employees of each Subsidiary of the Company as that term is defined in Section 3 below (hereinafter individually referred to as a "Subsidiary" and collectively as "Subsidiaries") with an additional incentive for them to promote the success of the business, to increase their proprietary interest in the success of the Company and its Subsidiaries, and to encourage them to remain in the employ of the Company or its Subsidiaries. The above aims will be effectuated through the granting of certain stock options, as herein provided, which are intended to qualify as Incentive Stock Options (hereinafter called "ISOs") under Section 422 of the Internal Revenue Code of 1986, as the same has been and shall be amended (hereinafter called the "Code"). 2. Administration The Plan shall be administered by the Compensation Committee of the Board of Directors of the Company (hereinafter called the "Committee") composed of not less than two (2) directors of the Company, each of whom, shall be a "disinterested person" within the meaning of Rule 16b-3 under the Exchange Act (as defined in Section 7 hereof). The Committee is authorized to adopt such rules and regulations for the administration of the Plan and the conduct of its business as may seem to it proper. Any action taken or interpretation by the Committee under any provision of the Plan or any option granted hereunder shall be in accordance with the provisions of the Code, and the regulations and rulings issued thereunder as such may be amended, promulgated, issued, renumbered or continued from time to time hereafter in order that the options granted hereunder shall constitute "incentive stock options" within the meaning of the Code. All action taken pursuant to this Plan shall be lawful and with a view to obtaining for the Company and the option holder the maximum advantages under the law as then obtaining, and in the event that any dispute shall arise as to any action taken or interpretation by the Committee under any provision of the Plan, then all doubts shall be resolved in favor of such having been done in accordance with the said Code and such revenue laws, amendments, regulations, rulings and provisions as may then be applicable. Any action taken or interpretation by the Committee under any provision of the Plan shall be final. No member of the Committee shall be liable for any action, determination or interpretation under any provision of the Plan or otherwise if done in good faith. 3. Participation The Committee shall determine which of the employees of the Company and its Subsidiaries will receive options under the terms of this Plan from among officers and key employees of the Company and its Subsidiaries (including, subject to the provisions of Section 422(c)(5) of the Code, officers or key employees that own stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company). Those individuals to whom options are granted under the terms of this Plan are sometimes hereinafter referred to as "Optionees". The Committee shall determine the terms and provisions of the options granted hereunder (which need not be identical), the time or times at which options shall be granted and the number of shares of common stock of the Company (sometimes hereinafter referred to as "Common Stock") (or such number of shares of stock in which the Common Stock may at any time hereafter be constituted), for which options are granted. Notwithstanding the foregoing, in no event shall the Committee grant any options to the Company's Chief Executive Officer or any of the four (4) most highly compensated officers of the Company if the aggregate number of shares of Common Stock which can be purchased by any such individual through the exercise of all options granted to him or her under the Plan exceeds 200,000 shares of Common Stock, adjusted as provided for in Section 5 hereof. For purposes of this Plan, the term "Subsidiary" shall mean any corporation which satisfies the definition of a "subsidiary corporation" as contained in Section 424(f) of the Code and the term "Subsidiaries" shall mean all corporations which satisfy the definition of a "subsidiary corporation" as contained in Section 424(f) of the Code when, in each case, for purposes of applying such definition, the "employer corporation" is deemed to mean the Company. In selecting Optionees and in determining the number of shares for which options are granted, the Committee may weigh and consider the following factors: the office or position of the Optionee and his degree of responsibility for the growth and success of the Company, length of service, remuneration, promotions and potential. The foregoing factors shall not be considered to be exclusive or obligatory upon the Committee, and the Committee may properly consider any other factors which to it seems appropriate. An Optionee who has been granted an option under the Plan may be granted additional options under the Plan if the Committee shall so determine. In no event shall any options be granted under this Plan at any time after the termination date set forth at the end of this Plan. 4. Shares Subject to the Plan Subject to adjustment as provided in Section 5 of this Plan, the aggregate number of reserved shares of Common Stock for which options may be granted hereunder shall not exceed one million five hundred thousand (1,500,000) shares, determined as of September 3, 1992, (the effective date of this Plan); provided, however, that as to shares subject to options which expire or terminate pursuant to the provisions of this Plan without having been exercised in full, such shares shall be considered to be available again for placement under options granted thereafter under the Plan. Shares issued pursuant to the exercise of incentive stock options granted under the Plan shall be fully paid and non-assessable. 5. Anti-Dilution Provisions The aggregate number of shares and the class of shares as to which options may be granted under the Plan, the number and class of shares subject to each outstanding option, the price per share thereof (but not the total price), and the number of shares as to which an option may be exercised at any one time, shall all be adjusted proportionately in the event of any change, increase or decrease in the outstanding shares of Common Stock or any change in classification of the Company's Common Stock without receipt of consideration by the Company which results either from a split-up, reverse split or consolidation of shares, payment of a stock dividend, recapitalization, reclassification or other like capital adjustment so that upon exercise of the option, the Optionee shall receive the number and class of shares that he would have received had he been the holder of the number of shares of Common Stock for which the option is being exercised immediately preceding such change, increase or decrease in the outstanding shares of Common Stock of the Company. Any such adjustment made by the Committee shall be final and binding upon all Optionees, the Company, and all other interested persons. Any adjustment of an incentive stock option under this paragraph shall be made in such manner as not to constitute a "modification" within the meaning of Section 424(h)(3) of the Code. Anything in this Section 5 to the contrary notwithstanding, no fractional shares or scrip representative of fractional shares shall be issued upon the exercise of any option. Any fractional share interest resulting from any change, increase or decrease in the outstanding shares of Common Stock of the Company or resulting from any reorganization, merger, or consolidation for which adjustment is provided in this Section 5 shall disappear and be absorbed into the next lowest number of whole shares, and the Company shall not be liable for any payment for such fractional share interest to the Optionee upon his exercise of the option. 6. Option Price The purchase price for each share of Common Stock which may be acquired upon the exercise of each option issued under the Plan shall be determined by the Committee at the time the option is granted, but in no event shall such purchase price be less than one hundred percent (100%) of the fair market value of the Company's Common Stock on the date of grant. If the Common Stock of the Company is listed upon an established stock exchange or exchanges on the day the option is granted, such fair market value shall be deemed to be the highest closing price of the Common Stock of the Company on such stock exchange or exchanges on the day the option is granted, or if no sale of the Company's Common Stock shall have been made on any stock exchange on that day, on the next preceding day on which there was a sale of such stock. 7. Option Exercise Periods (a) The time within which any option granted hereunder may be exercised shall be, by its terms, not earlier than one (1) year from the date such option is granted and not later than ten (10) years from the date such option is granted. Except as otherwise provided for herein, the Optionee must remain in the continuous employment of the Company or any of its subsidiaries from the date of the grant of the option to and including the date of exercise of option in order to be entitled to exercise his option. Options granted hereunder shall be exercisable in such installments and at such dates as the Committee may specify. Unless the Committee shall specify otherwise, the right of each Optionee to exercise his option to purchase the number of shares to which his option initially related shall accrue on a cumulative basis as follows: (i) the Optionee shall have the right to purchase one-fourth (1/4) of the total number of shares of Common Stock which can be purchased pursuant to the option (subject to adjustment as provided in Section 5 hereof) at the end of the one (1) year period following the date the option is granted; (ii) the Optionee shall have the right to purchase an additional one-fourth (1/4) of the total number of shares of Common Stock which can be purchased pursuant to the option (subject to adjustment as provided in Section 5 hereof) at the end of the two (2) year period following the date the option is granted; (iii) the Optionee shall have the right to purchase an additional one-fourth (1/4) of the total number of shares of Common Stock which can be purchased pursuant to the option (subject to adjustment as provided in Section 5 hereof) at the end of the three (3) year period following the date the option is granted; (iv) the Optionee shall have the right to purchase the remaining one-fourth (1/4) of the total number of shares of Common Stock which can be purchased pursuant to the option (subject to adjustment as provided in Section 5 hereof) at the end of the four (4) year period following the date the option is granted. Continuous employment shall not be deemed to be interrupted by transfers between the Subsidiaries or between the Company and any Subsidiary, whether or not elected by termination from any Subsidiary and re-employment by any other Subsidiary or the Company. Time of employment with the Company shall be considered to be one employment for the purposes of this Plan, provided there is no intervening employment by a third party or no interval between employments which, in the opinion of the Committee, is deemed to break continuity of service. The Committee shall, at its discretion, determine the effect of approved leaves of absence and all other matters having to do with "continuous employment". Where an Optionee dies while employed by the Company or any of its Subsidiaries, his options may be exercised following his death in accordance with the provisions of Section 10 below. (b) Notwithstanding the foregoing provisions of Section 7(a), in the event the Company or the shareholders of the Company enter into an agreement to dispose of all or substantially all of the assets or stock of the Company by means of a sale, merger, consolidation, reorganization, liquidation, or otherwise, or in the event a Change of Control (as hereinafter defined) of the Company shall occur, all unexercised options granted hereunder shall become immediately exercisable with respect to the full number of shares subject to that option during the period commencing as of the date of execution of such agreement and ending as of the earlier of (i) ten (10) years from the date such option was granted, or (ii) ninety (90) days following the date on which a Change in Control occurs or the disposition of assets or stock contemplated by this sentence is consummated. In addition, in the event that substantially all the stock of any Subsidiary by whom an Optionee is employed is sold or otherwise disposed of by merger, consolidation, reorganization, liquidation or otherwise, or in the event that substantially all the assets of any division of the Company or any division of any Subsidiary by whom the Optionee is employed are sold or disposed of by means of a sale, merger, consolidation, reorganization, liquidation or otherwise and, in connection with any such asset sale, the Optionee's employment with the Company or the Subsidiary (as the case may be) is terminated, the options of an Optionee employed by such a division or Subsidiary shall, unless the Optionee remains in the employ of the Company or any Subsidiary of the Company immediately following any such sale or other disposition of stock or assets, become immediately exercisable with respect to the full number of shares subject to that option during the period commencing as of the date of execution of the agreement providing for such sale or other disposition and ending as of the earlier of (x) ten (10) years from the date such option was granted and (y) ninety (90) days following the date on which the disposition of the assets or stock contemplated by this sentence is consummated. Ninety (90) days following the consummation of any disposition of assets or stock referred to in the preceding sentence, any unexercised options issued hereunder which have become exercisable pursuant to this paragraph (or any unexercised portion thereof) shall terminate and cease to be effective. In addition, if any disposition of assets or stock referred to in this paragraph occurs with respect to substantially all the assets or stock of the Company or if a Change in Control occurs, ninety (90) days following such disposition of assets or stock or Change in Control, this Plan and any unexercised options issued hereunder which have become exercisable pursuant to this paragraph (or any unexercised portion thereof) shall terminate and cease to be effective, unless provision is made in connection with such transaction for assumption of options previously granted or the substitution for such options of new options covering the securities of a successor corporation or an affiliate thereof, with appropriate adjustments as to the number and kind of securities and prices. (c) For purposes of this Plan, a "Change in Control" shall be deemed to have occurred if: (i) any "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Act")) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Act) of more than thirty percent (30%) of the then outstanding voting stock of the Company, otherwise than through a transaction arranged by, or consummated with the prior approval of its Board of Directors; or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company (and any new director whose election to the Board of Directors or whose nomination for election by the Company's shareholders was approved by a vote of at least two thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) (hereinafter referred to as the "Continuing Directors") cease for any reason to constitute a majority thereof; or (iii) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company immediately prior thereto continuing to represent (either by remaining outstanding or being converted into voting securities of the surviving entity) at least 80% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation (provided, however, that if prior to the merger or consolidation, the Board of Directors of the Company adopts a resolution that is approved by a majority of the Continuing Directors providing that such merger or consolidation shall not constitute a "change in control" for purposes of the Plan, then such a merger or consolidation shall not constitute a "change in control"); or (iv) the shareholders of the Company approve an agreement for the sale or disposition by the Company of all or substantially all the assets of the Company. (d) Any change or adjustment made pursuant to the terms of this Section 7 shall be made in such a manner so as not to constitute a "modification" as defined in Section 424 of the Code, and so as not to cause any incentive stock option issued under this Plan to fail to continue to qualify as an incentive stock option as defined in Section 422(b) of the Code. Notwithstanding the foregoing, in the event that any such agreement shall be terminated without consummating the disposition of said stock or assets, any unexercised unaccrued portion of any option that had become exercisable solely by reason of the provisions of this paragraph shall again become unaccrued and unexercisable as of said termination of such agreement; subject, however, to such portion of such option accruing pursuant to the normal accrual schedule provided in the terms under which such option was granted. Any exercise of any portion of any option prior to said termination of said agreement shall remain effective despite the fact that such portion became exercisable solely by reason of the Company or its shareholders entering into said agreement to dispose of the stock or assets of the Company or the stock or assets of any Subsidiary of the Company, any division of the Company or any division of any Subsidiary of the Company. 8. Exercise of Option Options shall be exercised as follows: (a) Notice and Payment. Each option, or any installment thereof, shall be exercised, whether in whole or in part, by giving written notice to the Company at its principal office, (the "Exercise Notice") that the Optionee intends to exercise all or part of any option he has been granted and by paying to the Company the purchase price for the number of shares of Common Stock of the Company which the Optionee desires to purchase at the price per share (as adjusted) set forth in the option which the Optionee desires to exercise. (b) The Exercise Notice: (i) shall state the identity of the options being exercised (by reference to the date of the grant of the option); (ii) shall state the number of shares to be purchased and the purchase price to be paid; and (iii) shall contain representations on behalf of the Optionee that he acknowledges that the Company is selling the shares being acquired by him under a claim of exemption from registration under the Securities Act of 1933 as amended (hereinafter referred to as the "Act"), as a transaction not involving any public offering; that he represents and warrants that he is acquiring such shares with a view to "investment" and not with a view to distribution or resale; and that he agrees not to transfer, encumber or dispose of the shares unless: (A) a registration statement with respect to the shares shall be effective under the Act, together with proof satisfactory to the Company that there has been compliance with applicable state law; or (B) the Company shall have received an opinion of counsel in form and content satisfactory to the Company to the effect that the transfer qualifies under Rule 144 or some other disclosure exemption from registration and that no violation of the Act or applicable state laws will be involved in such transfer, and/or such other documentation in connection therewith as the Company's counsel may in its sole discretion require. (c) Payment of the purchase price for shares of Common Stock to be acquired in connection with the exercise of any options granted under this Plan shall be made: (i) by delivery to the Company of cash or a certified or bank check payable to the order of the Company in an amount equal to the portion of the purchase price which is payable in connection with the exercise of such option; or (ii) by delivery to the Company of previously acquired shares of the Company's common Stock having an aggregate fair market value equal to the portion of the purchase price which is payable in connection with the exercise of such option provided that such previously acquired shares of Common Stock have been held by the Optionee for at least six (6) months or such other period of time as may be required by the Committee at the time such shares are delivered to the Company in connection with the Optionee's exercise of his or her option hereunder. If shares of the Company's Common Stock are delivered as payment of the purchase price for shares of Common Stock to be purchased in connection with the exercise of options granted hereunder, the shares of Common Stock which are delivered in payment of such purchase price shall be equal to the fair market value (determined in accordance with the principles set forth in Section 6 hereof) of the Common Stock on the day immediately preceding the day on which such Common Stock is delivered in payment of the purchase price for shares of Common Stock to be acquired in connection with the exercise of options granted hereunder. (d) Issuance of Certificates. Certificates representing the shares purchased by the Optionee shall be issued as soon as practicable after the Optionee has complied with the provisions of Section 8(a) hereof. (e) Rights as a Shareholder. The Optionee shall have no rights as a shareholder with respect to the shares purchased until the date of the issuance to him of a Certificate representing such shares. 9. Assignment of Option Subject to the provisions of Section 10, options granted under this Plan may not be assigned voluntarily or involuntarily or by operation of law. Any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of, or to subject to execution, attachment or similar process, any incentive stock option, or any right thereunder, contrary to the provisions hereof shall be void and ineffective, shall give no right to the purported transferee, and shall, at the sole discretion of the Committee, result in forfeiture of the option with respect to the shares involved in such attempt. 10. Effect of Termination of Employment, Death or Disability (a) In the event of the termination of employment of an Optionee during the two (2) year period after the date of issuance of an option to him either by reason of (i) a discharge for cause, or (ii) voluntary separation on the part of the Optionee and without consent of the Company or the Subsidiary for whom the Optionee was employed, any option or options theretofore granted to him under this Plan, to the extent not theretofore exercised by him, shall forthwith terminate. (b) In the event of the termination of employment of an Optionee (otherwise than by reason of death or retirement of the Optionee at his Retirement Date) by the Company or by any of the Subsidiaries employing the Optionee at such time, any option or options granted to him under the Plan to the extent not theretofore exercised shall be deemed cancelled and terminated forthwith, except that, subject to the provisions of subparagraph (a) of this Section, such Optionee may exercise any options theretofore granted to him, which have not then expired and which are otherwise exercisable within the provisions of Section 7 hereof, within three (3) months after such termination. If the employment of an Optionee shall be terminated by reason of the Optionee's retirement at his Retirement Date by the Company or by any of the Subsidiaries employing the Optionee at such time, the Optionee shall have the right to exercise such option or options held by him to the extent that such options have not expired, at any time within three (3) months after such retirement. The provisions of Section 7 to the contrary notwithstanding, upon retirement, all options held by an Optionee shall be immediately exercisable in full. The transfer of an Optionee from the employ of the Company to a Subsidiary of the Company or vice versa, or from one Subsidiary of the Company to another, shall not be deemed to constitute a termination of employment for purposes of this Plan. (c) In the event that an Optionee shall die while employed by the Company or by any of the Subsidiaries or shall die within three (3) months after retirement on his Retirement Date (from the Company or any Subsidiary), any option or options granted to him under this Plan and not theretofore exercised by him or expired shall be exercisable by the estate of the Optionee or by any person who acquired such option by bequest or inheritance from the Optionee in full, notwithstanding Section 7, at any time within one (1) year after the death of the Optionee. References hereinabove to the Optionee shall be deemed to include any person entitled to exercise the option after the death of the Optionee under the terms of this Section. (d) In the event of the termination of employment of an Optionee by reason of the Optionees' disability, the Optionee shall have the right, notwithstanding the provisions of Section 7 hereof, to exercise all options held by him, to the extent that options have not previously expired or been exercised, at any time within one (1) year after such termination. The term "disability" shall, for the purposes of this Plan, be defined in the same manner as such term is defined in Section 105(d)(4) of the Internal Revenue Code of 1986. (e) For the purposes of this Plan, "Retirement Date" shall mean any date an employee is otherwise entitled to retire under the Company's retirement plans. 11. Amendment and Termination of the Plan The Board of Directors of the Company may at any time suspend, amend or terminate the Plan; provided, however, that except as permitted in Section 13 hereof, no amendment or modification of the Plan which would: (a) increase the maximum aggregate number of shares as to which options may be granted hereunder (except as contemplated in Section 5); or (b) reduce the option price or change the method of determining the option price; or (c) increase the time for exercise of options to be granted or those which are outstanding beyond the terms of ten (10) years; or (d) change the designation of the employees or class of employees eligible to receive options under this Plan, may be adopted unless with the approval of the holders of a majority of the outstanding shares of Common Stock represented at a shareholders' meeting of the Company, or with the written consent of the holders of a majority of the outstanding shares of Common Stock. No amendment, suspension or termination of the Plan may, without the consent of the holder of the option, terminate his option or adversely affect his rights in any material respect. 12. Incentive Stock Options Power to Establish Other Provisions. It is intended that the Plan shall conform to and each option shall qualify and be subject to exercise only to the extent that it does qualify as an "incentive stock option" as defined in Section 422 of the Code and as such section may be amended from time to time or be accorded similar tax treatment to that accorded to an incentive stock option by virtue of any new Revenue Laws of the United States. The Board of Directors may make any amendment to the Plan which shall be required so to conform the Plan. Subject to the provisions of the Code, the Committee shall have the power to include such other terms and provisions in options granted under this Plan as the Committee shall deem advisable, provided, however, that no option shall be granted hereunder which does not qualify under the Code. 13. Maximum Annual Value of Options Exercisable. Any other provisions of this Plan notwithstanding, after December 31, 1987 no employee to whom options are granted hereunder shall receive options, under all stock plans of the Company and any parent or subsidiary of the Company, first exercisable during any single calendar year, for shares, the fair market value of which (determined at the time of the grant of the options) exceeds $100,000. Accordingly, no Optionee shall be entitled to exercise options granted under any stock option plan of the Company and any parent or subsidiary of the Company, in any single calendar year, except to the extent first exercisable in previous complete calendar years, for shares of stock the value of which (determined at the time of grant of the options) exceeds $100,000. 14. General Provisions (a) No incentive stock option shall be construed as limiting any right which the Company or any parent or subsidiary of the Company may have to terminate at any time, with or without cause, the employment of an Optionee. (b) The Section headings used in this Plan are intended solely for convenience of reference and shall not in any manner amplify, limit, modify or otherwise be used in the construction or interpretation of any of the provisions hereof. (c) The masculine, feminine or neuter gender and the singular or plural number shall be deemed to include the other whenever the content so indicates or requires. (d) No options shall be granted under the Plan after ten (10) years from the date the Plan is adopted by the Board of Directors of the Company or approved by the stockholders of the Company, whichever is earlier. 15. Effective Date and Duration of the Plan The Plan became effective on September 3, 1992, the date adoption of the Plan was approved by the Board of Directors of the Company. On August 17, 1993, as required by Section 422 of the Code, the Plan was approved by the Shareholders of the Company. The Plan will terminate on September 2, 2002; provided however, that the termination of the Plan shall not be deemed to modify, amend or otherwise affect the term of any options outstanding on the date the Plan terminates. IN WITNESS WHEREOF, the undersigned has executed this Amendment and Restatement to the Mark IV Industries, Inc. and Subsidiaries 1992 Incentive Stock Option Plan for and on behalf of Mark IV Industries, Inc. this 16th day of May, 1994. MARK IV INDUSTRIES, INC. By: Richard L. Grenolds Vice President and Chief Accounting Officer EX-10.5 3 RESTRICTED STOCK PLAN Exhibit 10.5 MARK IV INDUSTRIES, INC. 1992 RESTRICTED STOCK PLAN ________________________ Amendment and Restatement Effective March 30, 1994 ________________________ WHEREAS, Mark IV Industries, Inc., a Delaware corporation with offices at One Towne Centre, 501 John James Audubon Parkway, Amherst, New York (the "Company"), by resolution of its Board of Directors, adopted a restricted stock plan known as the Mark IV Industries, Inc. 1992 Restricted Stock Plan (hereinafter the "Plan") effective December 16, 1992; and WHEREAS, pursuant to the terms of the Plan, the Company was authorized, effective December 16, 1992, to issue, in connection with restricted stock awards granted by the Compensation Committee of the Company's Board of Directors up to 350,000 shares of restricted stock (subject to certain anti- dilutive adjustments); and WHEREAS, the Company, as permitted by Section 17 of the Plan, desires to amend the Plan to increase the number of shares of restricted stock which may be issued pursuant to the Plan by 200,000; and WHEREAS, the Company, as permitted by Section 17 of the Plan, desires to amend the Plan to provide that the restrictions imposed upon shares of restricted stock awarded to employees of divisions or subsidiaries of the Company will lapse if substantially all the stock of a subsidiary by whom the employee is employed is sold or if the employee's employment with the Company or any of the Company's subsidiaries is terminated in connection with a sale of all or substantially all the assets of the division or subsidiary by whom the employee is employed; NOW, THEREFORE, in consideration of the foregoing, Mark IV Industries, Inc. hereby adopts the following Amendment and Restatement of the Mark IV Industries, Inc. 1992 Restricted Stock Plan effective March 30, 1994: 1. Purpose. The purposes of the Mark IV Industries, Inc. 1992 Restricted Stock Plan (the "Plan") are: (a) to enable Mark IV Industries, Inc. (the "Company") and its direct and indirect wholly owned subsidiaries to attract, reward and retain highly qualified executive and managerial employees through the use of an equity based incentive compensation program; and (b) to increase the personal interest which the executive and managerial employees of the Company and its direct and indirect wholly owned subsidiaries have in the successful and profitable operation of the Company by linking the long-term value of the compensation paid to such employees to the value of the Company's common stock. 2. Stock Subject to Plan. The shares of stock which may be the subject of awards pursuant to this Plan shall be shares of the Company's common stock ("Common Stock"). All awards of Common Stock made pursuant to this Plan shall be subject to the restrictions on transferability described in Section 6 hereof and to such other restrictions as may be imposed by the Committee (as defined in Section 3 hereof) in connection with its making of an award under this Plan (which other restrictions need not be the same for each Participant). Accordingly, each share of Common Stock which is the subject of an award pursuant to the terms of this Plan is hereinafter referred to as "Restricted Stock". On December 16, 1992, (the date on which the Plan became effective), the aggregate number of shares of Common Stock reserved for issuance in connection with Restricted Stock awards made pursuant to the terms of this Plan was three hundred fifty thousand (350,000), subject to adjustment as hereinafter provided in this Section 3. Effective March 30, 1994, in addition to the number of shares of Common Stock reserved for issuance effective March 29, 1994 in connection with Restricted Stock awards which could be made pursuant to the terms of the Plan, an additional two hundred thousand (200,000) shares of Common Stock shall be reserved and available for issuance in connection with Restricted Stock awards made pursuant to the Plan. The number of shares of Restricted Stock available for awards under this Plan shall be adjusted proportionately in the event of any change, increase or decrease in the outstanding shares of common stock of the Company which results either from a split-up, reverse split or consolidation of shares, payment of a stock dividend, recapitalization, reclassification or other like capital adjustment; provided, however, that no fractional shares shall be issued in connection with any such capital adjustment. The Restricted Stock which is awarded under this Plan may be either authorized but unissued Common Stock or treasury shares. Shares which are the subject of an award granted under this Plan shall not again become available for future grants unless the recipient fails to pay the purchase price for the shares pursuant to Section 5 hereof. 3. Committee. The Plan shall be administered by the Compensation Committee of the Board of Directors of the Company (the "Committee") which shall consist of at least two Directors of the Company, each of whom shall be a "disinterested person" within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (hereinafter referred to as the "Act"). 4. Eligibility and Participation. Each employee of the Company and each employee of each of the Company's direct and indirect wholly owned subsidiaries shall be eligible to receive an award of Restricted Stock under the terms of this Plan. The employees of the Company (or any of its direct or indirect wholly owned subsidiaries) to whom awards of Restricted Stock are to be granted under the Plan and the number of shares of Restricted Stock with respect to which awards are to be granted to each such employee shall be determined by the Committee. In determining which employees should receive an award of Restricted Stock under the terms of the Plan, the Committee shall take into account the past performance of the Company, the employee's contributions to past performance, the capacity of the employee to contribute in a substantial measure to the performance of the Company in the future and such other factors as the Committee may consider relevant. The Committee shall provide an employee who is granted such an award written notice of the number of shares of Restricted Stock contained in the award, the timing and terms for payment by the employee of the purchase price of the Restricted Stock to be issued pursuant to the award, a statement of any restrictions imposed on the Restricted Stock to be issued pursuant to the award and a statement of the date to be used for determining whether the restrictions imposed by this Plan have lapsed (such date being hereinafter referred to as the "Award Date"). For purposes of this plan, if an award of Restricted Stock is granted to an employee under the terms of this Plan, such employee shall be deemed to be a "Participant". 5. Awards of Restricted Stock. Each Participant who is granted an award of Restricted Stock under this Plan shall be required to pay for such Restricted Stock. The price per share which shall be paid by a Participant granted an award of Restricted Stock shall be equal to the par value of such share. The Committee shall determine the time and manner in which a Participant shall be required to pay for Restricted Stock which he has been awarded under this Plan. Each share of Restricted Stock awarded to an employee under the terms of this Plan shall be subject to the restrictions on transferability contained in Section 6 hereof and such other restrictions as the Committee may establish at the time the award is granted (which other restrictions need not be the same for each Participant). The Committee shall require the Participant to execute an agreement at the time of issuance of the Restricted Stock to the Participant, which agreement shall contain such terms and conditions as may be established by the Committee. 6. Restrictions. The shares of the Restricted Stock sold to a Participant in connection with this Plan may not be sold, pledged, encumbered or otherwise alienated or hypothecated by the Participant until the time that these restrictions have lapsed as hereinafter provided in Section 7 hereof. 7. Termination of Restrictions. The restrictions on the transferability of shares of Restricted Stock imposed by Section 6 hereof and any other restrictions which may be imposed by the Committee on shares of Restricted Stock pursuant to Section 5 hereof shall terminate and lapse: (a) with respect to all shares of Restricted Stock contained in a Restricted Stock award, at the end of the five (5) year period beginning on the Award Date with respect to such Restricted Stock award; (b) with respect to one third of the shares of Restricted Stock contained in a Restricted Stock award, for each fiscal year of the Company, beginning with the Company's fiscal year which begins at least one (1) full fiscal year after the Company's fiscal year containing the Award Date for such Restricted Stock award and for each fiscal year thereafter, provided that the operating performance of the Company is such that the Participant is entitled to payment of a bonus under the Company's Executive Bonus Plan as adopted by the Company's Board of Directors on May 27, 1986 and as amended from time to time thereafter (hereinafter the "Executive Bonus Plan"). If the restrictions on any shares of Restricted Stock awarded to a Participant will lapse as provided for in this Section 7(b), the date on which such restrictions will lapse shall be the date on which the Participant receives written notice from or on behalf of the Committee that the Participant is entitled to payment of a bonus under the Executive Bonus Plan; (c) with respect to all shares of Restricted Stock awarded to a Participant if: (i) the Participant is employed by a division of the Company, any corporation in which the Company, directly or indirectly, owns stock possessing more than fifty percent (50%) of the total combined voting power of all classes of stock issued by such corporation (hereinafter individually referred to as a "Subsidiary" and collectively as the "Subsidiaries") or any division of any Subsidiary of the Company and: (A) all or substantially all of the stock of the Subsidiary by whom the Participant is employed is sold to an unrelated third party; (B) all or substantially all the assets of the division of the Company, the Subsidiary or the division of the Subsidiary by whom the Participant is employed are sold to an unrelated third party; and (C) following the sale of stock or assets described in this Section 7(c), the Participant is not otherwise employed by the Company or any of its Subsidiaries; (d) with respect to all shares of Restricted Stock awarded to a Participant, upon the Participant's attainment of age 65 or upon the Participant's death, total and permanent disability (to the extent and in a manner as shall be determined by the Committee in its sole discretion) or retirement (as determined by the Committee in its sole discretion); (e) with respect to such portion of the shares of Restricted Stock awarded to the Participant as may be determined by the Committee, in its sole discretion, upon the occurrence of such special circumstance or event as, in the sole discretion of the Committee, merits special consideration; and (f) with respect to all shares of Restricted Stock awarded to a Participant, upon the occurrence of a Change in Control which, for purposes of this Plan, shall be deemed to have occurred if: (i) any "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Act) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Act) of more than thirty percent (30%) of the then outstanding voting stock of the Company, otherwise than through a transactions arranged by, or consummated with the prior approval of its Board of Directors; or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company (and any new director whose election to the Board of Directors or whose nomination for election by the Company's shareholders was approved by a vote of at least two thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) (hereinafter referred to as the "Continuing Directors") cease for any reason to constitute a majority thereof; or (iii) the shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger of consolidation which would result in the voting securities of the Company immediately prior thereto continuing to represent (either by remaining outstanding or being converted into voting securities of the surviving entity) at least 80% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation (provided, however, that if prior to the merger or consolidation, the Board of Directors of the Company adopts a resolution that is approved by a majority of the Continuing Directors providing that such merger or consolidation shall not constitute a "change in control" for purposes of the Plan, then such a merger or consolidation shall not constitute a "change in control"); or (iv) the shareholders of the Company approve an agreement for the sale or disposition by the Company of all or substantially all the assets of the Company. 8. Stockholder Rights. Subject to the other provisions of this Plan, the Participant shall have all the rights of a stockholder with respect to the shares of Restricted Stock which are subject to his award including, but not limited to, the right to receive all dividends, distributions and adjustments with respect to such shares and the right to vote such shares; provided, however, that non-cash dividends, distributions and adjustments shall be subject to the same restrictions and risk of forfeiture set forth in Section 6 and 10 hereof as are applicable to the original shares of Restricted Stock subject to the Participant's award. 9. Other Restrictions. The Committee may impose such other restrictions on any shares of Restricted Stock sold pursuant to this Plan as it may deem advisable, including, without limitation, restrictions required under the Securities Act of 1933 as amended, restrictions under the requirements of any stock exchange upon which such shares or shares of the same class are then listed, and restrictions under any blue sky or securities laws applicable such shares. 10. Legend. In order to enforce the restrictions imposed on Restricted Stock granted under this Plan, the Committee shall cause a legend or legends to be placed on any certificate representing shares of Restricted Stock issued pursuant to this Plan, which legend or legends shall make appropriate reference to the restrictions imposed under it. 11. Termination of Employment. Except as hereinafter provided, if a Participant's employment with the Company or any of its subsidiaries is voluntarily or involuntarily terminated at any time prior to the date that the restrictions imposed by Section 6 hereof have lapsed, any shares of Restricted Stock issued to such Participant with respect to which such restrictions have not lapsed shall be forfeited and the price paid by the Participant therefor shall be returned to the Participant. 12. Non-Transferability of Awards. Awards granted under this Plan shall not be transferable by the Participant otherwise than by will or the laws of descent and distribution and the right to purchase shares of Restricted Stock pursuant to an award under this Plan may be exercised or surrendered during a Participant's lifetime only by the Participant. 13. Tax Withholding. The Company or subsidiary shall deduct and withhold, from any cash payments to be made to the Participant or from any stock to be issued to the Participant upon a lapse of the restrictions provided for hereunder, such amounts under federal, state or local tax rules or regulations as it deems appropriate with respect to an award under the Plan. In addition, the Committee may, in its discretion and subject to such rules as it may adopt, permit a Participant to satisfy the amount of tax required by law to be withheld, in whole or in part, by electing to have the Company withhold from any payment under the Plan, shares of Common Stock of the Company having a fair market value equal to the amount of taxes required to be withheld. In any event, the Participant shall make available to the Company or subsidiary, promptly when required, sufficient funds to meet the requirements of such withholding, and the Committee shall be entitled to take and authorize such steps as it may deem advisable in order to have such funds available to the Company or subsidiary when required. 14. Issuance of Shares and Compliance with Securities Act. The Company may postpone the issuance and delivery of shares of Restricted Stock until (a) the admission of such shares to listing on any stock exchange on which shares of Common Stock are then listed and (b) the completion of such registration or other qualification of such shares of Restricted Stock under any state or federal law, rule or regulation as the Company shall determine to be necessary or advisable. As a condition precedent to the issuance of shares of Restricted Stock pursuant to the grant of an award under the Plan, the Company may require the recipient thereof to make such representations and furnish such information as may, in the opinion of counsel for the Company, be appropriate to permit the Company, in the light of the then existence or non- existence with respect to such shares of an effective Registration Statement under the Securities Act of 1933, as amended, to issue the shares in compliance with the provisions of that or any comparable act. 15. Administration. The Committee shall have full authority to manage and control the operation and administration of the Plan. Any interpretation of the Plan by the Committee and any decision made by the Committee of any matter within its discretion is final and binding on all persons. 16. Employees' and Participants' Rights. No employee or other person shall have any claim or right to be granted an award of Restricted Stock under the Plan except as the Committee shall have conferred in its discretion in the administration of the Plan. Participation in the Plan shall not confer upon any Participant any right with respect to continuation of employment by the Company or its subsidiaries, nor interfere with the right of the Company to terminate at any time the employment of any Participant. 17. Amendment and Termination. The Board of Directors of the Company may amend, suspend or terminate the Plan or any portion thereof at any time; provided that no amendment, suspension or termination shall impair the rights of any Participant, without the Participant's consent, in any Restricted Stock previously awarded under this Plan. The Committee may amend the Plan to the extent necessary for the efficient administration of the Plan, or to make it practically workable or to conform it to the provisions of any federal or state law or regulation. Notwithstanding the foregoing provisions of this Section 17, in the event that an amendment is required to be approved by stockholders of the Company in order to comply with Rule 16b-3 under the Act, such amendment shall be subject to the requisite approval of the stockholders of the Company. 18. Non-Exclusivity of Plan. Neither the adoption of this Plan by the Company's Board of Directors nor the submission of this Plan to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Company's Board of Directors to adopt any other incentive compensation arrangements it may deem desirable, including, without limitation, the awarding of Common Stock to employees otherwise than under the terms of this Plan and such other arrangements as may be either generally applicable or applicable only in specific cases. 19. Governing Law. Except as required by Delaware corporate law, this Plan shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to principles of conflict of laws. 20. Effective Date of Amendment and Restatement; Stockholder Approval. This amendment and restatement of the Plan is conditioned upon its approval at the next annual meeting of the stockholders of the Company after March 30, 1994, by the holders of a majority of the stock of the Company present in person or represented by proxy and entitled to vote at such meeting, except that this amendment and restatement of the Plan is adopted and approved by the Board of Directors of the Company effective as of March 30, 1994, to permit the grant of awards hereunder prior to the approval of this amendment and restatement of the Plan by the stockholders of the Company as aforesaid. Certificates representing shares of Restricted Stock which are the subject of any award under the Plan granted prior to such stockholder approval shall in no event be issued before the date on which such stockholder approval is obtained. In the event that this amendment and restatement of the Plan is approved by the stockholders of the Company as aforesaid, the grantee of any award made prior thereto shall be entitled to the following: (a) an amount of cash, payable by the Company, equal to the amount of cash dividends to which he would have been entitled had he actually owned, as of the Award Date and through the date of issuance of such shares, the shares of Restricted Stock subject to the award, and (b) if there shall be declared and paid a stock dividend upon the Common Stock or the Common Stock shall be split up, converted, exchanged, reclassified or in any way substituted for, such number and kind of securities or cash or other property to which he would have been entitled had he actually owned the shares subject to the award at the time of the occurrence of any stock dividend, split up, conversation, exchange, reclassification or substitution, and the aggregate purchase price payable by the grantee shall be the same as if the original shares of common stock subject to the award were being purchased thereunder; provided, however, that any securities or other property (other than cash) shall be subject to the same restrictions and risk of forfeiture as are applicable to the original shares of Restricted Stock subject to the award. In the event that this amendment and restatement of the Plan is not approved by the stockholders of the Company as aforesaid, this amendment and restatement of the Plan and any awards made hereunder which could not have been made based on the number of shares of Restricted Stock available for issuance prior to this amendment and restatement shall be void and of no force or effect and the terms and conditions of the Plan as in effect on March 29, 1994 shall be and remain the terms and conditions of the Plan. IN WITNESS WHEREOF, the undersigned has executed this Amendment and Restatement of the Mark IV Industries, Inc. 1992 Restricted Stock Plan for and on behalf of Mark IV Industries, Inc. this 16th day of May, 1994. MARK IV INDUSTRIES, INC. By: Richard L. Grenolds Vice President and Chief Accounting Officer EX-10.8 4 NON-QUALIFIED PLAN Exhibit 10.8 NON-QUALIFIED PLAN OF DEFERRED COMPENSATION OF MARK IV INDUSTRIES, INC. ________________________________ Third Amendment and Restatement _________________________________ Effective September 1, 1993 NON-QUALIFIED PLAN OF DEFERRED COMPENSATION OF MARK IV INDUSTRIES, INC. _______________________________________ Third Amendment and Restatement ______________________________________ WHEREAS, Mark IV Industries, Inc., a Delaware corporation having its principal place of business at One Town Centre, John James Audubon Parkway, Amherst, New York ("Mark IV") adopted a non-qualified plan of deferred compensation known as the "Non-Qualified Plan of Deferred Compensation for Employees of Mark IV Industries, Inc. (the "Plan") effective February 20, 1990 in order to provide a select group of its highly compensated management employees the same amount of retirement income such highly compensated management employees would have been entitled to receive if the provisions of the Internal Revenue Code as amended by the Tax Reform Act of 1986, did not require Mark IV to change the manner in which it administers the Mark IV Retirement Savings Plan, (a tax qualified retirement plan maintained by Mark IV for the benefit of certain of its employees), and the Mark IV Industries, Inc. and Subsidiaries Master Defined Contribution Pension Plan (a tax qualified retirement plan maintained by Mark IV for certain of its employees); and WHEREAS, the Plan provides for the hypothetical investment of amounts hypothetically credited to accounts established to maintain records of the amounts payable to Participants in the Plan; and WHEREAS, Mark IV amended and restated the Plan effective December 1, 1991 to provide that the value of the accounts of certain Participants will be the greater of the amount hypothetically allocated to the account of the Participant together with interest thereon and the value of common stock of Mark IV which is to be hypothetically allocated to the account of such Participant, and to make certain other conforming changes to the Plan; and WHEREAS, Mark IV amended and restated the Plan effective December 16, 1992, to provide certain Participants the opportunity to defer the receipt of payment of any bonus or other incentive compensation which they may be entitled to receive under the terms of certain executive bonus arrangements and to provide that the amount of the incentive bonus, if any, which the Participant defers shall be credited with hypothetical earnings and paid in accordance with the terms of this Plan; and WHEREAS, Mark IV desires to provide that, effective September 1, 1993, certain Participants shall be permitted to defer the receipt of all or any part of the salary or wages they are entitled to receive and to provide that the amount of the salary or wages deferred by the Participant, if any, shall be credited with hypothetical earnings and paid in accordance with the terms of this Plan; NOW, THEREFORE, Mark IV hereby adopts the following as the Third Amendment and Restatement of the Plan effective September 1, 1993: SECTION 1. Definitions 1.01 Employer means Mark IV Industries, Inc. and any other corporation or other business entity affiliated with Mark IV or which is a successor in interest to such corporation or which, hereafter, with the approval of the Board of Directors of Mark IV, adopts the provisions and obligations of the Plan with respect to its employees by resolution of its own Board of Directors or similar governing body. 1.02 Plan means this non-qualified plan of deferred compensation known as the Non-Qualified Plan of Deferred Compensation for Employees of Mark IV Industries, Inc. 1.03 Trust Fund means one or more trust funds which may be established by Mark IV pursuant to this Plan, and all the assets at any time held by the Trustee of such trust funds. 1.04 Trustee means the person or persons, firm or corporation designated by the Board of Directors of Mark IV to serve as Trustee of any Trust Fund which may be created pursuant to the provisions of this Plan, and who, by joining in the execution of the agreement creating such Trust Fund or any amendments thereunder, signifies his acceptance of the Trust Fund and any person or persons, firm or corporation duly appointed as successor Trustee. 1.05 Eligible Employee means any officer or other key employee of the Employer. 1.06 Board of Directors means the Board of Directors of Mark IV. 1.07 Participant means any Eligible Employee of the Employer who becomes a participant in the Plan. 1.08 Beneficiary means any person or persons designated, in writing, by a Participant to share in the benefits of the Plan after his death, or if none, his spouse, or, if neither, his estate. 1.09 Committee means the administrative committee, referred to in Section 6.01, designated by the Board of Directors of Mark IV to administer the Plan. 1.10 Effective Date means February 20, 1990. 1.11 Anniversary Date means March 1, of each year. 1.12 Valuation Date means the last day of February of each calendar year. 1.13 Plan Year means the 12 consecutive month period beginning on March 1 of each calendar year. 1.14 Compensation means total salary or wages paid by the Employer to an Eligible Employee at his regular rate for services actually rendered during the calendar year ending within the Plan Year including bonuses which are payable with respect to services performed during the fiscal year of the Employer in which such calendar year ends but which bonuses are paid after the end of such calendar year (whether or not such salary, wages or bonuses are actually paid as a result of the Eligible Employee's election to defer receipt of such Compensation) and further including overtime and amounts contributed by the Participant to the Mark IV Retirement Savings Plan, a tax qualified master 401(k) plan maintained by Mark IV, but excluding any portion of the Annual Deferred Compensation Commitment allocated to the Account of an Eligible Employee under this Plan or any other contributions or benefits made to or for the benefit of any Eligible Employee under any other pension, profit sharing, insurance, hospitalization or other plan or policy maintained by the Employer for the benefit of any such Eligible Employee. The decision of the Committee as to what constitutes Compensation within the meaning of the foregoing definition shall be conclusive. 1.15 Annual Deferred Compensation Commitment means, for each Plan Year, the amount, if any, established by the Board of Directors of Mark IV and entered on Schedule A attached hereto, representing the total amount of the deferred compensation (excluding interest) which Mark IV has agreed and committed to allocate and pay with respect to such Plan Year in the future, to the Participants in the Plan. 1.16 Compensation Deferral means, for the Plan Year ending February 28, 1993, for the four (4) month period beginning September 1, 1993 and ending December 31, 1993 and for each calendar year beginning on or after January 1, 1994, the amount, if any, of the salary, wages, bonus or other incentive compensation payable to a Participant which the Participant has elected to defer the receipt of payment of pursuant to Section 3.02 hereof and which Mark IV has agreed and committed to allocate and pay to such Participant in the future under the terms of this Plan. 1.17 Applicable Interest Rate means, for each Plan Year, a variable rate of interest, adjusted on a quarterly basis as of March 1, June 1, September 1 and December 1 of each calendar year and equaling one hundred twenty percent (120%) of the Federal long-term interest rate established for such months by the Secretary of the Treasury pursuant to the provisions of Section 1274 of the Internal Revenue Code and the regulations thereunder. 1.18 Taxable Wage Base means, for each Plan Year, the maximum amount of earnings which may be considered wages under Internal Revenue Code Section 3121(a)(l), determined as of the last day of the calendar year ending with or within the Plan Year. 1.19 Authorized Absence means a leave of absence from the Employer or any Affiliate for a period not exceeding twenty-four (24) months or absence to enter the Armed Services of the United States during a period of national emergency or at any time through the operation of a compulsory military service law of the United States. Leaves of absence may be granted in the event of illness or accident of an Eligible Employee or a member of his family or for the continuation of the training or education of the Eligible Employee. For purposes of this Plan, an Eligible Employee who leaves on an Authorized Absence shall not be deemed to have incurred a termination of employment with the Employer or any Affiliate solely by reason of his leaving on such Authorized Absence. However, the failure of any Eligible Employee to return to active employment with the Employer or any Affiliate after a leave of absence or authorized extension thereof or during the period after his separation from military service in which his reemployment rights are guaranteed by law shall be deemed a termination of employment at the later of the date of commencement of such leave of absence or such military leave or the date for which he was last credited with an Hour of Service. Leaves of absence shall be granted in accordance with the Employer's normal policies and practices in a uniform and non-discriminatory manner. 1.20 Year of Service means each Plan Year in which the Eligible Employee has not less than 1,000 Hours of Service. 1.21 Hour of Service means each hour for which an Eligible Employee is paid, or entitled to payment, by the Employer or any Affiliate for the performance of duties. In addition, an Hour of Service means each hour for which an Eligible Employee is paid, or entitled to payment, directly or indirectly by the Employer or any Affiliate on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, an Employer or Affiliate approved sick or disability leave, layoff, leave of absence, military leave or jury duty. Notwithstanding the above, the hours required to be credited to an Eligible Employee pursuant to the provisions of the preceding sentence shall not include hours for which payment is made or due under a plan maintained solely for the purpose of complying with applicable Workers' Compensation laws, or Unemployment Compensation or disability insurance laws, and no more than 501 hours shall be credited to an Eligible Employee on account of any single continuous period during which the Eligible Employee performs no duties. In addition, no hours shall be credited for a payment which solely reimburses an Eligible Employee for medical or medically related expenses incurred by the Eligible Employee. An Hour of Service also means each hour for which back pay, irrespective of mitigation of damages, has been either awarded or agreed to by the Employer or any Affiliate; provided, however, that in no event shall the same hours be credited under both this paragraph and the other paragraphs of this Section 1.21. The computation period to which Hours of Service shall be credited and the number of Hours of Service to be credited for reasons other than the performance of duties shall be determined under Title 29, Subchapter C, Section 2530.200b(b) and (c) of Code of Federal Regulations, which is hereby incorporated by reference. Hours of Service shall be determined from records maintained by the Employer or Affiliate. 1.22 Vesting Computation Period means each Plan Year. 1.23 Break in Service means each Plan Year during which the Eligible Employee has completed no more than 500 Hours of Service due to a termination of employment with the Employer and any Affiliate. A termination of employment shall not occur upon a Participant's transfer between the employment of the Employer and any Affiliate. In the case of an Eligible Employee who is absent from work for any period by reason of: (a) the pregnancy of the Eligible Employee; (b) the birth of a child of the Eligible Employee; (c) the placement of a child with the Eligible Employee in connection with the adoption of such child by such Eligible Employee; or (d) the need to care for such child for a period beginning immediately following the birth or placement of such child with such Eligible Employee; such Eligible Employee shall receive an Hour of Service for each Hour of Service which the Eligible Employee would have been credited with during the period of such absence had the Eligible Employee not been absent. If the Committee is unable to determine the number of Hours of Service which the Eligible Employee would have been credited with had such Eligible Employee not been absent, such Eligible Employee shall be credited with 8 Hours of Service per work day of such absence. Notwithstanding the foregoing, an Eligible Employee shall not be credited with more than the number of Hours of Service required to prevent such Eligible Employee from incurring a Break in Service nor be credited with more than 501 Hours of Service by reason of any absence described in this paragraph. The Hours of Service credited under this paragraph shall be credited in the computation period in which the absence begins if the crediting is necessary to prevent the Eligible Employee from incurring a Break in Service in that computation period or, in all other cases, in the following computation period. The provisions of this paragraph shall be used solely for purposes of determining whether an Eligible Employee has incurred a Break in Service for participation and vesting purposes. 1.24 Account means the account or accounts established and maintained by the Committee for each Participant to reflect the amount of the deferred compensation payable to each Participant under the terms of this Plan and, in the event a Trust Fund is established pursuant to Section 5.01 hereof, to reflect the interest of each Participant in the Trust Fund. 1.25 Annual Allocation Account means a sub-account maintained by the Committee within each Participant's Account for each Plan Year with respect to which an Annual Deferred Compensation Commitment is to be made and established by the Committee for the purpose of valuing the total aggregate amount of each of the Annual Deferred Compensation Commitments made by the Employer to the Participant's Account together with any earnings thereon as provided for in this Plan. In the event a Trust Fund is established pursuant to Section 5.01 hereof, the "Annual Allocation Account" shall mean a sub-account established and maintained by the Committee for each Plan Year with respect to which an Annual Deferred Compensation Commitment is to be made and which reflects the amount, if any, which is allocated to the Participant's Account for such Plan Year, increased or decreased to reflect the proportionate share of the earnings or losses of the Trust Fund attributable to such portion of the Participant's Account. 1.26 Compensation Deferral Account means a sub-account maintained by the Committee within the Account of each Participant that has made a Compensation Deferral and established by the Committee for the purpose of valuing the amount of the Compensation Deferrals made by the Participant together with any earnings thereon as provided for in this Plan. In the event a Trust Fund is established pursuant to Section 5.01 hereof, the "Compensation Deferral Account" shall mean a sub-account established and maintained by the Committee for each Participant that has made a Compensation Deferral and which reflects the aggregate amount of the Compensation Deferrals allocated to the Participant's Account, increased or decreased to reflect the proportionate share of the earnings or losses of the Trust Fund attributable to such portion of the Participant's Account. 1.27 Phantom Stock means the shares of common stock of Mark IV, if any, which are hypothetically allocated to a Participant's Account pursuant to the terms of this Plan. 1.28 Dollar Value means, except as otherwise specifically provided in Section 3.10 hereof, an amount equal to the sum of (a) the dollar amount credited to a Participant's Account, if any, under the terms of the Plan, determined as of November 30, 1991 including the interest credited thereon as provided for in this Plan; and (b) the total of the dollar amounts credited to each of the Annual Allocation Accounts and the Compensation Deferral Account contained within the Participant's Account including the interest credited thereon as provided for in this Plan. 1.29 Share Value means an amount equal to (a) the sum of (i) the number of shares of Phantom Stock, if any, credited to a Participant's Account as of November 30, 1991 under the terms of this Plan; and (ii) the total of the number of shares of Phantom Stock, if any, credited to each of the Annual Allocation Accounts and the Compensation Deferral Account contained within the Participant's Account; multiplied by (b) the applicable price per share of common stock of Mark IV as determined pursuant to Section 3.07 hereof. 1.30 Fiduciary means any person with respect to the Plan to the extent: (a) He exercises any discretionary authority or discretionary control respecting management of the Plan or exercises any authority or control respecting management or disposition of its assets; (b) He renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of the Plan or has any authority or responsibility to do so; or (c) He has any discretionary authority or discretionary responsibility in the administration of the Plan. This term also includes persons designated by the Committee to carry out fiduciary responsibilities under the Plan. A Fiduciary may serve in more than one fiduciary capacity (including service as both Trustee and Committee) with respect to this Plan. 1.31 Investment Manager means that person so designated by the Committee to manage and invest designated Plan assets, who acknowledges his acceptance in writing and who is either (a) registered in good standing as an Investment Adviser under the Investment Advisers Act of 1940, (b) a bank, as defined in that Act, or (c) an insurance company qualified to perform investment management services under the laws of more than one state. 1.32 ERISA means the Employee Retirement Income Security Act of 1974, as amended, and corresponding provisions of future laws, as amended. 1.33 Affiliate means any corporation under common control with the Employer within the meaning of Internal Revenue Code Section 414(b) and any trade or business (whether or not incorporated) under common control with the Employer within the meaning of Internal Revenue Code Section 414(c). 1.34 Internal Revenue Code, Code and IRC each mean the Internal Revenue Code of 1986, as amended. 1.35 Mark IV Retirement Savings Plan means a master profit sharing/401(k) plan established effective March 1, 1987 and maintained by Mark IV Industries, Inc. and any successor plan to such master profit sharing/401(k) plan. 1.36 Profit Sharing Adoption Agreement means an adoption agreement which provides for the continuation of the provisions of the Employees Profit Sharing Plan of Mark IV Industries, Inc. (a profit sharing plan established by Mark IV Industries, Inc. effective July 1, 1973) within the framework of the Mark IV Retirement Savings Plan. 1.37 Mark IV Industries, Inc. and Subsidiaries Master Defined Contribution Pension Plan means a master defined contribution pension plan established effective March 1, 1987 and maintained by Mark IV Industries, Inc. and any successor plan to such master defined contribution pension plan. 1.38 Pension Plan Adoption Agreement means an adoption agreement which provides for the continuation of the provisions of the Employees Retirement Plan of Mark IV Industries, Inc. (a defined contribution pension plan established by Mark IV Industries, Inc. effective July 1, 1973) within the framework of the Mark IV Industries, Inc. Master Defined Contribution Pension Plan. SECTION 2. Eligibility 2.01 Employees Eligible.The Committee shall determine which Eligible Employees will participate in the Plan and the determination of the Committee concerning which Eligible Employees shall participate in the Plan shall be conclusive and binding on all persons. An Eligible Employee shall become a Participant in the Plan on the date that the Committee gives such Eligible Employee written notice that he or she has become a Participant in the Plan. Schedule B attached hereto contains a list of the Eligible Employees that were Participants in the Plan effective as of September 1, 1993. 2.02 Participation Form. The Committee shall furnish each Eligible Employee who becomes a Participant in the Plan with a form containing such information as the Committee may desire, including, but not limited to, date of birth of the Eligible Employee, and the Beneficiary designation of such Eligible Employee. SECTION 3. Annual Deferred Compensation Commitment and Compensation Deferrals 3.01 Annual Deferred Compensation Commitment. For each Plan Year (including the Plan Year ending on February 28, 1990) and not later than the time prescribed by law for filing the Federal Income Tax Return of Mark IV for the fiscal year of Mark IV in which such Plan Year ends (including extensions thereof), Mark IV shall, with respect to such fiscal year, establish the amount of the Annual Deferred Compensation Commitment to be allocated among the Participants in the Plan that were employed by the Employer as of the end of the Plan Year ending with or within such fiscal year. The amount of the Annual Deferred Compensation Commitment for any Plan Year together with earnings thereon as provided by Section 3.10 hereof, shall represent the amount which Mark IV has (subject to the vesting provisions of this Plan) agreed to pay to Participants in the Plan as of the end of the Plan Year for which such Annual Deferred Compensation Commitment has been made and, unless a Trust Fund is established pursuant to Section 5.01 hereof, no segregation of any assets of Mark IV for the purpose of paying such Annual Deferred Compensation Commitment shall be required. For each Plan Year, the amount of the Annual Deferred Compensation Commitment shall be determined by the Board of Directors of Mark IV and shall be entered on Schedule A attached to this Plan. The amount of the Annual Deferred Compensation Commitment as determined by the Board of Directors of Mark IV shall be conclusive and binding on Mark IV, all Participants, the Committee and the Employer. 3.02 Compensation Deferrals. For each Plan Year beginning with the Plan Year ending February 28, 1993, each Participant identified in Schedule B attached hereto may elect to defer his receipt of payment of all or any part of the bonus or other incentive compensation to which he is entitled as provided for in the executive bonus and other incentive plans of Mark IV. If a Participant makes a Compensation Deferral with respect to his bonus or other incentive compensation payable in connection with the services he has provided to the Employer for any Plan Year ending on or after February 28, 1993, the amount of the bonus or other incentive compensation which the Participant has elected to defer the receipt of shall not be paid to the Participant by his Employer except as provided for hereunder. For the four (4) month period beginning September 1, 1993 and ending December 31, 1993, and for each calendar year beginning on or after January 1, 1994, each Participant identified in Schedule B attached hereto may elect to defer the receipt of payment of all or any part of the salary or wages, to which he is entitled. If a Participant makes a Compensation Deferral with respect to the salary or wages to which he is entitled for the four (4) month period beginning September 1, 1993 and ending December 31, 1993 or for any calendar year thereafter, the portion of the salary or wages which the Participant has elected to defer the receipt of shall not be paid by his Employer except as provided for hereunder. The total amount of the Compensation Deferrals made by a Participant (which shall include the total amount of the salary, wages, bonus or other incentive compensation which the Participant has elected to defer the receipt of payment of) together with any earnings thereon as provided by Section 3.10 hereof, shall represent the amount which Mark IV has agreed to pay to the Participant that makes such Compensation Deferral and, unless a Trust Fund is established pursuant to Section 5.01 hereof, no segregation of any assets of Mark IV for the purpose of paying such Compensation Deferral shall be required. A Participant that is eligible to make Compensation Deferrals may make a Compensation Deferral by executing and delivering to the Committee, a form, supplied by the Committee, which provides a description of the amount of the Participant's salary or wages which the Participant elects to defer the receipt of together with a description of the portion of the bonus or other incentive compensation which the Participant elects to defer the receipt of (a "Deferred Compensation Election Form"). The Deferred Compensation Election Form shall also contain a statement of the period of time over which payment of the Participant's salary, wages, bonus or other incentive compensation is to be deferred (which period of time may extend beyond the Participant's Normal Retirement Date and may be different for separate and distinct portions (identified by the Participant) of the salary or wages, bonus or incentive compensation which the Participant has elected to defer). The Deferred Compensation Election Form shall provide, among other things, that the Participant's election to defer the receipt of payment of the salary or wages otherwise payable to the Participant is irrevocable for the calendar year for which the election is made, that the Participant's election to defer the receipt of payment of any bonus or other incentive compensation payable to the Participant is irrevocable and that the Participant waives his right to make any claim for payment of the salary, wages, bonus or other incentive compensation which the Participant has elected to defer except to the extent such amount is payable pursuant to this Plan. Notwithstanding the provisions of the preceding paragraph, a Participant's election to defer the receipt of any portion of his salary or wages shall be effective only for the calendar year immediately following the date the Participant delivers his Deferred Compensation Election Form to the Committee and a Participant's election to defer the receipt of any portion of the bonus or other incentive compensation to which he may be entitled shall be effective only for the bonus or other incentive compensation which is payable as of the end of the Plan Year immediately following the date the Participant delivers his Deferred Compensation Election Form to the Committee. Therefore, in the event a Participant identified in Schedule B attached hereto desires to defer the receipt of any portion of the salary or wages which he is otherwise entitled to for a calendar year following the calendar year in which payment of the Participant's salary or wages has been deferred, the Participant must execute and deliver a new Deferred Compensation Election Form to the Committee within the time set forth in the following paragraph. In addition, in the event a Participant identified in Schedule B desires to defer the receipt of any portion of the bonus or other incentive compensation he is entitled to for a Plan Year following the Plan Year in which any portion of his bonus or other incentive compensation was deferred, the Participant must execute and deliver a new Deferred Compensation Election Form to the Committee within the time set forth in the following paragraph. If a Participant that is eligible to defer the receipt of payment of a portion of his Compensation desires to defer a portion of his Compensation effective September 1, 1993, the Participant shall deliver an executed Deferred Compensation Election Form to the Committee on or before September 1, 1993. If a Participant desires to defer the receipt of a portion of his Compensation for any calendar year beginning on or after January 1, 1994, the Participant shall deliver an executed Deferred Compensation Election Form to the Committee on or before December 31 of the calendar year preceding the calendar year in which the Participant desires to have the receipt of such Compensation deferred. 3.03 Participant's Account.The Committee shall establish and maintain an Account in the name of each Participant to which the Committee shall credit such Participant's share of each AnnualDeferred Compensation Commitment made pursuant to the provisions of this Plan together with interest thereon as determined by Section 3.10 hereof and, if applicable, Phantom Stock as determined pursuant to Section 3.06 hereof Beginning with the Plan Year ending on February 29, 1992 and for each calendar year thereafter in which an Annual Deferred Compensation Commitment is made pursuant to this Plan, the Committee shall establish and maintain, within each Participant's Account, an Annual Allocation Account in the name of such Participant which shall be credited with such Participant's share of the Annual Deferred Compensation Commitment to be made for such Plan Year as determined pursuant to Section 3.04 hereof together with interest thereon as determined pursuant to Section 3.10 hereof and, if applicable, the number of shares of Phantom Stock determined pursuant to Section 3.06 hereof. Beginning with the Plan Year ending February 28, 1993 and for each calendar year beginning on or after January 1, 1994, in which a Participant makes a Compensation Deferral pursuant to this Plan, the Committee shall establish and maintain, within each Participant's Account, a Compensation Deferral Account in the name of such Participant which shall be credited with the amount of such Participant's Compensation Deferral pursuant to the terms of the Deferred Compensation Election Form executed by the Participant and effective for such calendar year, together with interest thereon as determined pursuant to Section 3.10 hereof and the number of shares of Phantom Stock determined pursuant to Section 3.06 hereof. In the event a Trust Fund is established pursuant to Section 5.01 hereof, the Committee shall establish and maintain, within the Trust Fund, an Account in the name of each Participant. At the time the Trust Fund is established, the Committee shall credit the Account of a Participant with an amount equal to the greater of the Dollar Value and, if applicable, the Share Value of the Participant's Account at the time the Trust Fund is established and, thereafter, the Committee shall credit such Participant's Account with the Participant's share of the net earnings of the Trust Fund and charge such Participant's Account with the net losses of the Trust Fund and distributions from the Trust Fund made on the Participant's behalf. In the event that this Plan is continued by Mark IV or its successor following the establishment of a Trust Fund, the Committee shall establish a Compensation Deferral Account within the Account of a Participant that is eligible to make a Compensation Deferral, which Compensation Deferral Account shall be credited with the amount of Compensation Deferrals made to the Plan by the Participant together with earnings or losses thereon. In addition, if the Plan is continued by Mark IV or its successor following the establishment of a Trust Fund, for each Plan Year following the establishment of the Trust Fund, the Committee shall establish within each Participant's Account in the Trust Fund, an Annual Allocation Account in the name of such Participant which shall be credited with such Participant's share of the Annual Deferred Compensation Commitment for such Plan Year together with all earnings or losses thereon. 3.04 Allocation of Annual Deferred Compensation Commitment. The Committee shall allocate the Annual Deferred Compensation Commitment for each Plan Year among the Accounts of the several Participants in the following manner: (a) There shall first be allocated to the Annual Allocation Account of each Participant, an amount equal to four percent (4%) of the amount by which the Compensation of such Participant exceeds the lesser of: (i)(A) for the Plan Years ending prior to March 1, 1994, an amount equal to $200,000 or such other amount as may be established by the Secretary of the Treasury under IRC Section 401(a)(17); and (B) for Plan Years beginning March 1, 1994 and thereafter, an amount equal to $150,000 or such other amount as may be established by the Secretary of the Treasury under IRC Section 401(a)(17); and (ii) for Plan Years beginning March 1, 1993 and thereafter, the actual amount of Compensation paid to the Participant during the calendar year ending within the Plan Year (excluding, for this purpose, the amount of Compensation which the Participant has elected to defer the receipt of pursuant to Section 3.02 hereof. In the event the Annual Deferred Compensation Commitment is insufficient to make the foregoing allocation, there shall be allocated to each Participant's Annual Allocation Account, an amount which bears the same ratio to the Annual Deferred Compensation Commitment as the portion of such Participant's Compensation described in the preceding sentence bears to the total Compensation of all Participants described in the preceding sentence. (b) Following the allocation of the Annual Deferred Compensation Commitment as provided in Section 3.04(a) above, there shall be allocated to each Participant's Annual Allocation Account, an amount equal to that percentage of each Participant's Compensation in excess of the Taxable Wage Base for the Plan Year for which the Annual Deferred Compensation Commitment is being made, which percentage equals the rate of tax provided for by IRC Section 3111(a) as determined on the last day of the calendar year ending with or within such Plan Year. In the event that the Annual Deferred Compensation Commitment is insufficient to make the foregoing allocation, there shall be allocated to each Participant's Annual Allocation Account, an amount which bears the same ratio to the Annual Deferred Compensation Commitment as such Participant's Compensation for such Plan Year in excess of the Taxable Wage Base for the Plan Year for which the Annual Deferred Compensation Commitment is being made bears to the total Compensation of all of the Participants in excess of such Taxable Wage Base. (c) The remaining amount of the Annual Deferred Compensation Commitment, if any, shall then be allocated among the Annual Allocation Accounts of the several Participants in the same ratio as such Participant's Compensation for the fiscal year bears to the total Compensation of all Participants for such fiscal year. 3.05 Time of Allocation. For purposes of determining the Dollar Value of a Participant's Account: (a) the amount of the Annual Deferred Compensation Commitment to be allocated to the Account of a Participant for a Plan Year shall be deemed to be allocated to such Participant's Account, and to the Annual Allocation Account established for such Plan Year, as of the end of such Plan Year, (b) the amount of the salary or wages deferred by a Participant in connection with a Compensation Deferral shall be deemed to be credited to the Participant's Account and the Compensation Deferral Account established for the Participant as of the end of the calendar month during which the services giving rise to such salary or wages were performed, and (c) the amount of any bonus or other incentive compensation deferred by a Participant in connection with a Compensation Deferral shall be deemed to be credited to such Participant's Account, and to the Compensation Deferral Account established for the Participant as of the end of the Plan Year ending with or within the fiscal year of the Company with respect to which such bonus or other incentive compensation is payable. For purposes of determining the Share Value of a Participant's Account as of the end of any Plan Year, the number of shares of Phantom Stock to be allocated to the Account of a Participant for a Plan Year shall be deemed to be allocated to such Participant's Account, to the Participant's Compensation Deferral Account, if any, and to the Annual Allocation Account established for such Plan Year, as of the end of such Plan Year. 3.06 Allocations of Phantom Stock. If the Dollar Value of a Participant's Account determined as of November 30, 1991 exceeds $25,000, the Committee shall allocate to the Account of such Participant, as of December 1, 1991, the number of shares of Phantom Stock which could be purchased at a price per share determined in accordance with Section 3.07 hereof using the Dollar Value of the Participant's Account determined as of November 30, 1991. In addition, if the Dollar Value of a Participant's Account determined as of November 30, 1991 was less than $25,000 but the Dollar Value of such Participant's Account determined as of the end of any Plan Year thereafter exceeds $25,000, (including the amount, if any, of the portion of the Annual Deferred Compensation Commitment to be allocated to the Participant's Annual Allocation Account for such Plan Year and the amount, if any, of the Compensation Deferrals credited to the Participant's Compensation Deferral Account as of the end of such Plan Year), the Committee shall allocate to such Participant's Account as of the end of such Plan Year, the number of shares of Phantom Stock which could be purchased at a price per share determined in accordance with Section 3.07 hereof using the Dollar Value of the Participant's Account determined as of the end of such Plan Year. For purposes of this paragraph, the number of shares of Phantom Stock allocated to the Participant's Account as of the end of such Plan Year shall be allocated by the Committee among the various sub-accounts established by the Committee for the Participant in proportion to the respective Dollar Values of such sub- accounts. Beginning with the Plan Year ending February 29, 1992, for the Plan Year ending February 28, 1993 and for each Plan Year thereafter, unless a Trust Fund has been established pursuant to Section 5.01 hereof, if the Dollar Value of a Participant's Account exceeds $25,000, the Committee shall credit the Annual Allocation Account to be established for such Participant with the number of shares of Phantom Stock which could be purchased at a price per share determined pursuant to Section 3.07 hereof using an amount equal to the portion of the Annual Deferred Compensation Commitment which is to be allocated to such Participant's Annual Allocation Account for such Plan Year. In addition, if the Dollar Value of a Participant's Account exceeds $25,000, and the Participant is eligible to make a Compensation Deferral, as of the end of each calendar month, the Committee shall credit the Participant's Compensation Deferral Account with the number of shares of Phantom Stock, if any, which could be purchased at a price per share determined pursuant to Section 3.07 hereof using the amount of salary or wages, if any, deferred by the Participant in connection with the services performed by such Participant for such calendar month and, as of the end of each Plan Year, the Committee shall credit the Participant's Compensation Deferral Account with the number of shares of Phantom Stock, if any, which could be purchased at a price per share determined pursuant to Section 3.07 hereof using the amount of the bonus or other incentive compensation, if any, deferred by the Participant with respect to services performed by the Participant during such Plan Year. 3.07 Pricing of Mark IV Common Stock. For purposes of determining the number of shares of Phantom Stock, if any, to be allocated to the Account of a Participant as of December 1, 1991, the price per share of common stock of Mark IV shall be deemed to be the average of the closing prices per share of common stock of Mark IV during the month of November, 1991, as determined from the closing prices per share of common stock of Mark IV as reported by the New York Stock Exchange Composite Index for such month. For purposes of determining the number of shares of Phantom Stock, if any, to be allocated to the Account of a Participant, as of the end of any calendar month in connection with the salary or wages deferred by the Participant as provided for by Section 3.06 hereof, the price per share of common stock of Mark IV shall be deemed to be the average of the closing prices per share of common stock of Mark IV during such calendar month as determined from the closing prices per share of common stock of Mark IV. For purposes of determining the number of shares of Phantom Stock, if any, to be allocated to the Account of a Participant as of the end of each Plan Year with respect to the bonus or other incentive compensation deferred by the Participant as provided for by Section 3.06 hereof, the price per share of common stock of Mark IV shall be deemed to be the average of the closing prices per share of common stock of Mark IV during the month of February for the Plan Year for which such bonus or other incentive compensation was deferred. For purposes of determining the number of shares of Phantom Stock, if any, to be allocated to the Account of a Participant, as of the end of each Plan Year in connection with any Annual Deferred Compensation Commitment allocated to the Participant's Account as of the end of such Plan Year pursuant to Section 3.06 hereof, the price per share of common stock of Mark IV shall be deemed to be the average of the closing prices per share of common stock of Mark IV during the month of February for the Plan Year for which the Annual Deferred Compensation Commitment is to be made. For purposes of determining the average of the closing prices per share of common stock of Mark IV as required by this paragraph, such closing prices shall be determined from the closing prices per share of common stock of Mark IV reported by the New York Stock Exchange Composite Index for such month. For purposes of determining the amount of the funds to be transferred to any Trust Fund established pursuant to Section 5.01 hereof, the price per share of common stock of Mark IV shall be the closing price per share of common stock of Mark IV on the day a Change in Control (as defined in Section 5.03 hereof) occurs, as reported by the New York Stock Exchange Composite Index. For purposes of determining the Share Value of a Participant's Account if the Participant's employment with the Employer is voluntarily or involuntarily terminated for any reason including, but not limited to, the Participant's retirement, death or suffering of a total and permanent disability, the price per share of common stock of Mark IV shall be deemed to be the average of the closing prices per share of common stock of Mark IV as reported by the New York Stock Exchange Composite Index for the thirty (30) day period ending on the day the Participant's employment with the Employer is terminated. If, pursuant to Section 4.05 hereof, a Participant has elected to receive payment of all or any portion of the Participant's Account attributable to Compensation Deferrals while the Participant is still employed by the Employer, for purposes of determining the Share Value of such portion of the Participant's Account, if any, at the time or times for payment of such portion of the Participant's Account, the price per share of the common stock of Mark IV shall be deemed to be the average of the closing prices per share of common stock of Mark IV during the calendar month ending immediately prior to the date for payment of all or any such portion of the Participant's Account as determined by the closing prices per share of common stock of Mark IV for such period as reported by the New York Stock Exchange Composite Index for such month. 3.08 Anti-Dilution Provisions. The aggregate number of shares of Phantom Stock allocated to a Participant's Account shall be adjusted proportionately in the event of any change, increase or decrease in the total number of issued and outstanding shares of common stock of Mark IV or any change in classification of the shares of common stock of Mark IV without the receipt of consideration by Mark IV as a result of any stock split, reverse stock split or other consolidation of shares of common stock of Mark IV or as a result of any payment of a stock dividend, recapitalization, reclassification or other adjustment in the capital of Mark IV without receipt of consideration by Mark IV. 3.09 Fractional Shares and Dividends. In the event that any cash dividends are paid with respect to any Phantom Stock allocated to a Participant's Account, an amount equal to the amount of the cash dividends which would be payable with respect to the number of shares of Phantom Stock contained in the Participant's Account shall be allocated by the Committee to the Participant's Account as of the date for payment of such cash dividends specified by Mark IV in the resolution authorizing the payment of such cash dividends. Such cash dividends shall be allocated among the respective sub- accounts established by the Committee for the Participant in proportion to the number of shares of Phantom Stock contained in such sub-accounts. In addition, if any fractional shares of common stock of Mark IV would result from the allocation of a portion of any Annual Deferred Compensation Commitment to a Participant's Account, from the crediting of any Compensation Deferral to a Participant's Account, or in connection with any change in the total number of issued and outstanding shares of common stock of Mark IV without the receipt of compensation by Mark IV, an amount equal to such fractional share of common stock of Mark IV shall be allocated to the Annual Allocation Account or Compensation Deferral Account, as the case may be, established for the Plan Year in which such fractional share becomes allocable to the Participant's Account. 3.10 Allocation of Interest. Subject to the provisions of the following paragraphs, unless a Trust Fund has been established pursuant to Section 5.01 hereof, as of the end of each Plan Year, the Committee shall increase the Dollar Value of each Participant's Account by an amount equal to the Applicable Interest Rate multiplied by the Dollar Value of such Participant's Account determined as of the end of the preceding Plan Year. In addition, if a Participant has elected to defer the receipt of all or any portion of his salary or wages by making a Compensation Deferral and if a Trust Fund has not been established pursuant to Section 5.01 hereof, as of the end of each Plan Year, the Committee shall increase the Dollar Value of each Participant's Account by an amount equal to the amount of interest which would have been earned by applying the Applicable Interest Rate for the immediately preceding Plan Year (adjusted for periods of less than one year) to each of the monthly allocations of the salary or wages deferred by the Participant during the Plan Year but only for the period between the date a monthly allocation of the Participant's salary or wages is made to the Participant's Deferral Compensation Account and the end of the Plan Year. For purposes of this Section 3.10, the amount of the interest to be allocated to the Participant's Account as of the end of such Plan Year shall be allocated among the respective sub-accounts established by the Committee for the Participant in proportion to the Dollar Values of such sub-accounts, determined as of the end of the preceding Plan Year. Notwithstanding the foregoing, the proportion of a Participant's Annual Allocation Account or Compensation Deferral Account, if any, which is attributable to cash dividends which would be payable with respect to the shares of common stock of Mark IV allocated to the Participant's Annual Allocation Account or Compensation Deferral Account, respectively, shall only be increased by the Applicable Interest Rate for the immediately preceding Plan Year (adjusted for periods of less than one year) for the period between the date such cash dividends would be allocated to the Participant's Annual Allocation Account or Compensation Deferral Account, respectively, and the end of the Plan Year. If a Trust Fund has not been established and a Participant's employment with the Employer is terminated on account of his death, retirement or suffering of a Total and Permanent Disability, the Committee shall increase the Dollar Value of such a Participant's Account by an amount equal to the amount of interest which would have been earned by the Dollar Value of the Participants' Account determined as of the end of the Plan Year ending prior to the Participant's death, retirement or Total and Permanent Disability and applying the Applicable Interest Rate for such immediately preceding Plan Year (adjusted for periods of less than one year) to such Dollar Value for the period from the end of such Plan Year to the date the Participant's employment with the Employer is terminated on account of the Participant's retirement, death or suffering of a Total and Permanent Disability. In addition, if a Participant has elected to make Compensation Deferrals, a Trust Fund has not been established and the Participant's employment with the Employer is terminated on account of his death, retirement or suffering of a Total and Permanent Disability, the Committee shall increase the Dollar Value of such Participant's Account by an amount equal to the amount of interest which would have been earned by applying the Applicable Interest Rate (adjusted for periods of less than one year) to each of the monthly allocations of salary or wages made to the Participant's Compensation Deferral Account for the period between the date such monthly allocation is made to the Participant's Compensation Deferral Account and the date the Participant's employment with the Employer is terminated on account of his retirement, death or suffering of a Total and Permanent Disability. As soon as practicable following the termination of a Participant's employment with the Employer on account of death, retirement or Total and Permanent Disability, the Committee shall compare the Dollar Value of the Participant's Account determined as of the date of the Participant's retirement, death or Total and Permanent Disability (including the amount of any interest thereon as provided for by the two preceding sentences) with the Share Value of the Participant's Account determined as of the date of the Participant's retirement, death or Total and Permanent Disability and the greater of such values shall, thereafter, be deemed the Dollar Value of the Participant's Account determined as of the date the Participant's employment with the Employer is terminated on account of the Participant's death, retirement or Total and Permanent Disability. Thereafter, if a Trust Fund has not been established, the Dollar Value (as determined pursuant to the preceding sentence) of the Account of a Participant whose employment with the Employer has been terminated on account of his death, retirement or suffering of a Total and Permanent Disability, shall be credited with interest for the period beginning on the date the Participant's employment with the Employer is terminated as a result of his death, retirement or Total and Permanent Disability and ending on the date the value of the Participant's Account is distributed. For each Plan Year or portion thereof which elapses during the period beginning on the date a Participant's employment with the Employer is terminated on account of his death, retirement or Total and Permanent Disability and ending on the date the value of the Participant's Account is distributed, the interest rate which shall be applied to the Dollar Value of the Account of such Participant shall be the Applicable Interest Rate as in effect for the immediately preceding Plan Year. If a Trust Fund has not been established and a Participant's employment with the Employer is terminated for any reason prior to his death, retirement or suffering of a Total and Permanent Disability, the Share Value of the Participant's Account, if any, shall be determined as provided in Section 3.07 hereof, and the Committee shall compare the Dollar Value of the Participant's Account determined as of the end of the immediately preceding calendar month with the Share Value of the Participant's Account as of the end of the immediately preceding calendar month and the greater of such values shall, thereafter, be deemed the Dollar Value of such Participant's Account determined as of the date the Participant's employment with the Employer is terminated. Thereafter, the Participant's Account shall be credited with interest during the period beginning on the date the Participant's employment with the Employer is terminated and ending on the last day of the calendar month ending immediately before the calendar month in which the Participant's Account is distributed. The amount of such interest for any such period shall be equal to the Applicable Interest Rate for the immediately preceding Plan Year multiplied by the Dollar Value of the Participant's Account determined as of the end of the immediately preceding Plan Year. For purposes of this paragraph, the amount of interest to be allocated to the Participant's Account as of the end of a Plan Year shall be allocated among the respective sub- accounts established by the Committee for the Participant in proportion to the Dollar Values of such sub-accounts, determined as of the end of the preceding Plan Year. Upon the occurrence of a Change in Control as defined in Section 5.03 hereof, the Committee shall increase the Dollar Value of each Participant's Account by an amount equal to the amount of interest which would have been earned by the Dollar Value of such Participant's Account determined as of the Plan Year ending prior to the Change in Control and applying the Applicable Interest Rate for such immediately preceding Plan Year to such Dollar Value for the period from the end of such Plan Year to the date on which the Change in Control occurs. In addition, upon the occurrence of a Change in Control, the Committee shall increase the Dollar Value of the Account of a Participant that has elected to make Compensation Deferrals by an amount equal to the amount of interest, if any, which would have been earned by applying the Applicable Interest Rate for the immediately preceding Plan Year (adjusted for periods of less than one year) to each of the monthly allocations of salary or wages, if any, made to the Participant's Compensation Deferral Account for the period between the date such monthly allocation is made to the Participant's Compensation Deferral Account and the date the Change in Control occurs. If a Trust Fund has been established pursuant to Section 5.01 hereof and a Participant's employment with the Employer is terminated for any reason prior to his death, retirement or disability, during the period between the date such Participant's employment with the Employer is terminated and the date that distribution of the Participant's Account begins, such Participant's Account shall be credited or charged with its proportionate share of the earnings or losses of the Trust Fund. 3.11 Allocation of Forfeitures. As of each Valuation Date, the Committee shall allocate the amounts, if any, forfeited in accordance with Section 4.07 hereof among the Accounts of the several Participants as if said amounts were an additional Annual Deferred Compensation Commitment of Mark IV with respect to the Plan Year of containing such Valuation Date. 3.12 Allocations Upon Death, Disability or Retirement. If a Participant's employment with the Employer is terminated due to the Participant's retirement, death or suffering of a Total and Permanent Disability after the Participant has completed at least 1000 Hours of Service, as soon as practicable following such Participant's termination of employment with the Employer (but in no event later than thirty (30) days following the date the Participant's employment with the Employer is terminated due to the Participant's death, retirement or suffering of a Total and Permanent Disability) the Committee shall allocate an additional amount to the Participant's Account. The additional amount to be allocated to a Participant's Account as described in the preceding sentence shall be equal to the amount, if any, which would have been allocated to the Participant's Account based on the Participant's Compensation during the calendar year in which the Participant's employment with the Employer is terminated had the amount of the Annual Deferred Compensation Commitment for the Plan Year containing the Participant's termination of employment been equal to the amount required to make the full allocations set forth in Sections 3.04(a) and (b) hereof. 3.13 Participants Eligible for Allocation. Except as otherwise provided by Section 3.12 hereof, for purposes of Section 3.04 hereof, the term "Participant" shall only include those Participants who (a) have completed at least 1,000 Hours of Service with the Employer during the Plan Year for which the allocation of the Annual Deferred Compensation Commitment is to be made; and (b) are employed by the Employer on the last day of the Plan Year for which the allocation of the Annual Deferred Compensation Commitment is to be made. 3.14 Allocation Does Not Vest Any Interest. The fact that an amount is credited to the Account of a Participant shall not vest in such Participant or any Beneficiary any right, title or interest in any assets of Mark IV except at such time or times and upon the terms and conditions herein provided. In addition, in the event a Trust Fund is established pursuant to Section 5.01 hereof, the fact that an amount is credited to the Account of a Participant shall not vest in such Participant or any Beneficiary any right, title or interest in the assets of the Trust Fund except at such time or times and upon the terms and conditions provided herein. 3.15 Contributions. In the event a Trust Fund is established pursuant to Section 5.01 hereof and, following the establishment of such Trust Fund, Mark IV or its successor elects to continue this Plan, for each Plan Year in which an Annual Deferred Compensation Commitment is made under this Plan and not later than the time prescribed by law for filing of the Federal Income Tax Return of Mark IV or its successor, Mark IV or its successor shall make a contribution to the Trust Fund in an amount equal to the Annual Deferred Compensation Commitment for such Plan Year. In addition, in the event a Trust Fund is established pursuant to Section 5.01 hereof and, following the establishment of such Trust Fund, Mark IV or its successor elects to continue this Plan, for each Plan Year in which a Participant makes a Compensation Deferral, Mark IV or its successor, as the case may be shall, within fifteen (15) days following the end of the calendar month in which any portion of the Participant's Compensation is to be allocated to his Compensation Deferral Account contribute to the Trust Fund an amount equal to the Compensation Deferrals made for such calendar month. 3.16 Valuation of Trust Fund. In the event a Trust Fund is established pursuant to Section 5.01 hereof, as of each Valuation Date, the Trustee shall determine the net worth of the assets of the Trust Fund and report such value to the Committee in writing. In determining such net worth, the Trustee shall value the assets of the Trust Fund at their fair market value as of such Valuation Date and shall deduct all fees and expenses chargeable to the Trust Fund. Such valuation shall not include the portion of any Compensation Deferral for such Plan Year which is attributable to the Participant's election to defer receipt of his bonus or other incentive compensation nor shall such valuation include any contribution to be made by Mark IV or its successor to reflect the Annual Deferred Compensation Commitment for the Plan Year ending on such Valuation Date. The Committee shall then adjust the net credit balance in the Accounts of all Participants upward or downward, pro rata, so that the total of such net credit balances will equal such net worth of the Trust Fund as of such Valuation Date. Finally, the Committee shall add to the Account of each Participant, the portion of the contribution, if any, to be made by Mark IV or its successor to reflect the Annual Deferred Compensation Commitment for the Plan Year ending on such Valuation Date to which the Participant is entitled pursuant to Section 3.04 hereof and the amount, if any, of the Participant's Compensation Deferral. 3.17 Statement of Account. As soon as practicable following Mark IV's establishment of the Annual Deferred Compensation Commitment for a Plan Year, the Committee shall deliver to each Participant a statement of the Dollar Value and, if applicable, the Share Value of his Account including a statement of: (a) the amount of the Annual Deferred Compensation Commitment to be allocated to his Annual Allocation Account for such Plan Year; (b) the amount of the portion of the Participant's Compensation Deferral which is attributable to the Participant's deferral of salary or wages and which has been allocated to the Participant's Compensation Deferral Account for the Plan Year (c) the amount of the Participant's Compensation Deferral which is attributable to the Participant's deferral of his bonus or other incentive compensation and which is to be allocated to the Participant's Compensation Deferral Account as soon as practicable following the end of such Plan Year; (d) the number of shares of Phantom Stock, if any, to be allocated to his Annual Allocation Account and, if applicable, his Compensation Deferral Account for such Plan Year; (e) the Dollar Value of the Participant's Account (including the Dollar Value of the vested and non-vested portions of the Participant's Account) together with a statement of the interest to be allocated to such Participant's Account for such Plan Year and the manner in which such interest is to be allocated among the respective sub-accounts established by the Committee for the Participant in connection with its administration of the Plan; and, (f) the Share Value, if any, of the Participant's Account (including the Share Value of the vested and non-vested portions of the Participant's Account). SECTION 4. Distributions 4.01 Retirement. Every Participant shall retire for purposes of this Plan upon his termination of employment on his normal retirement date or his deferred retirement date, as such dates are defined below, and shall continue to participate until his actual retirement. Notwithstanding anything to the contrary contained in Section 4.04 hereof, upon a Participant's retirement, the Dollar Value and, if applicable, the Share Value of his Account shall become fully and nonforfeitably vested and his participation hereunder shall cease. As soon as practicable following a Participant's retirement, the Committee shall direct Mark IV to distribute to the Participant in one lump sum payment in cash or by check drawn on an account containing sufficient funds, an amount equal to the Dollar Value of the Participant's Account as determined pursuant to Section 3.10 hereof, together with an amount equal to any additional allocation to which the Participant may be entitled pursuant to Section 3.12 hereof. If a Trust Fund has been established pursuant to Section 5.01 hereof, following a Participant's retirement, the Committee shall direct the Trustee to distribute to the Participant in one lump sum payment in cash or by check drawn on an account containing sufficient funds, the value of such Participant's Account within the Trust Fund, determined as of the preceding Valuation Date. In addition, if a Trust Fund has been established pursuant to Section 5.01 hereof, following a Participant's retirement, the Committee shall direct Mark IV or its successor to distribute to the Participant in one lump sum payment in cash or by check drawn on an account containing sufficient funds, the amount of any additional allocation to which the Participant may be entitled pursuant to Section 3.12 hereof. The payments required to be made to a Participant pursuant to this paragraph shall be delivered to the Participant no later than sixty (60) days following the date the Participant retires from employment with the Employer. For purposes of this Plan: (a) Normal Retirement Date means the first day of the first calendar month next following such Participant's fifty-fifth (55th) birthday; and (b) Deferred Retirement Date means the first day of the month after such Participant actually leaves the service of the Employer, provided it is subsequent to his Normal Retirement Date. 4.02 (a) Death Notwithstanding anything to the contrary contained in Section 4.04 hereof, upon the death of a Participant before retirement or other termination of employment, the Dollar Value and, if applicable, the Share Value of his Account shall become fully and nonforfeitably vested. As soon as practicable thereafter, the Committee shall direct Mark IV to distribute to any surviving Beneficiary designated by the Participant, or, if none, to the Participant's surviving spouse, or if neither to the Participant's estate, in one lump sum payment in cash or by check drawn on an account containing sufficient funds, an amount equal to the Dollar Value of the deceased Participant's Account as determined pursuant to Section 3.10 hereof, together with an amount equal to any additional allocation to which the deceased Participant may be entitled pursuant to Section 3.12 hereof. If a Trust Fund has been established pursuant to Section 5.01 hereof, following a Participant's death, the Committee shall direct the Trustee to distribute to any surviving Beneficiary designated by the Participant, or, if none, to the Participant's surviving spouse, or, if neither, to the Participant's estate, in one lump sum payment in cash or by check drawn on an account containing sufficient funds, the value of such Participant's Account within the Trust Fund determined as of the preceding Valuation Date. In addition, if a Trust Fund has been established pursuant to Section 5.01 hereof, following the Participant's death, the Committee shall direct Mark IV or its successor to distribute to any surviving Beneficiary designated by the Participant or, if none, to the Participant's surviving spouse, or, if neither, to the Participant's estate, in one lump sum payment in cash or by check drawn on an account containing sufficient funds, an amount equal to any additional allocation to which the Participant may be entitled pursuant to Section 3.12 hereof. The payments required to be made pursuant to this paragraph shall be delivered to the Participant's Beneficiary, or if none to the Participant's surviving spouse, or if neither to the Participant's estate no later than 60 days following the Participant's death. (b) Proof of Death The Committee may require such proper proof of death and such evidence of the right of any person to receive payment of a deceased Participant's Account as the Committee may deem desirable. The Committee's determination shall be conclusive. (c) Designation of Beneficiary Each Eligible Employee, upon becoming a Participant, may designate a Beneficiary of his own choosing and may, in addition, name a contingent Beneficiary. Such designation shall be made in a form satisfactory to the Committee. Any Participant may at any time revoke or change his Beneficiary designation by filing written notice with the Committee. 4.03 (a) Disability. Notwithstanding anything to the contrary contained in Section 4.04 hereof in the event of a Participant's Total and Permanent Disability before retirement or other termination of employment, the Dollar Value and, if applicable, the Share Value of his Account shall become fully and nonforfeitably vested. As soon as practicable following the date it is determined that a Participant suffers from a total and permanent disability, the Committee shall direct Mark IV, to distribute and pay to the Participant in one lump sum payment in cash or by check drawn on an account containing sufficient funds, an amount equal to the Dollar Value of the Participant's Account as determined pursuant to Section 3.10 hereof, together with an amount equal to any additional allocation to which the Participant may be entitled pursuant to Section 3.12 hereof. If a Trust Fund has been established pursuant to Section 5.01, after it is determined that the Participant suffers from a Total and Permanent Disability, the Committee shall direct the Trustee to distribute and pay to the Participant in one lump sum payment in cash or by check drawn on an account containing sufficient funds, an amount equal to the value of such Participant's Account within the Trust Fund determined as of the preceding Valuation Date. In addition, if a Trust Fund has been established pursuant to Section 5.01 hereof, after it is determined that the Participant suffers from a total and permanent disability, the Committee shall direct Mark IV or its successors to distribute to the Participant in one lump sum payment in cash or by check drawn on an account containing sufficient funds, an amount equal to any additional allocations to which the Participant may be entitled pursuant to Section 3.12 hereof. The payments required to be made pursuant to this paragraph shall be delivered to the Participant no later than 60 days following the date it is determined that the Participant suffers from a Total and Permanent Disability. (b) Total and Permanent Disability. For purposes of this Plan, Total and Permanent Disability shall mean a presumably permanent physical or mental condition of a Participant resulting from a bodily injury or disease or mental disorder which renders him incapable of continuing in the employment of the Employer or any Affiliate. (c) Determination of Total and Permanent Disability. The total and permanent disability of any Participant shall be determined by a licensed physician in accordance with uniform principles consistently applied, upon the basis of independent medically determined evidence. 4.04 Vesting. Each Participant in the employ of the Employer on December 1, 1991 shall at all times have a 100% vested interest in the entire Dollar Value and the entire Share Value, if any, of his Account including the Dollar Value and Share Value, if any, of his Account determined as of December 1, 1991, and the Dollar Value and Share Value, if any, of his Account attributable to amounts credited to each of his Annual Allocation Accounts under the terms of this Plan with respect to any additional allocations made to each of the Participant's Annual Allocation Accounts after December 1, 1991. Each Participant shall at all times have a 100% vested interest in the Dollar Value and the Share Value, if any, of his Account attributable to amounts credited to his Compensation Deferral Account under the terms of this Plan. The vested interest in an Annual Allocation Account of a Participant that first performs an Hour of Service for the Employer at any time on or after December 2, 1991 shall be determined on the basis of the number of the Participant's whole Years of Service occurring after the Plan Year for which an Annual Deferred Compensation Commitment is allocated to such Participants's Annual Allocation Account. Such vested interest shall be determined in accordance with the following schedule: Completed Years of Service After Allocation of Annual Deferred Percent Compensation Commitment Vested Less than 1 20% 1 but less than 2 40% 2 but less than 3 60% 3 but less than 4 80% 4 or more 100% A Participant's vested interest in any of his Annual Allocation Accounts for any Plan Year can be determined at any point in time by using the above schedule. Notwithstanding the above schedule, a Participant shall become fully and nonforfeitably vested in the entire Dollar Value and, the entire Share Value, if any, of his Account upon the occurrence of a Change in Control as defined in Section 5.03 hereof, including any Dollar Value or Share Value attributable to amounts credited to the Participant's Account following the Change in Control. For purposes of this Section 4.04, Years of Service shall be determined on the basis of the Vesting Computation Period. All Years of Service of an Eligible Employee with the Employer and any Affiliate shall be taken into account. However, in determining a Participant's vested interest in any of his Annual Allocation Accounts subsequent to the rehiring of a terminated Eligible Employee who has incurred a Break in Service, Years of Service completed by a Participant prior to such Break in Service shall not be counted under the following circumstances: (a) If the Eligible Employee fails to complete a Year of Service after his rehiring; or (b) If the Eligible Employee incurred five (5) consecutive Breaks in Service and had no vested interest in the value of his Account at the time of his termination of employment. 4.05 Distribution of Compensation Deferrals. A Participant shall be entitled to receive payment of all or any portion of the amount of his Compensation Deferral for a Plan Year at the time or times specified in the Deferred Compensation Election Form executed by the Participant with respect to such Plan Year notwithstanding the fact that the Participant is actively employed by the Employer at the time such payment is to be made to the Participant. As soon as practicable following the date specified by the Participant in his Deferred Compensation Election Form (and, in no event later than ten (10) days following such date), the Committee shall distribute and pay to the Participant in one (1) lump sum payment in cash or by check drawn on an account containing sufficient funds, the percentage, specified in the Participant's Deferred Compensation Election Form, of the Dollar Value or the Share Value, whichever is greater, of the Participant's Compensation Deferral made in connection with such Deferred Compensation Election Form. If a Participant's Deferred Compensation Election Form provides for the partial payment to a Participant of the Participant's Compensation Deferral, the Dollar Value and the Share Value of the Participant's Compensation Deferral Account shall be reduced in an amount equal to the percentage of the Compensation Deferral that is to be paid to the Participant. If a Trust Fund has been established pursuant to Section 5.01 hereof, at the time a Participant is entitled to payment of all or any portion of his Compensation Deferral for a Plan Year as provided for the Deferred Compensation Election Form executed by the Participant for such Plan Year, the Committee shall direct the Trustee to distribute to the Participant in one (1) lump sum payment in cash or by check drawn on an account containing sufficient funds, the portion of the Participant's Account which is attributable to the portion of the Compensation Deferral which the Participant is entitled to receive payment of together with any earnings (or less any losses) of the Trust Fund attributable to such amount. 4.06 Termination of Employment and Distribution of Vested Benefits. Upon a Participant's voluntary or involuntary termination of employment with the Employer and any Affiliate with a vested interest in his Account other than by reason of retirement, death or disability, the Dollar Value, as determined pursuant to Section 3.10 hereof, of the vested portion of such Participant's Account shall be distributed to, or in the case of the Participant's death, on behalf of, the Participant within sixty (60) days following the date the Participant's employment with the Employer is terminated. As soon as practicable after such former Participant is entitled to distribution as provided in the preceding sentence, the Committee shall direct Mark IV to distribute the Dollar Value of the vested portion of the Participant's Account as determined pursuant to Section 3.10 hereof together with any earnings thereon to such former Participant or his Beneficiary in one lump sum payment in cash or by check drawn on an account containing sufficient funds. If a Trust Fund has been established pursuant to Section 5.01 hereof, following the date a former Participant is entitled to a distribution as provided in this Section 4.06, the Committee shall direct the Trustee to distribute to or on behalf of the Participant in one lump sum payment in cash or by check drawn on an account containing sufficient funds, an amount equal to the value of the vested portion of the Participant's Account within the Trust Fund. Payments required to be made from the Trust Fund to or on behalf of a former Participant as provided in this paragraph shall be made no later than sixty (60) days following the date the Participant's employment with the Employer is terminated. During the period between the date a Participant's employment with the Employer is terminated and the date the Participant's Account is to be distributed, the Participant's Account shall be credited with interest as provided in Section 3.10 or, if a Trust Fund has been established pursuant to Section 5.01, the Participant's Account shall be credited or charged with its proportionate share of the earnings or losses of the Trust Fund. At the time a former Participant is entitled to distribution, according to its records, the Committee shall send, by registered or certified mail directed to his address last known to the Committee, a notice informing him as to his rights with respect to any amounts held for him and requesting confirmation of his address and age. Each Participant and former Participant has the obligation to keep the Committee informed of his address. In the event the Committee is unable to locate such former Participant within four (4) years, the amount held for his benefit shall be forfeited; provided, however, if a claim is made by the Participant or his Beneficiary for the forfeited amount, such amount shall be reinstated into his Account. 4.07 Forfeitures. If a Participant terminates his employment with the Employer before he has acquired a 100% vested interest in any portion of any of his Annual Allocation Accounts, the portion of each of such Annual Allocation accounts which is not vested, shall be forfeited as of the end of the first Plan Year in which the Participant incurs a Break in Service and, as of the end of the first Plan Year in which the Participant incurs a Break in Service, an amount equal to the greater of the Dollar Value or the Share Value of the portion of each of such Annual Allocation Accounts which is not vested shall be reallocated among the Accounts of the remaining Participants in accordance with Section 3.11 hereof. For purposes of determining the amount to be reallocated among the Accounts of the remaining Participants, if any portion of an Account which is to be forfeited pursuant to this Section 4.07 was allocated to the purchase of Phantom Stock, the price per share of such Phantom Stock shall equal the average of the closing prices per share of common stock of Mark IV during the month of February for the Plan Year in which such Account is to be forfeited as determined from the closing prices per share of common stock of Mark IV reported by the New York Stock Exchange Composite Index for such month. If a Participant's employment with his Employer is terminated before he acquires a one hundred percent (100%) vested interest in each of his Annual Allocation Accounts and, at the time of such Participant's termination of employment, a Trust Fund had been established pursuant to Section 5.01 hereof, the value within the Trust Fund of the portion of each of such Participant's Annual Allocation Accounts which is not 100% vested shall be maintained in a suspense account within the Trust Fund until the end of the first Plan Year in which the Participant incurs a Break in Service, at which time, the amount of such suspense account shall be forfeited and reallocated among the accounts of the remaining Participants in accordance with Section 3.11. Such suspense account shall be for accounting purposes only, shall not require a segregation of assets within the Trust Fund to such Account and shall not share in the gains, losses, income or expenses of the Trust Fund. The amount of the assets necessary to maintain the suspense account shall be deemed an expense chargeable to the Trust Fund. The Committee shall maintain records so that each former Participant's share of the suspense account is clearly identifiable. If the terminated Participant returns to the employ of the Employer or any Affiliate before he has incurred five (5) consecutive one year Breaks in Service, the balance in his Account upon reparticipation in the Plan shall be equal to the greater of the vested portion of the Dollar Value and, if applicable, the Share Value of his Account as of the end of the first Plan Year in which he incurs a Break in Service. The amount previously forfeited by the Participant shall not be restored to such Participant's Account. 4.08 Certain Additional Payments by Mark IV. In the event that a "Change in Control" as defined in Section 5.03 occurs and, thereafter, it shall be determined that any payment or distribution by Mark IV to or for the benefit of any Participant under this Plan, whether paid or payable or distributed or distributable pursuant to this Plan would be subject to any income, excise or other tax under the Internal Revenue Code of 1986, as amended, or any interest or penalties with respect to such income, excise or other tax (the aggregate amount of any such income, excise or other taxes together with any interest or penalties relating to such income, excise and other taxes being hereinafter collectively referred to as the "Taxes") then such Participant shall be entitled to payment by Mark IV or its successor of an additional payment (the "Gross Up Payment") in an amount such that the net amount distributed to or on behalf of the Participant, after payment by such Participant or his Beneficiary of all Taxes (including any Taxes imposed on the Gross-Up Payment) equals the value of the Participant's Account which is paid and distributed to the Participant under the terms of this Plan. The determination of the amount of the Gross-Up Payment shall be made by Mark IV within thirty (30) days following the date a Participant becomes entitled to payment under the provisions of this Plan, or, if earlier, within thirty (30) days following written notice from a Participant that the Internal Revenue Service has made a claim that amounts paid or payable, or distributed or distributable under this Plan are subject to income, excise or other taxes; provided that the Participant gives written notice to the Committee of such Internal Revenue Service claim at least ten (10) days following receipt of the same. The determination of the amount of the Gross-Up Payment to be made by Mark IV shall be based on: (a) the applicable marginal rate of Federal income taxation which would be in effect with respect to the calendar year in which the Gross-Up Payment is to be made for a total Compensation equal to the sum of: (i) amount of the payment to be made under this Plan which is subject to Taxes and (ii) the amount of the Gross-Up Payment; and (b) any applicable state and local taxes at the applicable marginal rate of such taxes with respect to the calendar year in which the Gross-Up Payment is to be made based upon a total Compensation equal to the sum of: (i) the amount of the payment to be made under this Plan which is subject to Taxes and (ii) the amount of the Gross-Up Payment. 4.09 Effects of Vesting. Each Participant, upon (a) acquiring a vested interest in his Account pursuant to the terms of this Plan; and (b) otherwise satisfying the requirements for payment and distribution of his Account pursuant to the terms of this Plan, shall have a valid and enforceable claim against Mark IV for payment of the amount described in the applicable provisions of this Plan together with the amount of any applicable Gross-Up Payment. Notwithstanding the foregoing, no Participant, spouse or Beneficiary shall have any interest in any particular assets of Mark IV by reason of the right to receive deferred compensation under this Plan and any such Participant, spouse or Beneficiary shall have only the rights of a general unsecured creditor of Mark IV with respect to any deferred compensation payable under this Plan. 4.10 No Duplication of Benefits. It is the intent of Mark IV and each Employer that the deferred compensation to be provided under this Plan shall, with respect to the employment of an Eligible Employee by the Employer during the periods this Plan is in effect, supersede any other deferred compensation (a) to which an Eligible Employee is entitled under the terms of any written employment agreement between any Employer and such Eligible Employee, covering periods of such Eligible Employee's employment with the Employer during the periods with respect to which this Plan is in effect; and (b) provided for under any such written employment agreement, but only to the extent that the deferred compensation provided under such written employment agreement is based upon the amounts which could have been accrued by such Eligible Employee under the Profit Sharing Adoption Agreement as in effect for periods beginning on and after March 1, 1989 or under the Pension Plan Adoption Agreement as in effect for periods beginning on and after March 1, 1989 and without giving effect to any limitations of the Internal Revenue Code or ERISA relating to (i) any restrictions contained in the Mark IV Retirement Savings Plan or the Mark IV Industries, Inc. and Subsidiaries Master Defined Contribution Pension Plan (collectively the "Qualified Plans") on the use of employer contributions for any employee who is among the group of the twenty- five most highly paid employees; (ii) any restrictions in the Qualified Plans upon the maximum benefits payable pursuant to the Internal Revenue Code; (iii) any limitations on the amount of compensation which may be taken into account with respect to an employee under the Qualified Plans pursuant to Section 401(a)(17) of the Internal Revenue Code; (iv) any limitations on the amount of the annual benefit which may be accrued by an employee under the Qualified Plans pursuant to Section 415 of the Internal Revenue Code or (v) any other direct or indirect restriction of the benefits which may be payable to an employee under the Qualified Plans under the Internal Revenue Code or ERISA. Accordingly, notwithstanding anything to the contrary under this Plan, to the extent the amounts payable to a Participant under this Plan are otherwise payable to a Participant under the terms of a written employment agreement between a Participant and any Employer, the deferred compensation payable to such Participant under the terms of this Plan shall be reduced to reflect deferred compensation payable to the Participant under the terms of a written employment agreement which are attributable to amounts which could have been accrued under the Qualified Plans had none of the limitations described in the preceding sentence been in effect. SECTION 5. Trust Established Upon Change in Control 5.01 Establishment of Trust. Upon the occurrence of a Change in Control (as hereinafter defined), Mark IV or its successors shall establish a Trust Fund for the purpose of holding and investing assets of Mark IV to be used for payment of the deferred compensation to be provided to Participants under this Plan. The terms and conditions of the agreement containing the terms of the Trust Fund shall be consistent with the terms and conditions required by rulings and regulations of the Internal Revenue Service for a trust to be classified as a "Rabbi Trust" within the scope of Internal Revenue Service Private Letter Ruling No. 8113017 and Internal Revenue Service Private Letter Ruling No. 8907034 such that the amounts payable under this Plan will not be immediately taxable to the Participants to whom such amounts are payable under the terms of this Plan by virtue of the establishment of such Trust Fund and contribution of assets thereto or by virtue of the acquisition by any such Participants of a vested interest in the deferred compensation payable hereunder. 5.02 Contributions to Trust. Promptly upon the occurrence of a Change in Control (as hereinafter defined), but in any event not later than sixty (60) days following the occurrence of the Change in Control, Mark IV or its successor shall determine for each Participant, the Dollar Value and the Share Value of the Participant's Account as of the date the change in Control occurs. Thereafter, Mark IV or its successor shall pay to the Trustee, to be held pursuant to the Trust Fund, cash or immediately available funds, an amount for each Participant which is equal to the greater of the Dollar Value and the Share Value of the Participant's Account determined as of the date the Change in Control occurs. 5.03 Change in Control. For purposes of this Plan, a Change in Control shall occur if (i) any "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Act")) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Act) of more than twenty percent (20%) of the then outstanding voting stock of Mark IV, otherwise than through a transaction arranged by, or consummated with the prior approval of its Board of Directors, or (ii) during any period of two (2) consecutive years, individuals who at the beginning of such period constitute the Board of Directors (and any new director whose election to the Board of Directors or whose nomination for election by Mark IV's shareholders was approved by a vote of at least two thirds (2/3) of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) (hereinafter referred to as the "Continuing Directors") cease for any reason to constitute a majority thereof; or (iii) the shareholders of Mark IV approve a merger or consolidation of Mark IV with any other corporation, other than a merger or consolidation which would result in the voting securities of Mark IV immediately prior thereto continuing to represent (either by remaining outstanding or being converted into voting securities of the surviving entity) at least eighty percent (80%) of the combined voting power of the voting securities of Mark IV or such surviving entity outstanding immediately after such merger or consolidation (provided, however, that if prior to the merger or consolidation, the Board of Directors adopts a resolution that is approved by a majority of the Continuing Directors providing that such merger or consolidation shall not constitute a "change in control" for purposes of the Plan, then such a merger or consolidation shall not constitute a "change in control"), or (iv) the shareholders of Mark IV approve an agreement for the sale or disposition by Mark IV or all or substantially all the assets of Mark IV. Notwithstanding the provisions of Sections 7.01 and 7.02 hereof, the foregoing provisions of Sections 5.01, 5.02 and 5.03 hereof may not be amended within three (3) years following a "change in control" without the written consent of a majority in both number and interest of the Participants who are actively employed by the Employer, both immediately prior to the "change in control" and at the date of such amendment. 5.04 Investment Policy. In determining its investments hereunder, the Trustee or any duly appointed Investment Manager shall consider the short and long range needs of the Plan communicated to them by the Committee. Benefits may be provided through any combination of investment media designated to provide the requisite liquidity, growth and security appropriate to this Plan. 5.05 Trustee Responsibilities. Following the establishment of a Trust pursuant to Section 5.01 hereof, the Trustee appointed to administer the Trust Fund shall be deemed a Fiduciary and shall discharge his duties for the exclusive benefit of Participants in the Plan. SECTION 6. Administration 6.01 The Committee. The Board of Directors of Mark IV shall appoint an administrative committee to administer the Plan as the plan administrator. The Committee shall be the named fiduciary of the Plan with respect to Plan administration and, if a Trust Fund is established pursuant to Section 5.01 hereof, the Committee shall be a named fiduciary with respect to the appointment of an Investment Manager to manage any assets of the Plan. The Committee shall consist of officers or other employees of the Employer, or any other individuals, who shall serve at the pleasure of the Board of Directors of Mark IV. Any member may resign by delivering his written resignation to the Board of Directors. Vacancies arising by resignation, death, removal or otherwise shall be filled by the Board of Directors of Mark IV. If at any time no members are currently serving as the Committee, or if no Committee is appointed, the Board of Directors of Mark IV shall be deemed to be the Committee. 6.02 General Duties and Responsibilities. The Committee shall administer the Plan in accordance with its terms and shall have all powers necessary to carry out the provisions of the Plan. Any interpretation, construction or determination made in good faith shall be final and conclusive. The Committee may correct any defect, supply any omission, or reconcile any inconsistency in such manner and to such extent as shall be deemed necessary or advisable to carry out the purpose of this Plan. The Committee as named fiduciary may employ attorneys, accountants and such other advisors to advise it with respect to its duties and obligations as it deems appropriate. 6.03 Funding Policy. In the event a Trust Fund is established pursuant to Section 5.01 hereof, the Committee shall establish a funding policy and method consistent with the requirements of law and designed to protect the interests of Plan Participants. The Committee shall thereafter review, and if necessary, change such funding policy and method. 6.04 Allocation and Delegation of Responsibilities. As the named fiduciary, the Committee may engage agents to assist it in carrying out its functions hereunder. The Committee members are expressly authorized to allocate among themselves and/or delegate to other named persons or parties, fiduciary responsibilities, other than Trustee responsibilities. In the event a Trust Fund is established pursuant to Section 5.01 hereof, the Committee may appoint an Investment Manager and delegate to him the authority to manage, acquire, invest or dispose of all or any part of the Trust Fund assets. With regard to the assets entrusted to his care, the Investment Manager shall provide written instructions and directions to the Trustee, who shall in turn, be entitled to rely thereon. Appointments and delegations shall be evidenced by a signed written document, which must be retained with the other Plan documents. 6.05 Bonding. The Committee shall be responsible for procuring bonding for any persons dealing with the Plan or its assets as may be required by law or by this Plan. 6.06 Records, Reporting and Disclosure. The Committee shall maintain all the records necessary for the administration of the Plan. The Committee shall also be responsible for preparing and filing such annual reports and tax forms as may be required by law. The Committee shall furnish and/or make available for inspection by each Participant covered under the Plan and to each Beneficiary who is entitled to receive benefits under the Plan, such information and reports as may be required by law. 6.07 Expenses and Compensation. The expenses necessary to administer the Plan shall be borne by Mark IV and, if necessary, shall be reimbursed to the Plan. In the event a Trust Fund is established pursuant to Section 5.01 hereof, upon the failure of Mark IV to pay said expenses, the Trustee shall pay said expenses out of the Plan assets. Expenses include, but are not limited to, those involved in retaining necessary professional assistance from an attorney, an accountant, an actuary, or an investment advisor. The Employer shall furnish the Committee with such clerical and other assistance as is necessary in the performance of its duties. The Committee, with the approval of the Employer, may receive reasonable compensation for services rendered in administering this Plan, provided the member performing the services is not a full-time employee of any Employer maintaining this Plan. 6.08 Information from Employer. To enable the Committee to perform its functions, the Employer shall supply full and timely information to the Committee on all matters relating to the Compensation of all Participants, their employment, their retirement, death, disability or termination of employment, and such other pertinent facts as the Committee may require. The Committee shall advise the Trustee of such of the foregoing facts as may be pertinent to the Trustee's duties under the Plan. The Committee is entitled to rely on such information as is supplied by the Employer and shall have no duty or responsibility to verify such information. 6.09 Multiple Signatures. In the event that more than one person has been duly nominated to serve on the Committee, one signature may be relied upon by any interested party as conclusive evidence that the Committee has duly authorized the action therein set forth and as representing the will of and binding upon the whole Committee. No person receiving such documents or written instructions and acting in good faith and in reliance thereon shall be obliged to ascertain the validity of such action under the terms of this Plan and Trust. The Committee shall act by a majority of its members at the time in office and such action may be taken either by a vote at a meeting or in writing without a meeting. 6.10 General Fiduciary Liability. The Employer, its Board of Directors, the Committee, the Trustee and any Fiduciary with respect to this Plan and, if applicable, the Trust Fund created pursuant hereto shall not be liable for any actions taken or omitted by any of them except for such acts involving gross negligence or willful misconduct of the party to be charged and except as required by ERISA. Nothing contained in this Section 6.10 shall be deemed to release, discharge or otherwise limit the liability of Mark IV, or, if a Trust Fund is established pursuant to Section 5.01 hereof, the liability of the Trust Fund and any successor in interest to Mark IV for payment to Participants of the amounts described in this Plan. 6.11 Liability Insurance. The Committee may purchase, as an authorized expense of the Plan, liability insurance for the Plan and/or for its Fiduciaries to cover liability or losses occurring by reason of the act or omission of a Fiduciary, providing such insurance contract permits recourse by an Insurer against the Fiduciary in the case of breach of fiduciary obligation by such Fiduciary. Any Fiduciary may purchase on behalf of himself, insurance to protect himself in the event of a breach of fiduciary duty and the Employer may also purchase insurance to cover the potential liability of one or more persons who serve in a fiduciary capacity with regard to this Plan. 6.12 Benefit Claims Procedures. The Committee shall establish a benefit claims procedure. Such procedure shall provide for the filing of claims for benefits, adequate notice in writing to any Participant or Beneficiary whose claim for benefits has been denied, setting forth the specific reasons for such denial and written in a manner calculated to be understood by the Participant, and afford a reasonable opportunity to any Participant whose claim for benefits has been denied for a full and fair review by the Committee of the decision denying the claim. SECTION 7. Amendment, Termination and Merger 7.01 Amendment. The Board of Directors of Mark IV shall have the right at any time and from time to time without the consent of any Participant or Beneficiary to amend, in whole or in part, any or all of the provisions of this Plan. No amendment to the Plan shall be effective to the extent that it has the effect of decreasing the value of a Participant's Account or depriving any Participant or the Beneficiary of any Participant of any amount payable (whether immediately or in the future) to such Participant or Beneficiary under the terms of this Plan as in effect on the date of such amendment. 7.02 Termination. Mark IV, by action of its Board of Directors shall have the right at any time to discontinue its contributions hereunder and to terminate this Plan. Upon complete termination of the Plan or upon the occurrence of any event which constitutes a partial termination pursuant to IRC Section 411(d)(3), whether by action of the Board of Directors or otherwise, all Participants shall become fully and nonforfeitably vested in the value of their respective Accounts; provided, however, in the case of a partial termination, full vesting shall only be applicable to that part of the Plan and the Participants covered thereunder that is terminated. 7.03 Continuation of Plan by Successor. Mark IV will require any person, firm, corporation or other entity that becomes a successor to Mark IV, (whether direct or indirect, by purchase of stock or assets, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Mark IV to expressly assume and agree to perform the provisions of this Plan as in effect at the time any such person, firm, corporation or other entity becomes a successor to Mark IV, in the same manner and to the same extent that Mark IV would be required to perform it if no such succession had taken place. Unless this Plan be sooner terminated, a successor to the business of Mark IV by whatever form or manner resulting, may continue this Plan after such person, firm, corporation or entity becomes a successor to Mark IV by executing an appropriate supplemental agreement. In the event any successor to the business of Mark IV shall not elect to continue this Plan within the ninety days after such person, firm, corporation or other entity becomes a successor to Mark IV, this Plan shall be deemed to be terminated and the obligation to pay to each Participant the amounts described herein at the times provided for herein shall become fixed and binding obligations of such successor. SECTION 8. Miscellaneous 8.01 No Rights Created by Plan and Trust - Terms of Employment Not Affected. Neither the establishment of the Plan or Trust nor any modification hereof, nor the creation of any fund or account, nor the payment of any benefits, shall be construed as giving to any Participant, Beneficiary or other person any legal or equitable right against the Employer or any officer or Employee thereof, or the Trustee, or the Committee, except as herein provided. Under no circumstances shall participation in this Plan by an Employee constitute a contract of continuing employment or in any manner obligate the Employer to continue the services of an Employee. 8.02 Participants Rights Unsecured. Unless the establishment of a Trust Fund is required pursuant to Section 5.01 hereof, the Plan shall at all times be entirely unfunded and no provision shall at any time be made with respect to segregating any assets of Mark IV for payment of any distributions hereunder. The rights of a Participant or his Beneficiary to receive a distribution hereunder shall be an unsecured claim against the general assets of Mark IV and neither the Participant nor his Beneficiary shall have any rights in or against any specific assets of Mark IV including, but not limited to, any assets contained in any Trust Fund established pursuant to Section 5.01 hereof. 8.03 No Guaranty of Benefits. Nothing contained in this Plan shall be deemed to constitute a guaranty by Mark IV or any other entity or person that the assets of Mark IV will be sufficient to pay the benefits hereunder. 8.04 Execution of Receipts and Releases. Any payment to any Participant, or to his legal representatives or Beneficiary, in accordance with the provisions of this Plan, shall to the extent thereof be in full satisfaction of all claims hereunder against the Plan, and the Committee may require such Participant, legal representative, or Beneficiary, as a condition precedent to such payment, to execute a receipt and release therefor in such form as it shall determine. 8.05 Benefits Non-Assignable. No benefit which shall be payable to any person under this Plan, (including a Participant or his Beneficiary), whether payable out of the general assets of Mark IV or payable out of the Trust Fund, shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge the same shall be void and no such benefit shall in any manner be liable for, or subject to, the debts, contracts, liabilities, engagements or torts or any such person, nor shall it be subject to attachment or legal process for or against such person, and the same shall not be recognized by the Committee or the Trustee, except to such extent as may be required by law. 8.06 Construed Under Applicable Federal Law and New York Law. This Plan shall be construed according to applicable Federal Law and the laws of the State of New York and all provisions hereof shall be administered according to such laws. 8.07 Masculine Gender to Include Feminine; Singular to Include Plural. Wherever any words are used herein in the masculine gender they shall be construed as though they were also used in the feminine gender in all cases where they would so apply, and wherever any words are used herein in the singular form, they shall be construed as though they were also used in the plural form in all cases where they would so apply. 8.08 Heading No Part of Plan. Heading of sections and subsections of this instrument are inserted for convenience of reference only. They constitute no part of this Plan are not to be construed in the construction hereof. 8.09 Counterparts. This instrument may be executed in several counterparts, each of which shall be deemed an original, and said counterparts shall constitute but one and the same instrument and may be sufficiently evidenced by any one counterpart. IN WITNESS WHEREOF, the Mark IV Industries, Inc. has caused this Plan to be executed as of the 30th day of November, 1993. MARK IV INDUSTRIES, INC. BY: Richard L. Grenolds Vice President and Chief Accounting Officer EX-10.9 5 NON-QUALIFIED PLAN FOR NON-EMPLOYEE DIRECTORS Exhibit 10.9 NON-QUALIFIED PLAN OF DEFERRED COMPENSATION FOR NON-EMPLOYEE DIRECTORS OF MARK IV INDUSTRIES, INC. ________________________________ First Amendment and Restatement _________________________________ Effective December 1, 1993 NON-QUALIFIED PLAN OF DEFERRED COMPENSATION FOR NON-EMPLOYEE DIRECTORS OF MARK IV INDUSTRIES, INC. ____________________________________ First Amendment and Restatement _____________________________________ WHEREAS, Mark IV Industries, Inc., a Delaware corporation having its principal place of business at One Towne Centre, 501 John James Audubon Parkway, Amherst, New York ("Mark IV") adopted a non-qualified plan of deferred compensation known as the "Non-Qualified Plan of Deferred Compensation for Non-Employee Directors of Mark IV Industries, Inc. (the "Plan"); and WHEREAS, the Plan permits the non-employee directors of Mark IV to defer the receipt of payment of all or part of the bonus or other incentive compensation which they may be entitled to receive under the terms of the executive bonus arrangements in effect from time to time for the non-employee directors of Mark IV and to further provide that the amount of the bonus or other incentive compensation, if any, which the Participant defers shall be credited with hypothetical earnings and paid in accordance with the terms of the Plan; and WHEREAS, Mark IV desires to amend the Plan to provide that, effective December 1, 1993, non-employee directors shall be permitted to defer the receipt of all or any part of the salary or wages they are entitled to receive and to provide that the amount of the salary or wages deferred by such non-employee directors if any, shall be credited with hypothetical earnings paid in accordance with the terms of this Plan; NOW, THEREFORE, Mark IV hereby adopts the following as the First Amendment and Restatement of the Non-Qualified Plan of Deferred Compensation for Non-Employee Directors of Mark IV Industries, Inc. effective as of December 1, 1993: SECTION 1. Definitions 1.01 Plan means this non-qualified plan of deferred compensation known as the Non-Qualified Plan of Deferred Compensation for Non-Employee Directors of Mark IV Industries, Inc. 1.02 Trust Fund means one or more trust funds which may be established by Mark IV pursuant to this Plan, and all the assets at any time held by the Trustee of such trust funds. 1.03 Trustee means the person or persons, firm or corporation designated by the Board of Directors of Mark IV to serve as Trustee of any Trust Fund which may be created pursuant to the provisions of this Plan, and who, by joining in the execution of the agreement creating such Trust Fund or any amendments thereto, signifies his acceptance of the Trust Fund and any person or persons, firm or corporation duly appointed as successor Trustee. 1.04 Board of Directors means the Board of Directors of Mark IV. 1.05 Participant means each member of the Board of Directors that is not an employee of Mark IV or any of its divisions or subsidiaries if such non- employee director has elected or elects to defer the receipt of payment of all or any portion of his Compensation (as hereinafter defined) in accordance with the provisions of this Plan, including any bonus or other incentive compensation to which he may be entitled. 1.06 Beneficiary means any person or persons designated, in writing, by a Participant to share in the benefits of the Plan after his death, or if none, his spouse, or, if neither, his estate. 1.07 Committee means the administrative committee, referred to in Section 6.01, designated by the Board of Directors of Mark IV to administer the Plan. 1.08 Effective Date means December 16, 1992. 1.10 Anniversary Date means March 1, of each year. 1.11 Valuation Date means the last day of February of each calendar year. 1.12 Plan Year means the approximately two and one-half month period beginning December 16, 1992 and ending February 28, 1993 and, thereafter, each 12 consecutive month period beginning on March 1 of each calendar year. 1.13 Compensation means the total salary or wages paid by Mark IV to a Participant for services rendered to Mark IV as a non-employee director of Mark IV during the fiscal year of Mark IV, including any bonus or other incentive compensation, whether or not such salary, wages, bonuses or other incentive compensation is actually paid as a result of the Participant's election to defer receipt of such Compensation. The decision of the Committee as to what constitutes Compensation within the meaning of the foregoing definition shall be conclusive. 1.14 Compensation Deferral means, for each Plan Year, the amount, if any, of the salary, wages, bonuses or other incentive compensation payable to a Participant which the Participant has elected to defer the receipt of payment of pursuant to Section 3.01 hereof and which Mark IV has agreed and committed to allocate and pay to such Participant in the future under the terms of this Plan. 1.15 Applicable Interest Rate means, for each Plan Year, a variable rate of interest, adjusted on a quarterly basis as of March 1, June 1, September 1 and December 1 of each calendar year and equaling one hundred twenty percent (120%) of the Federal long-term interest rate established for such months by the Secretary of the Treasury pursuant to the provisions of Section 1274 of the Internal Revenue Code and the regulations thereunder. 1.16 Account means the account or accounts established and maintained by the Committee for each Participant to reflect the amount of the deferred compensation payable to each Participant under the terms of this Plan and, in the event a Trust Fund is established pursuant to Section 5.01 hereof, to reflect the interest of each Participant in the Trust Fund. 1.17 Phantom Stock means the shares of common stock of Mark IV, if any, which are hypothetically allocated to a Participant's Account pursuant to the terms of this Plan. 1.18 Dollar Value means, except as otherwise specifically provided in Section 3.08 hereof, an amount equal to the total dollar amount of the Incentive Compensation Deferrals credited to the Participant's Account together with the interest credited thereon as provided for in this Plan. 1.19 Share Value means an amount equal to (a) the number of shares of Phantom Stock, if any, credited to a Participant's Account, multiplied by (b) the applicable price per share of common stock of Mark IV as determined pursuant to Section 3.05 hereof. 1.20 Fiduciary means any person with respect to the Plan to the extent: (a) He exercises any discretionary authority or discretionary control respecting management of the Plan or exercises any authority or control respecting management or disposition of its assets; (b) He renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of the Plan or has any authority or responsibility to do so; or (c) He has any discretionary authority or discretionary responsibility in the administration of the Plan. This term also includes persons designated by the Committee to carry out fiduciary responsibilities under the Plan. A Fiduciary may serve in more than one fiduciary capacity (including service as both Trustee and Committee) with respect to this Plan. 1.21 Investment Manager means that person so designated by the Committee to manage and invest designated Plan assets, who acknowledges his acceptance in writing and who is either (a) registered in good standing as an Investment Adviser under the Investment Advisers Act of 1940, (b) a bank, as defined in that Act, or (c) an insurance company qualified to perform investment management services under the laws of more than one state. 1.22 ERISA means the Employee Retirement Income Security Act of 1974, as amended, and corresponding provisions of future laws, as amended. 1.23 Affiliate means any corporation under common control with the Employer within the meaning of Internal Revenue Code Section 414(b) and any trade or business (whether or not incorporated) under common control with the Employer within the meaning of Internal Revenue Code Section 414(c). 1.24 Internal Revenue Code, Code and IRC each mean the Internal Revenue Code of 1986, as amended. SECTION 2. Eligibility 2.01 Directors Eligible. Each member of the Board of Directors that is not an employee of Mark IV or any of its direct or indirect wholly owned subsidiaries shall be eligible to participate in the Plan and shall become a Participant in the Plan by delivering the Committee a written election to defer, in accordance with the provisions of this Plan all or part of the salary, wages, bonus or other incentive compensation to which he is otherwise entitled. 2.02 Participation Form. The Committee shall furnish each non-employee Director a form containing such information as the Committee may desire, including, but not limited to, date of birth of the Participant and the Beneficiary designation of such Participant. SECTION 3. Incentive Compensation Deferrals 3.01 Compensation Deferrals. For each Plan Year beginning with the Plan Year ending February 28, 1993, each non-employee Director of Mark IV may elect to defer his receipt of payment of all or any part of the bonus or other incentive compensation to which he is entitled as provided for in the executive bonus and other incentive compensation plans for non-employee Directors of Mark IV. If a Participant makes a Compensation Deferral with respect to his bonus or other incentive compensation payable in connection with the services he has provided for any Plan Year ending on or after February 28, 1993, the amount of the bonus or other incentive compensation which the Participant has elected to defer the receipt of shall not be paid by Mark IV except as provided for hereunder and shall be deemed to be contributed to the Plan as of the end of the Plan Year ending with or within the fiscal year of Mark IV with respect to which such bonus or other incentive compensation is payable to the Participant. For each calendar year beginning on or after January 1, 1994, each participant may elect to defer the receipt of payment of all or any part of the salary or wages to which he is entitled. If a Participant makes a Compensation Deferral with respect to all or any part of the salary or wages to which he is entitled, the portion of the salary or wages which the Participant has elected to defer the receipt of shall not be paid by Mark IV except as provided for hereunder and a pro-rata portion of the salary or wages which the Participant is entitled to for each calendar year shall be deemed to be contributed to the Plan as of the end of each calendar month which elapses in a calendar year in which the Participant has elected to defer the receipt of such salary or wages. The total amount of Compensation Deferrals made by a Participant (which shall include the total amount of salary, wages, bonus or other incentive compensation which the Participant has elected to defer the receipt of) for a Plan Year, together with any earnings thereon as provided by Section 3.08 hereof, shall represent the amount which Mark IV has agreed to pay to the Participant that makes such Compensation Deferral and, unless a Trust Fund is established pursuant to Section 5.01 hereof, no segregation of any assets of Mark IV for the purpose of paying such Compensation Deferral shall be required. A Participant that is eligible to make Compensation Deferrals may make a Compensation Deferral by executing and delivering to the Committee, a form, supplied by the Committee, which provides a description of the amount of the Participant's salary or wages which the Participant elects to defer the receipt of and a description of the portion of the bonus or other incentive compensation which the Participant elects to defer the receipt of (a "Deferred Compensation Election Form"). The Deferred Compensation Election Form shall also contain a statement of the period of time over which payment of the Participant's salary, wages, bonus or other incentive compensation is to be deferred (which period of time may extend beyond the Participant's Normal Retirement Date and may be different for separate and distinct portions (identified by the Participant) of the salary, wages or bonus or incentive compensation which the Participant has elected to defer). The Deferred Compensation Election Form shall provide, among other things, that the Participant's election to defer the receipt of payment of the salary, wages, bonus or other incentive compensation payable to the Participant is irrevocable and that the Participant waives his right to make any claim for payment of the salary, wages, bonus or other incentive compensation which the Participant has elected to defer except to the extent such amount is payable pursuant to this Plan. Notwithstanding the provisions of the preceding paragraph, a Participant's election to defer the receipt of any portion of his salary or wages shall be effective only for the calendar year immediately following the date the Participant delivers his Deferred Compensation Election Form to the Committee and a Participant's election to defer the receipt of any portion of the bonus or other incentive compensation to which he may be entitled shall be effective only for the bonus or other incentive compensation which is payable as of the end of the Plan Year immediately following the date the Participant delivers his Deferred Compensation Election Form to the Committee. Therefore, in the event a Participant desires to defer the receipt of any portion of the salary or wages which he is otherwise entitled to for a calendar year following a calendar year in which payment of the Participant's salary or wages has been deferred, the Participant must execute and deliver a new Deferred Compensation Election Form to the Committee on or before December 31 of the calendar year preceding the calendar year in which the Participant desires to have the receipt of such Compensation deferred. In addition, in the event a Participant desires to defer the receipt of any portion of the bonus or other incentive compensation he is entitled to for a Plan Year following the Plan Year in which any portion of the bonus or other incentive compensation was deferred, the Participant must execute and deliver a new Deferred Compensation Election Form to the Committee on or before December 31 of the calendar year preceding the calendar year in which the Participant desires to have the receipt of such Compensation deferred. 3.02 Participant's Account. The Committee shall establish and maintain an Account in the name of each Participant that makes a Compensation Deferral, which Account shall be credited with the amount of the Compensation Deferral made by the Participant pursuant to the terms of the Deferred Compensation Election Form executed by the Participant and effective for such Plan Year, together with interest thereon as determined pursuant to Section 3.08 hereof and the number of shares of Phantom Stock determined pursuant to Section 3.04 hereof. In the event a Trust Fund is established pursuant to Section 5.01 hereof, the Committee shall establish and maintain, within the Trust Fund, an Account in the name of each Participant. At the time the Trust Fund is established, the Committee shall credit the Account of a Participant with an amount equal to the greater of the Dollar Value and, if applicable, the Share Value of the Participant's Account at the time the Trust Fund is established and, thereafter, the Committee shall credit such Participant's Account with the Participant's share of the net earnings of the Trust Fund and charge such Participant's Account with the net losses of the Trust Fund and distributions from the Trust Fund made on the Participant's behalf. In the event that this Plan is continued by Mark IV or its successor following the establishment of a Trust Fund, the Committee shall credit the Participant's Account with the amount of Incentive Compensation Deferrals made to the Plan by the Participant together with earnings or losses thereon. 3.03 Time of Allocation. For purposes of determining the Dollar Value of a Participant's Account, the amount of the Compensation Deferral to be credited to the Account of a Participant with respect to any salary or wages deferred by the Participant in connection with such Compensation Deferral shall be deemed to be credited to a Participant's Account as of the end of each calendar month during which the Participant was a non-employee Director of Mark IV and the amount of any bonus or other incentive compensation deferred by a Participant in connection with a Compensation Deferral shall be deemed to be credited to such Participant's Account as of the end of the Plan Year ending with or within the fiscal year of Mark IV with respect to which such bonus or other incentive compensation is payable. For purposes of determining the Share Value of a Participant's Account as of the end of any Plan Year, the number of shares of Phantom Stock to be allocated to the Account of a Participant for a Plan Year shall be deemed to be allocated to such Participant's Account, as of the end of such Plan Year. 3.04 Allocations of Phantom Stock. If a Participant elects to defer all or any portion of his salary or wages as permitted by Section 3.01 hereof, as of the end of each calendar month, the Committee shall credit such Participant's Account with the number of shares of Phantom Stock which could be purchased at a price per share determined pursuant to Section 3.05 hereof using the amount of salary or wages deferred by the Participant for such calendar month, which amount shall be equal to one twelfth of the Compensation (excluding incentive compensation and bonus) which is payable to such Participant for the calendar year for which such deferral is made. If a Participant elects to defer all or any portion of his bonus or other incentive compensation, as of the end of each Plan Year, the Committee shall allocate to the Account of each Participant, the number of shares of Phantom Stock which could be purchased at a price per share determined in accordance with Section 3.05 hereof using an amount equal to the bonus or other incentive compensation deferred by the Participant for such Plan Year. 3.05 Pricing of Mark IV Common Stock. For purposes of determining the number of shares of Phantom Stock to be allocated to the Account of a Participant as of the end of any calendar month in connection with the salary or wages deferred by the Participant as provided for by Section 3.01 hereof, the price per share of common stock of Mark IV shall be deemed to be the average of the closing prices per share of common stock of Mark IV during such calendar month as determined from the closing prices per share of common stock of Mark IV. For purposes of determining the number of shares of Phantom Stock, if any, to be allocated to the account of a Participant as of the end of each Plan Year with respect to the bonus or other incentive compensation deferred by the Participant as provided for by Section 3.01 hereof, the price per share of common stock Mark IV shall be deemed to be the average of the closing prices per share of common stock of Mark IV during the month of February for the Plan Year such bonus or other incentive compensation was deferred. For purposes of determining the Share Value of a Participant's Account in connection with the determination of the amount of the funds to be transferred to any Trust Fund established pursuant to Section 5.01 hereof, the price per share of common stock of Mark IV shall be the closing price per share of common stock of Mark IV on the day a Change in Control (as defined in Section 5.03 hereof) occurs, as reported by the New York Stock Exchange Composite Index. For purposes of determining the Share Value of a Participant's Account if the Participant's status as a member of the Board of Directors of Mark IV is voluntarily or involuntarily terminated for any reason including, but not limited to, the Participant's retirement, death or suffering of a total and permanent disability, the price per share of common stock of Mark IV shall be the average of the closing prices per share of the common stock of Mark IV as reported by the New York Stock Exchange Composite Index for the thirty (30) day period ending on the day the Participant's status as a member of the Board of Directors of Mark IV is terminated. If, pursuant to Section 4.05 hereof, a Participant has elected to receive payment of all or any portion of the Participant's Account attributable to Compensation Deferrals while the Participant is still a member of the Board of Directors of Mark IV, for purposes of determining the Share Value of such portion of the Participant's Account, at the time or times for payment of such portion of the Participant's Account, the price per share of the common stock of Mark IV shall be deemed to be the average of the closing prices per share of common stock of Mark IV during the calendar month ending immediately prior to the date for payment of all or any such portion of the Participant's Account as determined by the closing prices per share of common stock of Mark IV for such period as reported by the New York Stock Exchange Composite Index for such month. 3.06 Anti-Dilution Provisions. The aggregate number of shares of Phantom Stock allocated to a Participant's Account shall be adjusted proportionately in the event of any change, increase or decrease in the total number of issued and outstanding shares of common stock of Mark IV or any change in classification of the shares of common stock of Mark IV without the receipt of consideration by Mark IV as a result of any stock split, reverse stock split or other consolidation of shares of common stock of Mark IV or as a result of any payment of a stock dividend, recapitalization, reclassification or other adjustment in the capital of Mark IV without receipt of consideration by Mark IV. 3.07 Fractional Shares and Dividends. In the event that any cash dividends are paid with respect to any Phantom Stock allocated to a Participant's Account, an amount equal to the amount of the cash dividends which would be payable with respect to the number of shares of Phantom Stock contained in the Participant's Account shall be allocated by the Committee to the Participant's Account as of the date for payment of such cash dividends specified by Mark IVin the resolution authorizing the payment of such cash dividends. In addition, if any fractional shares of common stock of Mark IV would result from the crediting of any Compensation Deferral to a Participant's Account, or in connection with any change in the total number of issued and outstanding shares of common stock of Mark IV without the receipt of compensation by Mark IV, an amount equal to such fractional share of common stock of Mark IV shall be allocated to the Participant's Account for the Plan Year. 3.08 Allocation of Interest. Subject to the provisions of the following paragraphs, unless a Trust Fund has been established pursuant to Section 5.01 hereof, as of the end of each Plan Year, the Committee shall increase the Dollar Value of each Participant's Account by an amount equal to the Applicable Interest Rate multiplied by the Dollar Value of such Participant's Account determined as of the end of the preceding Plan Year. In addition, if a Participant has elected to defer the receipt of all or any portion of his salary or wages by making a Compensation Deferral and if a Trust Fund has not been established pursuant to Section 5.01 hereof, as of the end of each Plan Year, the Committee shall increase the Dollar Value of each such Participant's Account by an amount equal to the amount of interest which would have been earned by applying the Applicable Interest Rate for the immediately preceding Plan Year (adjusted for periods of less than one year) to each of the monthly allocations of salary or wages deferred by the Participant during the Plan Year but only for the period between the date a monthly allocation of the Participant's salary or wages is Participant's Account and the end of the Plan Year. Notwithstanding the foregoing, the proportion of a Participant's Account, if any, which is attributable to cash dividends which would be payable with respect to the shares of common stock of Mark IV allocated to the Participant's Account shall only increased by the Applicable Interest Rate for the immediately preceding Plan (adjusted for periods of less than one year) for the period between the date such cash dividends would be allocated to the Participant's Account and the end of the Plan Year. If a Trust Fund has not been established and a Participant's status as a member of the Board of Directors of Mark IV is terminated on account of his death, retirement or suffering of a Total and Permanent Disability, the Committee shall increase the Dollar Value of such a Participant's Account by an amount equal to the amount of interest which would have been earned by the Dollar Value of the Participants' Account determined as of the end of the Plan Year ending prior to the Participant's death, retirement or Total and Permanent Disability and applying the Applicable Interest Rate for such immediately preceding Plan Year (adjusted for periods of less than one year) to such Dollar Value for the period from the end of such Plan Year to the date the Participant's status as a member of the Board of Directors of Mark IV is terminated on account of the Participant's retirement, death or suffering of a Total and Permanent Disability. In addition, if a Participant has elected to make Compensation Deferrals, a Trust Fund has not been established and the Participant's status as a member of the Board of Directors of Mark IV is terminated on account of his death, retirement or suffering of a Total and Permanent Disability, the Committee shall increase the Dollar Value of such Participant's Account by an amount equal to the amount of interest which would have been earned by applying the Applicable Interest Rate (adjusted for periods of less than one year) to each of the monthly allocations of salary or wages made to the Participant's account for the period between the date such monthly allocation to the Participant's Account and the date the Participant's status as a member of the Board of Directors of Mark IV is terminated on account of the Participant's retirement, death or suffering of a Total and Permanent Disability. As soon as practicable following the termination of a Participant's status as a member of the Board of Directors of Mark IV on account of death, retirement or Total and Permanent Disability, the Committee shall compare the Dollar Value of the Participant's Account determined as of the date of the Participant's retirement, death or Total and Permanent Disability (including the amount of any interest thereon as provided for by the two preceding sentences) with the Share Value of the Participant's Account determined as of the date of the Participant's retirement, death or Total and Permanent Disability and the greater of such values shall, thereafter, be deemed the Dollar Value of the Participant's Account determined as of the date the Participant's status as a member of the Board of Directors of Mark IV is terminated on account of the Participant's death, retirement or Total and Permanent Disability. Thereafter, if a Trust Fund has not been established, the Dollar determined pursuant to the preceding sentence) of the Account of a Participant whose status as a member of the Board of Directors of Mark IV has been terminated on account of his death, retirement or suffering of a Total and Permanent Disability, shall be credited with interest for the period beginning on the date the Participant's status as a member of the Board of Directors of Mark IV is terminated as a result of his death, retirement or Total and Permanent Disability and ending on the date the value of the Participant's Account is distributed. For each Plan Year or portion thereof which elapses during the period beginning on the date a Participant's status as a member of the Board of Directors of Mark IV is terminated on account of his death, retirement or Total and Permanent Disability and ending on the date the value of the Participant's Account is distributed, the interest rate which shall be applied to the Dollar Value of the Account of such Participant shall be the Applicable Interest Rate as in effect for the immediately preceding Plan Year. If a Trust Fund has not been established and a Participant's status as a member of the Board of Directors of Mark IV is terminated for any reason prior to his death, retirement or suffering of a Total and Permanent Disability, the Share Value of the Participant's Account, if any, shall be determined as provided in Section 3.05 hereof, and the Committee shall compare the Dollar Value of the Participant's Account determined as of the end of the immediately preceding calendar month with the Share Value of the Participant's Account as of the end of such immediately preceding calendar month, and the greater of such values shall, thereafter, be deemed the Dollar Value of such Participant's Account determined as of the date the Participant's status as a member of the Board of Directors of Mark IV is terminated. Thereafter, the Participant's Account shall be credited with interest during the period beginning on the date the Participant's status as a member of the Board of Directors of Mark IV is terminated and ending on the last day of the calendar month ending immediately before the calendar month in which the Participant's Account is distributed. The amount of such interest for any such period shall be equal to the Applicable Interest Rate for the immediately preceding Plan Year multiplied by the Dollar Value of the Participant's Account determined as of the end of the immediately preceding Plan Year. Upon the occurrence of a Change in Control as defined in Section 5.03 hereof, the Committee shall increase the Dollar Value of each Participant's Account by an amount equal to the amount of interest which would have been earned by the Dollar Value of such Participant's Account determined as of the Plan Year ending prior to the Change in Control and applying the Applicable Interest Rate for such immediately preceding Plan Year to such Dollar Value for the period from the end of such Plan Year to the date on which the Change in Control occurs. In addition, upon the occurrence of a Change in Control, the Committee shall increase the Dollar Value of the Participant's Account by an amount equal to the amount of interest, if any, which would have been earned by applying the Applicable Interest Rate for the immediately preceding Plan Year (adjusted for periods of less than one year) to each of the monthly allocations of salary or wages, if any, made to the Participant's Account for the period between the date such monthly allocation is made to the Participant's Account and the date the Change in Control occurs. If a Trust Fund has been established pursuant to Section 5.01 hereof and a Participant's status as a member of the Board of Directors of Mark IV is terminated for any reason prior to his death, retirement or disability, during the period between the date such Participant's status as a member of the Board of Directors of Mark IV is terminated and the date that distribution of the Participant's Account begins, such Participant's Account shall be credited or charged with its proportionate share of the earnings or losses of the Trust Fund. 3.09 Allocation Does Not Vest Any Interest. The fact that an amount is credited to the Account of a Participant shall not vest in such Participant or any Beneficiary any right, title or interest in any assets of Mark IV except at such time or times and upon the terms and conditions herein provided. In addition, in the event a Trust Fund is established pursuant to Section 5.01 hereof, the fact that an amount is credited to the Account of a Participant shall not vest in such Participant or any Beneficiary any right, title or interest in the assets of the Trust Fund except at such time or times and upon the terms and conditions provided herein. 3.10 Contributions. In the event a Trust Fund is established pursuant to Section 5.01 hereof and, following the establishment of such Trust Fund, Mark IV or its successor elects to continue this Plan, for each Plan Year in which a Participant makes a Compensation Deferral with respect to the bonus or other incentive compensation payable to the Participant, Mark IV or its successor, as the case may be shall, within thirty (30) days following the end of such Plan Year, contribute to the Trust Fund an amount equal to the sum of all such Compensation Deferrals made for the Plan Year. In addition, in the event a Trust Fund is established pursuant to Section 5.01 hereof and, following the establishment of such Trust Fund, Mark IV or its successor elects to continue this Plan, for each Plan Year in which a Participant makes a Compensation Deferral with respect to salary or wages payable to such Participant, Mark IV or its successor, as the case may be, shall, within fifteen (15) days following the end of the calendar month in which any portion of the Participant's Compensation is to be allocated to his Account contribute to the Trust Fund an amount equal to the Compensation Deferrals made by all Participants for such month. 3.11 Valuation of Trust Fund. In the event a Trust Fund is established pursuant to Section 5.01 hereof, as of each Valuation Date, the Trustee shall determine the net worth of the assets of the Trust Fund and report such value to the Committee in writing. In determining such net worth, the Trustee shall value the assets of the Trust Fund at their fair market value as of such Valuation Date and shall deduct all fees and expenses chargeable to the Trust Fund. Such valuation shall not include any portion of the Compensation Deferral made by the Participant with respect to his bonus or other incentive compensation for the Plan Year ending on such Valuation Date. The Committee shall then adjust the net credit balance in the Accounts of all Participants upward or downward, pro rata, so that the total of such net credit balances will equal such net worth of the Trust Fund as of such Valuation Date. Finally, the Committee shall add to the Account of each Participant, the portion of the contribution, if any, to be made by Mark IV or its successor to reflect the amount, if any, of the Participant's Compensation Deferral with respect to the Participant's bonus or other incentive compensation. 3.12 Statement of Account. As soon as practicable following the end of each Plan Year, the Committee shall deliver to each Participant a statement of the Dollar Value and the Share Value of his Account including a statement of: (a) the amount of the Participant's Compensation Deferral which is attributable to the deferral of salary or wages and which has been allocated to the Participant's Account for such Plan Year; (b) the amount of the Participant's Compensation Deferral which is attributable to the Participant's deferral of his bonus or other compensation which is to be allocated to the Participant's Account as soon as practicable following the end of such Plan Year; (c) the number of shares of Phantom Stock to be allocated to his Account for such Plan Year; (d) the total Dollar Value of the Participant's Account together with a statement of the interest to be allocated to such Participant's Account for such Plan Year and, (e) the total Share Value, of the Participant's Account. SECTION 4. Distributions 4.01 Retirement. Every Participant shall retire for purposes of this Plan upon the acceptance of his resignation from membership in the Board of Directors of Mark IV. As soon as practicable following a Participant's retirement, the Committee shall direct Mark IV to distribute to the Participant in one lump sum payment in cash or by check drawn on an account containing sufficient funds, an amount equal to the Dollar Value of the Participant's Account as determined pursuant to Section 3.08 hereof. If a Trust Fund has been established pursuant to Section 5.01 hereof, following a Participant's retirement, the Committee shall direct the Trustee to distribute to the Participant in one lump sum payment in cash or by check drawn on an account containing sufficient funds, the value of such Participant's Account within the Trust Fund, determined as of the preceding Valuation Date. The payments required to be made to a Participant pursuant to this paragraph shall be delivered to the Participant no later than sixty (60) days following the date the Participant retires from employment with the Employer. 4.02 4.03 Death As soon as practicable following the death of a Participant, the Committee shall direct Mark IV to distribute to any surviving Beneficiary designated by the Participant, or, if none, to the Participant's surviving spouse, or if neither to the Participant's estate, in one lump sum payment in cash or by check drawn on an account containing sufficient funds, an amount equal to the Dollar Value of the deceased Participant's Account as determined pursuant to Section 3.08 hereof. If a Trust Fund has been established pursuant to Section 5.01 hereof, following a Participant's death, the Committee shall direct the Trustee to distribute to any surviving Beneficiary designated by the Participant, or, if none, to the Participant's surviving spouse, or, if neither, to the Participant's estate, in one lump sum payment in cash or by check drawn on an account containing sufficient funds, the value of such Participant's Account within the Trust Fund determined as of the preceding Valuation Date. The payments required to be made pursuant to this paragraph shall be delivered to the Participant's Beneficiary, or if none to the Participant's surviving spouse, or if neither to the Participant's estate no later than 60 days following the Participant's death. (a) Proof of Death The Committee may require such proper proof of death and such evidence of the right of any person to receive payment of a deceased Participant's Account as the Committee may deem desirable. The Committee's determination shall be conclusive. (b) Designation of Beneficiary Each Participant may designate a Beneficiary of his own choosing, and may in addition name a contingent Beneficiary. Such designation shall be made in a form satisfactory to the Committee. Any Participant may at any time revoke or change his Beneficiary designation by filing written notice with the Committee. 4.04 (a) Disability. As soon as practicable following the date it is determined that a Participant suffers from a total and permanent disability, the Committee shall direct Mark IV, to distribute and pay to the Participant in one lump sum payment in cash or by check drawn on an account containing sufficient funds, an amount equal to the Dollar Value of the Participant's Account as determined pursuant to Section 3.08 hereof. If a Trust Fund has been established pursuant to Section 5.01, after it is determined that the Participant suffers from a Total and Permanent Disability, the Committee shall direct the Trustee to distribute and pay to the Participant in one lump sum payment in cash or by check drawn on an account containing sufficient funds, an amount equal to the value of such Participant's Account within the Trust Fund determined as of the preceding Valuation Date. The payments required to be made pursuant to this paragraph shall be delivered to the Participant no later than 60 days following the date it is determined that the Participant suffers from a Total and Permanent Disability. (b) Total and Permanent Disability. For purposes of this Plan, Total and Permanent Disability shall mean a presumably permanent physical or mental condition of a Participant resulting from a bodily injury or disease or mental disorder which renders him incapable of continuing in the employment of the Employer or any Affiliate. (c) Determination of Total and Permanent Disability. The total and permanent disability of any Participant shall be determined by a licensed physician in accordance with uniform principles consistently applied, upon the basis of independent medically determined evidence. 4.05 Vesting. Each Participant shall at all times have a 100% vested interest in the entire Dollar Value and the entire Share Value of his Account. 4.06 Distribution of Compensation Deferrals. A Participant shall be entitled to receive payment of all or any portion of the amount of his Compensation Deferral for a Plan Year at the time or times specified in the Deferred Compensation Election Form executed by the Participant with respect to such Plan Year notwithstanding the fact that the Participant is an active member of the Board of Directors of Mark IV at the time such payment is to be made to the Participant. As soon as practicable following the date specified by the Participant in his Deferred Compensation Election Form (and, in no event later than ten (10) days following such date), the Committee shall distribute and pay to the Participant in one (1) lump sum payment in cash or by check drawn on an account containing sufficient funds, the percentage, specified in the Participant's Deferred Compensation Election Form, of the Dollar Value or the Share Value, whichever is greater, of the Participant's Compensation Deferral made in connection with such Deferred Compensation Election Form. If a Participant's Deferred Compensation Election Form provides for the partial payment to a Participant of the Participant's Compensation Deferral, the Dollar Value and the Share Value of the Participant's Compensation Deferral Account shall be reduced in an amount equal to the percentage of the Compensation Deferral that is to be paid to the Participant. If a Trust Fund has been established pursuant to Section 5.01 hereof, at the time a Participant is entitled to payment of all or any portion of his Compensation Deferral for a Plan Year as provided for the Deferred Compensation Election Form executed by the Participant for such Plan Year, the Committee shall direct the Trustee to distribute to the Participant in one (1) lump sum payment in cash or by check drawn on an account containing sufficient funds, the portion of the Participant's Account which is attributable to the portion of the Compensation Deferral which the Participant is entitled to receive payment of together with any earnings (or less any losses) of the Trust Fund attributable to such amount. 4.07 Termination of Board Membership and Distribution of Vested Benefits. Upon a Participant's voluntary or involuntary termination of his status as a member of the Board of Directors of Mark IV other than by reason of retirement, death or disability, the Dollar Value, as determined pursuant to Section 3.08 hereof, of such Participant's Account shall be distributed to, or in the case of the Participant's death, on behalf of, the Participant within sixty (60) days following the date the Participant's status as a member of the Board of Directors is terminated. As soon as practicable after such former Participant is entitled to distribution as provided in the preceding sentence, the Committee shall direct Mark IV to distribute the Dollar Value of the Participant's Account as determined pursuant to Section 3.08 hereof together with any earnings thereon to such former Participant or his Beneficiary in one lump sum payment in cash or by check drawn on an account containing sufficient funds. If a Trust Fund has been established pursuant to Section 5.01 hereof, following the date a former Participant is entitled to a distribution as provided in this Section 4.06, the Committee shall direct the Trustee to distribute to or on behalf of the Participant in one lump sum payment in cash or by check drawn on an account containing sufficient funds, an amount equal to the value of the Participant's Account within the Trust Fund. Payments required to be made from the Trust Fund to or on behalf of a former Participant as provided in this paragraph shall be made no later than sixty (60) days following the date the Participant's status as a member of the Board of Directors is terminated. During the period between the date a Participant's status as a member of the Board of Directors of Mark IV is terminated and the date the Participant's Account is to be distributed, the Participant's Account shall be credited with interest as provided in Section 3.08 or, if a Trust Fund has been established pursuant to Section 5.01, the Participant's Account shall be credited or charged with its proportionate share of the earnings or losses of the Trust Fund. At the time a former Participant is entitled to distribution, according to its records, the Committee shall send, by registered or certified mail directed to his address last known to the Committee, a notice informing him as to his rights with respect to any amounts held for him and requesting confirmation of his address and age. Each Participant and former Participant has the obligation to keep the Committee informed of his address. In the event the Committee is unable to locate such former Participant within four (4) years, the amount held for his benefit shall be forfeited; provided, however, if a claim is made by the Participant or his Beneficiary for the forfeited amount, such amount shall be reinstated into his Account. 4.08 Certain Additional Payments by Mark IV. In the event that a "Change in Control" as defined in Section 5.03 occurs and, thereafter, it shall be determined that any payment or distribution by Mark IV to or for the benefit of any Participant under this Plan, whether paid or payable or distributed or distributable pursuant to this Plan would be subject to any income, excise or other tax under the Internal Revenue Code of 1986, as amended, or any interest or penalties with respect to such income, excise or other tax (the aggregate amount of any such income, excise or other taxes together with any interest or penalties relating to such income, excise and other taxes being hereinafter collectively referred to as the "Taxes") then such Participant shall be entitled to payment by Mark IV or its successor of an additional payment (the "Gross Up Payment") in an amount such that the net amount distributed to or on behalf of the Participant, after payment by such Participant or his Beneficiary of all Taxes (including any Taxes imposed on the Gross-Up Payment) equals the value of the Participant's Account which is paid and distributed to the Participant under the terms of this Plan. The determination of the amount of the Gross-Up Payment shall be made by Mark IV within thirty (30) days following the date a Participant becomes entitled to payment under the provisions of this Plan, or, if earlier, within thirty (30) days following written notice from a Participant that the Internal Revenue Service has made a claim that amounts paid or payable, or distributed or distributable under this Plan are subject to income, excise or other taxes; provided that the Participant gives written notice to the Committee of such Internal Revenue Service claim at least ten (10) days following receipt of the same. The determination of the amount of the Gross-Up Payment to be made by Mark IV shall be based on: (a) the applicable marginal rate of Federal income taxation which would be in effect with respect to the calendar year in which the Gross-Up Payment is to be made for a total Compensation equal to the sum of: (i) amount of the payment to be made under this Plan which is subject to Taxes and (ii) the amount of the Gross-Up Payment; and (b) any applicable state and local taxes at the applicable marginal rate of such taxes with respect to the calendar year in which the Gross-Up Payment is to be made based upon a total Compensation equal to the sum of: (i) the amount of the payment to be made under this Plan which is subject to Taxes and (ii) the amount of the Gross-Up Payment. 4.09 Right to Payment of Deferred Compensation. Each Participant, upon satisfying the requirements for payment and distribution of his Account pursuant to the terms of this Plan, shall have a valid and enforceable claim against Mark IV for payment of the amount described in the applicable provisions of this Plan together with the amount of any applicable Gross-Up Payment. Notwithstanding the foregoing, no Participant, spouse or Beneficiary shall have any interest in any particular assets of Mark IV by reason of the right to receive deferred compensation under this Plan and any such Participant, spouse or Beneficiary shall have only the rights of a general unsecured creditor of Mark IV with respect to any deferred compensation payable under this Plan. SECTION 5. Trust Established Upon Change in Control .01 Establishment of Trust. Upon the occurrence of a Change in Control (as hereinafter defined), Mark IV or its successors shall establish a Trust Fund for the purpose of holding and investing assets of Mark IV to be used for payment of the deferred compensation to be provided to Participants under this Plan. The terms and conditions of the agreement containing the terms of the Trust Fund shall be consistent with the terms and conditions required by rulings and regulations of the Internal Revenue Service for a trust to be classified as a "Rabbi Trust" within the scope of Internal Revenue Service Private Letter Ruling No. 8113017 and Internal Revenue Service Private Letter Ruling No. 8907034 such that the amounts payable under this Plan will not be immediately taxable to the Participants to whom such amounts are payable under the terms of this Plan by virtue of the establishment of such Trust Fund and contribution of assets thereto or by virtue of the acquisition by any such Participants of a vested interest in the deferred compensation payable hereunder. 5.02 Contributions to Trust. Promptly upon the occurrence of a Change in Control (as hereinafter defined), but in any event not later than sixty (60) days following the occurrence of the Change in Control, Mark IV or its successor shall determine for each Participant, the Dollar Value and the Share Value of the Participant's Account as of the date the change in Control occurs. Thereafter, Mark IV or its successor shall pay to the Trustee, to be held pursuant to the Trust Fund, cash or immediately available funds, an amount for each Participant which is equal to the greater of the Dollar Value and the Share Value of the Participant's Account determined as of the date the Change in Control occurs. 5.03 Change in Control. For purposes of this Plan, a Change in Control shall occur if (i) any "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Act")) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Act) of more than twenty percent (20%) of the then outstanding voting stock of Mark IV, otherwise than through a transaction arranged by, or consummated with the prior approval of its Board of Directors, or (ii) during any period of two (2) consecutive years, individuals who at the beginning of such period constitute the Board of Directors (and any new director whose election to the Board of Directors or whose nomination for election by Mark IV's shareholders was approved by a vote of at least two thirds (2/3) of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) (hereinafter referred to as the "Continuing Directors") cease for any reason to constitute a majority thereof; or (iii) the shareholders of Mark IV approve a merger or consolidation of Mark IV with any other corporation, other than a merger or consolidation which would result in the voting securities of Mark IV immediately prior thereto continuing to represent (either by remaining outstanding or being converted into voting securities of the surviving entity) at least eighty percent (80%) of the combined voting power of the voting securities of Mark IV or such surviving entity outstanding immediately after such merger or consolidation (provided, however, that if prior to the merger or consolidation, the Board of Directors adopts a resolution that is approved by a majority of the Continuing Directors providing that such merger or consolidation shall not constitute a "change in control" for purposes of the Plan, then such a merger or consolidation shall not constitute a "change in control"), or (iv) the shareholders of Mark IV approve an agreement for the sale or disposition by Mark IV or all or substantially all the assets of Mark IV. Notwithstanding the provisions of Sections 7.01 and 7.02 hereof, the foregoing provisions of Sections 5.01, 5.02 and 5.03 hereof may not be amended within three (3) years following a "change in control" without the written consent of a majority in both number and interest of the Participants who are actively employed by the Employer, both immediately prior to the "change in control" and at the date of such amendment. 5.04 Investment Policy. In determining its investments hereunder, the Trustee or any duly appointed Investment Manager shall consider the short and long range needs of the Plan communicated to them by the Committee. Benefits may be provided through any combination of investment media designated to provide the requisite liquidity, growth and security appropriate to this Plan. 5.05 Trustee Responsibilities. Following the establishment of a Trust pursuant to Section 5.01 hereof, the Trustee appointed to administer the Trust Fund shall be deemed a Fiduciary and shall discharge his duties for the exclusive benefit of Participants in the Plan. SECTION 6. Administration 6.01 The Committee. The Board of Directors of Mark IV shall appoint an administrative committee to administer the Plan as the plan administrator. The Committee shall be the named fiduciary of the Plan with respect to Plan administration and, if a Trust Fund is established pursuant to Section 5.01 hereof, the Committee shall be a named fiduciary with respect to the appointment of an Investment Manager to manage any assets of the Plan. The Committee shall consist of officers or other employees of the Employer, or any other individuals, who shall serve at the pleasure of the Board of Directors of Mark IV. Any member may resign by delivering his written resignation to the Board of Directors. Vacancies arising by resignation, death, removal or otherwise shall be filled by the Board of Directors of Mark IV. If at any time no members are currently serving as the Committee, or if no Committee is appointed, the Board of Directors of Mark IV shall be deemed to be the Committee. 6.02 General Duties and Responsibilities. The Committee shall administer the Plan in accordance with its terms and shall have all powers necessary to carry out the provisions of the Plan. Any interpretation, construction or determination made in good faith shall be final and conclusive. The Committee may correct any defect, supply any omission, or reconcile any inconsistency in such manner and to such extent as shall be deemed necessary or advisable to carry out the purpose of this Plan. The Committee as named fiduciary may employ attorneys, accountants and such other advisors to advise it with respect to its duties and obligations as it deems appropriate. 6.03 Funding Policy. In the event a Trust Fund is established pursuant to Section 5.01 hereof, the Committee shall establish a funding policy and method consistent with the requirements of law and designed to protect the interests of Plan Participants. The Committee shall thereafter review, and if necessary, change such funding policy and method. 6.04 Allocation and Delegation of Responsibilities. As the named fiduciary, the Committee may engage agents to assist it in carrying out its functions hereunder. The Committee members are expressly authorized to allocate among themselves and/or delegate to other named persons or parties, fiduciary responsibilities, other than Trustee responsibilities. In the event a Trust Fund is established pursuant to Section 5.01 hereof, the Committee may appoint an Investment Manager and delegate to him the authority to manage, acquire, invest or dispose of all or any part of the Trust Fund assets. With regard to the assets entrusted to his care, the Investment Manager shall provide written instructions and directions to the Trustee, who shall in turn, be entitled to rely thereon. Appointments and delegations shall be evidenced by a signed written document, which must be retained with the other Plan documents. 6.05 Bonding. The Committee shall be responsible for procuring bonding for any persons dealing with the Plan or its assets as may be required by law or by this Plan. 6.06 Records, Reporting and Disclosure. The Committee shall maintain all the records necessary for the administration of the Plan. The Committee shall also be responsible for preparing and filing such annual reports and tax forms as may be required by law. The Committee shall furnish and/or make available for inspection by each Participant covered under the Plan and to each Beneficiary who is entitled to receive benefits under the Plan, such information and reports as may be required by law. 6.07 Expenses and Compensation. The expenses necessary to administer the Plan shall be borne by Mark IV and, if necessary, shall be reimbursed to the Plan. In the event a Trust Fund is established pursuant to Section 5.01 hereof, upon the failure of Mark IV to pay said expenses, the Trustee shall pay said expenses out of the Plan assets. Expenses include, but are not limited to, those involved in retaining necessary professional assistance from an attorney, an accountant, an actuary, or an investment advisor. The Employer shall furnish the Committee with such clerical and other assistance as is necessary in the performance of its duties. The Committee, with the approval of the Employer, may receive reasonable compensation for services rendered in administering this Plan, provided the member performing the services is not a full-time employee of any Employer maintaining this Plan. 6.08 Information from Employer. To enable the Committee to perform its functions, the Employer shall supply full and timely information to the Committee on all matters relating to the Compensation of all Participants, their employment, their retirement, death, disability or termination of employment, and such other pertinent facts as the Committee may require. The Committee shall advise the Trustee of such of the foregoing facts as may be pertinent to the Trustee's duties under the Plan. The Committee is entitled to rely on such information as is supplied by the Employer and shall have no duty or responsibility to verify such information. 6.09 Multiple Signatures. In the event that more than one person has been duly nominated to serve on the Committee, one signature may be relied upon by any interested party as conclusive evidence that the Committee has duly authorized the action therein set forth and as representing the will of and binding upon the whole Committee. No person receiving such documents or written instructions and acting in good faith and in reliance thereon shall be obliged to ascertain the validity of such action under the terms of this Plan and Trust. The Committee shall act by a majority of its members at the time in office and such action may be taken either by a vote at a meeting or in writing without a meeting. 6.10 General Fiduciary Liability. The Employer, its Board of Directors, the Committee, the Trustee and any Fiduciary with respect to this Plan and, if applicable, the Trust Fund created pursuant hereto shall not be liable for any actions taken or omitted by any of them except for such acts involving gross negligence or willful misconduct of the party to be charged and except as required by ERISA. Nothing contained in this Section 6.10 shall be deemed to release, discharge or otherwise limit the liability of Mark IV, or, if a Trust Fund is established pursuant to Section 5.01 hereof, the liability of the Trust Fund and any successor in interest to Mark IV for payment to Participants of the amounts described in this Plan. 6.11 Liability Insurance. The Committee may purchase, as an authorized expense of the Plan, liability insurance for the Plan and/or for its Fiduciaries to cover liability or losses occurring by reason of the act or omission of a Fiduciary, providing such insurance contract permits recourse by an Insurer against the Fiduciary in the case of breach of fiduciary obligation by such Fiduciary. Any Fiduciary may purchase on behalf of himself, insurance to protect himself in the event of a breach of fiduciary duty and the Employer may also purchase insurance to cover the potential liability of one or more persons who serve in a fiduciary capacity with regard to this Plan. 6.12 Benefit Claims Procedures. The Committee shall establish a benefit claims procedure. Such procedure shall provide for the filing of claims for benefits, adequate notice in writing to any Participant or Beneficiary whose claim for benefits has been denied, setting forth the specific reasons for such denial and written in a manner calculated to be understood by the Participant, and afford a reasonable opportunity to any Participant whose claim for benefits has been denied for a full and fair review by the Committee of the decision denying the claim. SECTION 7. Amendment, Termination and Merger 7.01 Amendment. The Board of Directors of Mark IV shall have the right at any time and from time to time without the consent of any Participant or Beneficiary to amend, in whole or in part, any or all of the provisions of this Plan. No amendment to the Plan shall be effective to the extent that it has the effect of decreasing the value of a Participant's Account or depriving any Participant or the Beneficiary of any Participant of any amount payable (whether immediately or in the future) to such Participant or Beneficiary under the terms of this Plan as in effect on the date of such amendment. 7.02 Termination. Mark IV, by action of its Board of Directors shall have the right at any time to discontinue its contributions hereunder and to terminate this Plan. Upon complete termination of the Plan or upon the occurrence of any event which constitutes a partial termination pursuant to IRC Section 411(d)(3), whether by action of the Board of Directors or otherwise, all Participants shall become fully and nonforfeitably vested in the value of their respective Accounts; provided, however, in the case of a partial termination, full vesting shall only be applicable to that part of the Plan and the Participants covered thereunder that is terminated. 7.03 Continuation of Plan by Successor. Mark IV will require any person, firm, corporation or other entity that becomes a successor to Mark IV, (whether direct or indirect, by purchase of stock or assets, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Mark IV to expressly assume and agree to perform the provisions of this Plan as in effect at the time any such person, firm, corporation or other entity becomes a successor to Mark IV, in the same manner and to the same extent that Mark IV would be required to perform it if no such succession had taken place. Unless this Plan be sooner terminated, a successor to the business of Mark IV by whatever form or manner resulting, may continue this Plan after such person, firm, corporation or entity becomes a successor to Mark IV by executing an appropriate supplemental agreement. In the event any successor to the business of Mark IV shall not elect to continue this Plan within the ninety days after such person, firm, corporation or other entity becomes a successor to Mark IV, this Plan shall be deemed to be terminated and the obligation to pay to each Participant the amounts described herein at the times provided for herein shall become fixed and binding obligations of such successor. SECTION 8. Miscellaneous 8.01 No Rights Created by Plan and Trust - Terms of Employment Not Affected. Neither the establishment of the Plan or Trust nor any modification hereof, nor the creation of any fund or account, nor the payment of any benefits, shall be construed as giving to any Participant, Beneficiary or other person any legal or equitable right against the Employer or any officer or Employee thereof, or the Trustee, or the Committee, except as herein provided. Under no circumstances shall participation in this Plan by an Employee constitute a contract of continuing employment or in any manner obligate the Employer to continue the services of an Employee. 8.02 Participants Rights Unsecured. Unless the establishment of a Trust Fund is required pursuant to Section 5.01 hereof, the Plan shall at all times be entirely unfunded and no provision shall at any time be made with respect to segregating any assets of Mark IV for payment of any distributions hereunder. The rights of a Participant or his Beneficiary to receive a distribution hereunder shall be an unsecured claim against the general assets of Mark IV and neither the Participant nor his Beneficiary shall have any rights in or against any specific assets of Mark IV including, but not limited to, any assets contained in any Trust Fund established pursuant to Section 5.01 hereof. 8.03 No Guaranty of Benefits. Nothing contained in this Plan shall be deemed to constitute a guaranty by Mark IV or any other entity or person that the assets of Mark IV will be sufficient to pay the benefits hereunder. 8.04 Execution of Receipts and Releases. Any payment to any Participant, or to his legal representatives or Beneficiary, in accordance with the provisions of this Plan, shall to the extent thereof be in full satisfaction of all claims hereunder against the Plan, and the Committee may require such Participant, legal representative, or Beneficiary, as a condition precedent to such payment, to execute a receipt and release therefor in such form as it shall determine. 8.05 Benefits Non-Assignable. No benefit which shall be payable to any person under this Plan, (including a Participant or his Beneficiary), whether payable out of the general assets of Mark IV or payable out of the Trust Fund, shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge the same shall be void and no such benefit shall in any manner be liable for, or subject to, the debts, contracts, liabilities, engagements or torts or any such person, nor shall it be subject to attachment or legal process for or against such person, and the same shall not be recognized by the Committee or the Trustee, except to such extent as may be required by law. 8.06 Construed Under Applicable Federal Law and New York Law. This Plan shall be construed according to applicable Federal Law and the laws of the State of New York and all provisions hereof shall be administered according to such laws. 8.07 Masculine Gender to Include Feminine; Singular to Include Plural. Wherever any words are used herein in the masculine gender they shall be construed as though they were also used in the feminine gender in all cases where they would so apply, and wherever any words are used herein in the singular form, they shall be construed as though they were also used in the plural form in all cases where they would so apply. 8.08 Heading No Part of Plan. Heading of sections and subsections of this instrument are inserted for convenience of reference only. They constitute no part of this Plan are not to be construed in the construction hereof. 8.09 Counterparts. This instrument may be executed in several counterparts, each of which shall be deemed an original, and said counterparts shall constitute but one and the same instrument and may be sufficiently evidenced by any one counterpart. IN WITNESS WHEREOF, the Mark IV Industries, Inc. has caused this Plan to be executed as of the 30th day of November, 1993. MARK IV INDUSTRIES, INC. By: Richard L. Grenolds Vice President and Chief Accounting Officer EX-11 6 STATEMENT REGARDING COMPUTATION OF PER SHARE EXHIBIT 11
MARK IV INDUSTRIES, INC. STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS (Amounts in Thousands, Except Per Share Data) For the Fiscal Year Ended the Last Day of February _______________________________ Primary Earnings Per Share 1994 1993 1992 __________________________ ____ ____ ____ Primary Shares Outstanding: Weighted average number of shares outstanding 42,481 41,993 33,140 Net effect of dilutive stock options (1) 316 330 438 Total 42,797 42,323 33,578 Income from continuing operations $ 51,100 $39,100 $26,800 Income per share from continuing operations $ 1.20 $ 0.93 $ 0.81 Income from discontinued operations $ - $ 3,600 $ 2,000 Income per share from discontinued operations $ - $ 0.09 $ 0.06 Loss from extraordinary items $(21,700) $(3,700) $(4,500) Loss per share from extraordinary items $ (0.51) $ (0.09) $ (0.14) Loss from cumulative accounting change $(26,000) $ - $ - Loss per share from cumulative accounting change $ (0.61) $ - $ - ======== ====== ======= Fully-diluted Earnings Per Share Fully-diluted Shares Outstanding: Weighted average number of shares outstanding 42,481 41,993 33,140 Shares issuable upon conversion of the Company's: 7% Convertible Subordinated Debentures - - 4,292 6-1/4% Convertible Subordinated Debentures 7,950 7,951 348 Net effect of dilutive stock options (1) 316 381 578 Total 50,747 50,325 38,358 Income from continuing operations $ 51,100 $39,100 $26,800 Interest, net of tax effect, for: 7% Convertible Subordinated Debentures - - 1,200 6-1/4% Convertible Subordinated Debentures 4,400 4,700 200 Income applicable to fully diluted shares $ 55,500 $43,800 $28,200 Income per share from continuing operations $ 1.09 $ 0.87 $ 0.73 Income from discontinued operations $ - $ 3,600 $ 2,000 Income per share from discontinued operations $ - $ 0.07 $ 0.05 Loss from extraordinary items $(21,700) $(3,700) $(4,500) Loss per share from extraordinary items $ (0.43) $ (0.07) $ (0.12) Loss from cumulative accounting change $(26,000) $ - $ - Loss per share from cumulative accounting change $ (0.51) $ - $ - ======== ======= ======= _________________ (1) The net effects for fiscal 1994, 1993 and 1992 are based upon the treasury stock method using average market prices during the periods for the primary amounts, and the higher of the average market prices or the market price at year-end for the fully-diluted amounts. (2) Primary earnings per share for fiscal 1994, 1993 and 1992 have been reported on the Company's financial statements based only upon the shares of common stock outstanding, since the dilutive effect of the stock options is not considered to be material.
EX-21 7 SUBSIDIARIES EXHIBIT 21 SUBSIDIARIES The following is a list of the subsidiaries of Mark IV Industries, Inc. at May 15, 1994. Except as otherwise indicated, the names of indirectly- owned subsidiaries are indented under the names of their immediate parent. Alston Corporation (Delaware) Audubon Leasing, Inc. (Delaware) Automatic Signal/Eagle Signal Corporation (Delaware) F-P Technologies Holding Corporation (Delaware) (a subsidiary of the Company owned 100% by the Company and Mark IV Industries Limited) Pinnacle Audio, Inc. (Delaware) Gulton Industries, Inc. (Delaware) F-P Displays, Inc. (Massachusetts) Altec Lansing Corporation (Delaware) Altec Lansing International Limited (United Kingdom) Electro-Voice, Incorporated (Delaware) Mark IV Audio Canada Inc. (Canada) (an indirect subsidiary of the Company 100% owned, in the aggregate, by Electro-Voice, Incorporated, Gulton Industries, Inc. and Altec Lansing Corporation) University Sound Inc. (Delaware) Mark IV Hong Kong Limited (Hong Kong) Audio Consultants Co., Limited (Hong Kong) Mark IV Audio (Aust) Pty. Limited (Australia) (an indirect subsidiary of the Company owned 100% by Gulton Industries, Inc. and Electro-Voice, Inc.) Mark IV Holding AG (Switzerland) Mark IV Audio AG (Switzerland) F-P Displays AG (Switzerland) LFE Industrial Systems Corporation (Connecticut) Luminator Service, Inc. (New York) Mark IV Audio Japan Ltd. (Japan) (88% owned) Mark IV France S.A. (France) (an indirect subsidiary of the Company 100% owned, in the aggregate, by Gulton Industries, Inc. and Dayco Products, Inc.) Dayco Products Europe S.A.R.L. (France) Mark IV Audio France S.A. (France) Gulton S.A. (France) SLE S.A.R.L. (France) Gulton-Statham Transducers, Inc. (Delaware) Interstate Highway Sign Corp. (Delaware) Kirkhof/Goodrich Corp. (Delaware) Mark IV Transportation Products Corp. (Delaware) Mark IV Audio, Inc. (Delaware) Armtek International Holding Company, Inc. (Delaware) Dayco Pacific Pty. Limited (Australia) (an indirect subsidiary of the Company 100% owned in the aggregate by Armtek Int'l Holding Company, Inc. and Dayco Products, Inc.) Dayco Products Singapore PTE Limited (Singapore) Dayco TSA Singapore PTE Limited (Singapore) (66% owned) Dayco Products-International, Inc. (Delaware) Dayco Products-United Kingdom, Inc. (Delaware) Eagle Funding Corporation (Delaware) Mark IV Industries GmbH (Germany) Mark IV Vertriebs GmbH (Germany) Dayco Europe GmbH (Germany) Dynacord Electronic-und Geratebau GmbH (Germany) (80% owned) Dynacord Electronic-und Geratebau GmbH & Co. KG (Germany) (80% owned) Dynacord France S.A. (France) (100% owned, in the aggregate, by Dynacord GmbH and Dynacord KG) Clarke Container Company, Inc. (New York) Glar-Ban Incorporated (New York) Mark IV Holdings Inc. (Delaware) Mark IV Industries Overseas, Ltd. (Barbados) Aerospace Sub, Inc. (Delaware) Mark IV Industries Ireland (Ireland) (100% owned by the Company and Mark IV Holdings, Inc.) Mark IV IVHS, Inc. (Delaware) Madison Industrial Properties, Inc. (Delaware) NRD, Inc. (New York) Protective Closures Co., Inc. (New York) LFE Corporation (Delaware) Dayco Products, Inc. (Delaware) Dayco Canada Holdings, Inc. (Canada) Dayco Products Canada Inc. (Ontario, Canada) Mark IV Industries Limited (Canada) Vapor Canada Inc. (Canada) Control Eldoro Dayco S.A. de C.V. (Mexico) Dayco Products - Eaglemotive, Inc. (Delaware) Dayco Italy S.p.A. (Italy) Dayco PTI S.p.A. (Italy) Dayco SACIC S.A. (Belgium) Dayco PTI S.A. (Spain) Dayco PTI GmbH (Germany) United Investors S.p.A. (Italy) Dayco Europe S.p.A. (Italy) Saig Tubiflex S.r.l. (Italy) Lunkoflex Iberica, S.A. (53% owned) (Spain) Dayco Europe AB (Sweden) Anchor Swan, Inc. (Delaware) Dayco PTI, Inc. (Delaware) U.S. Rubber Acquisition Corp. (Delaware) Mark IV Holdings, S.A. (Belgium) Mark IV Audio Magnetic, Inc. (Delaware) Mark IV PLC (United Kingdom) Dayco Europe Ltd. (United Kingdom) Dayco PTI Ltd. (United Kingdom) Cetec International Limited (United Kingdom) Klark Teknik Plc (United Kingdom) Nivenfield (1992) Limited (United Kingdom) Klark-Teknik (Singapore) Pte. Limited (Singapore) Dearden-Davies Associates Limited (United Kingdom) Klark-Teknik Electronics, Inc. (New York) Mark IV Transportation Products Ltd. (United Kingdom) Caplugs Ltd. (United Kingdom) Mark IV Netherlands B.V. (Netherlands) Vapor Corporation (Illinois) Pietranera S.r.L. (Italy) (a subsidiary of the Company owned 100% by the Company and Armtek International Holding Company, Inc.) EX-23 8 CONSENT OF INDEPENDENT ACCOUNTANTS EXHIBIT 23 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the Registration Statements of Mark IV Industries, Inc. on Form S-8 of our report dated March 29, 1994, on our audits of the consolidated financial statements and financial statement schedules of Mark IV Industries, Inc. as of February 28, 1994 and 1993, and for each of the three fiscal years in the period ended February 28, 1994, which reports are included in the Annual Report on Form 10-K. COOPERS & LYBRAND Rochester, New York May 23, 1994 -----END PRIVACY-ENHANCED MESSAGE-----