10-K405
1
FORM 10-K
1
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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 DECEMBER 31, 1994 COMMISSION FILE NUMBER 1-12068
MASCOTECH, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 38-2513957
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
21001 VAN BORN ROAD, TAYLOR, MICHIGAN 48180
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 313-274-7405
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ----------------------
COMMON STOCK, $1.00 PAR VALUE NEW YORK STOCK EXCHANGE, INC.
$1.20 CONVERTIBLE PREFERRED STOCK NEW YORK STOCK EXCHANGE, INC.
4 1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2003 NEW YORK STOCK EXCHANGE, INC.
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
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, AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES /X/ NO / /
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF 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. /X/
THE AGGREGATE MARKET VALUE OF THE REGISTRANT'S COMMON STOCK HELD BY
NON-AFFILIATES OF THE REGISTRANT ON MARCH 15, 1995 (BASED ON THE CLOSING SALE
PRICE OF $12 1/4 OF THE REGISTRANT'S COMMON STOCK ON THE NEW YORK STOCK EXCHANGE
COMPOSITE TAPE ON SUCH DATE) WAS APPROXIMATELY $328,500,000.
NUMBER OF SHARES OUTSTANDING OF THE REGISTRANT'S COMMON STOCK AT MARCH 15, 1995:
56,230,000 SHARES OF COMMON STOCK, PAR VALUE $1.00 PER SHARE
PORTIONS OF THE REGISTRANT'S DEFINITIVE PROXY STATEMENT TO BE FILED FOR ITS 1995
ANNUAL MEETING OF STOCKHOLDERS ARE INCORPORATED BY REFERENCE INTO PART III OF
THIS FORM 10-K.
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TABLE OF CONTENTS
ITEM PAGE
----- ----
PART I
1. Business........................................................................... 2
2. Properties......................................................................... 7
3. Legal Proceedings.................................................................. 8
4. Submission of Matters to a Vote of Security Holders................................ 9
Supplementary Item. Executive Officers of Registrant............................... 9
PART II
5. Market for Registrant's Common Equity and Related Stockholder Matters.............. 10
6. Selected Financial Data............................................................ 11
7. Management's Discussion and Analysis of Financial Condition and Results of 13
Operations.........................................................................
8. Financial Statements and Supplementary Data........................................ 18
9. Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure......................................................................... 42
PART III
10. Directors and Executive Officers of the Registrant................................. 42
11. Executive Compensation............................................................. 42
12. Security Ownership of Certain Beneficial Owners and Management..................... 42
13. Certain Relationships and Related Transactions..................................... 42
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K................... 43
Signatures......................................................................... 46
FINANCIAL STATEMENT SCHEDULES
MascoTech, Inc. Financial Statement Schedule....................................... F-1
TriMas Corporation and Subsidiaries Consolidated Financial Statements and Financial
Statement Schedule................................................................. F-3
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PART I
ITEM 1. BUSINESS.
MascoTech, Inc. is a leading supplier of metal-worked products for the
automotive industry. The Company is a supplier of powertrain and chassis
components, technical engineering and related services and automotive
aftermarket products. Sophisticated technology plays a significant role in the
Company's businesses and in the design, engineering and manufacturing of many of
its products. Products are manufactured utilizing a variety of metalworking and
other process technologies. Although published industry statistics are not
available, the Company believes that it is a leading independent producer of
many of the component parts that it produces using cold, warm or hot forming
processes.
During the last decade, MascoTech pursued diversified growth in the
transportation-related, architectural and defense markets. Structural changes in
recent years in the markets served by the Company, combined with the growth
opportunities and the capital requirements of certain of the Company's
Transportation-Related businesses, led the Company to an evaluation of the
prospects for all its businesses. This evaluation resulted in the Company's
long-term strategic plan to focus on certain core operating capabilities and
divest certain other businesses. The Company's powertrain and chassis group,
technical engineering and related services group and aftermarket group
constitute the Company's core operating businesses.
In late 1993, as part of the Company's long-term strategic plan, the
Company adopted a plan to divest the businesses in its energy segment, which has
since been completed. The Company's financial statements have been reclassified
to present the operating results of the energy segment as discontinued
operations. These businesses manufactured specialized tools, equipment and other
products for energy-related industries. Except as the context otherwise
indicates, all information contained herein has been reclassified for these
discontinued operations. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Discontinued Operations," included in
Item 7 of this Report. In late 1994, the Company adopted a plan to dispose of
its Architectural Products, Defense and certain of its Transportation-Related
businesses. The disposition of these businesses, which have annual sales of
approximately $700 million, is expected to occur primarily in 1995 with the cash
portion of the proceeds applied to reduce the Company's indebtedness and to
provide capital to invest in its core businesses. The disposition of these
businesses does not meet the criteria for discontinued operations treatment for
accounting purposes; accordingly, the sales and results of operations of these
businesses will be included in the results of continuing operations through the
date of disposition. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Disposition of Non-Core Businesses,"
included in Item 7 of this Report.
MascoTech was incorporated under the laws of Delaware in 1984 as a
wholly-owned subsidiary of Masco Corporation, which in May 1984 transferred to
MascoTech its industrial businesses. The Company became a separate public
company in July 1984 when Masco Corporation distributed shares of Company Common
Stock as a special dividend to its stockholders. Masco Corporation currently
owns approximately 44 percent of the Company's outstanding Common Stock. In June
1993 the Company changed its name to MascoTech, Inc. from Masco Industries, Inc.
to reflect the significance of technology in the design, engineering and
manufacturing of many of the Company's products.
Except as the context otherwise indicates, the terms "MascoTech" and the
"Company" refer to MascoTech, Inc. and its consolidated subsidiaries.
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INDUSTRY SEGMENTS
The following table sets forth for the three years ended December 31, 1994,
the contribution of the Company's industry segments (including businesses to be
sold) to net sales and operating profit:
(IN THOUSANDS)
NET SALES(1)
--------------------------------------
1994 1993 1992
---------- ---------- ----------
Transportation-Related Products.................. $1,332,000 $1,195,000 $1,058,000
Specialty Products:
Architectural.................................. 277,000 289,000 291,000
Other.......................................... 93,000 99,000 106,000
---------- ---------- ----------
$1,702,000 $1,583,000 $1,455,000
========== ========== ==========
OPERATING PROFIT (LOSS)(1)(2)(3)
--------------------------------------
1994 1993 1992
---------- ---------- ----------
Transportation-Related Products.................. $ (55,000) $ 160,000 $ 124,000
Specialty Products:
Architectural.................................. (118,000) (4,000) 2,000
Other.......................................... (78,000) 5,000 3,000
---------- ---------- ----------
$ (251,000) $ 161,000 $ 129,000
========== ========== ==========
(1) Results exclude the energy segment, which is treated as discontinued
operations -- see the Note to the Company's Consolidated Financial
Statements captioned "Dispositions of Operations," included in Item 8
of this Report.
(2) Amounts are before general corporate expense.
(3) Operating profit in 1994 includes the impact of a pre-tax charge in the
amount of $400 million for the disposition of businesses. The charge
impacts the Company's industry segments as follows:
Transportation-Related Products -- $196 million; Architectural -- $116
million; and Other Specialty Products -- $75 million. The remaining $13
million of the charge is included in General Corporate Expense.
Additional financial information concerning the Company's operations by
industry segments as of and for the three years ended December 31, 1994 is set
forth in the Note to the Company's Consolidated Financial Statements captioned
"Segment Information," included in Item 8 of this Report.
TRANSPORTATION-RELATED PRODUCTS
The Company manufactures a broad range of semi-finished components,
subassemblies and assemblies for the transportation industry.
Transportation-Related Products represented 78 percent of 1994 sales from
continuing operations and primarily consist of original equipment products for
the automotive and truck industries. The Company's products include a number of
high-performance products for which reliability, quality and certainty of supply
are major factors in customers' selection of suppliers.
The Company's core Transportation-Related businesses manufacture
powertrain, chassis and aftermarket products and provide technical engineering
and other related services. Powertrain and chassis products include
semi-finished transmission shafts, drive gears, engine connecting rods, wheel
spindles, front wheel drive and exhaust system components, control arms and
heavy stampings and related assemblies for suspension and chassis applications.
The Company's technical engineering and related services businesses supply
engineering and engineering services to support the vehicle development
processes of automotive original equipment manufacturers as well as specialty
vehicle, marketing, training, visual and other related professional services.
Aftermarket products include fuel and emission systems components, windshield
wiper blades, constant-velocity joints, brake hardware repair kits and
automotive accessories.
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The Company's Transportation-Related businesses held for disposition
manufacture products for vehicle body related applications including automotive
trim, luggage racks and accessories and light, medium and specialty metal
stampings. These businesses also supply specialty coatings and truck cab body
and passenger car convertible assemblies.
The Company's products are manufactured using various metalworking
technologies, including cold, warm and hot forming, powdered metal forming and
stamping. Approximately 30 percent of the Company's 1994 sales of
Transportation-Related Products (including both core businesses and businesses
held for disposition), and approximately 50 percent of sales of core
Transportation-Related Products, resulted from sales of products made using
cold, warm or hot metal forming technologies. The Company believes that its
metalworking technologies provide cost-competitive, high-performance, quality
components that are required in order to meet the increasing demands of the
automotive and truck markets it serves.
Approximately 90 percent of the Company's Transportation-Related Products
sales in 1994 were original equipment automotive products and services. Sales to
original equipment manufacturers are made through factory sales personnel and
independent sales representatives. During 1994, sales to various divisions and
subsidiaries of Ford Motor Company, Chrysler Corporation and General Motors
Corporation accounted for approximately 19 percent, 13 percent and 12 percent,
respectively, of the Company's net sales (including both core businesses and
businesses held for disposition). Sales to the automotive aftermarket are made
primarily to distributors utilizing factory sales personnel. Aftermarket
products are sold to companies distributing into the traditional, retail and
heavy duty segments of the automotive aftermarket.
SPECIALTY PRODUCTS
The businesses in the Specialty Products segment, which includes
Architectural Products and Other Specialty Products, are being held for
disposition as described earlier in this Report.
Architectural Products
The Company manufactures a variety of Architectural Products for
commercial, institutional and residential markets. Products include steel doors
and frames; stainable and low maintenance steel doors; wood windows and
aluminum-clad wood windows; leaded, etched and beveled glass for decorative
windows and entryways; residential entry systems; garage doors; sectional and
rolling doors; security grilles; and modular metal partitions. The Company's
commercial and institutional markets include office buildings, factories,
hotels, schools, hospitals, retail stores and malls, warehouses and
mini-warehouses. Residential markets include single and multifamily new
construction as well as repair and remodeling. Architectural Products are sold
principally to wholesale distributors who sell the products to builders,
developers, dealers, retailers (such as do-it-yourself home centers) and
residential, commercial, industrial and institutional end users. Security
grilles are sold directly to builders, developers and end users.
Other Specialty Products
The Company's Other Specialty Products consist primarily of Defense
Products, including large diameter extruded cartridge cases, projectiles and
casings for rocket motors and missiles for the United States government and its
suppliers. Changes in government procurement practices and requirements have
adversely affected orders, sales and profits of such products in recent years
and are expected to continue to do so in the future. As a result, the Company
has pursued other commercial applications for the resources related to the
manufacturing of Defense Products, including its metal forging capability and
waste-water treatment capability. Since obtaining the necessary permits in 1990,
the Company has marketed waste-water treatment services to other industrial
companies principally in southern California.
The Company's government contracts contain standard clauses providing for
termination at the convenience of the government which, in such cases, would
provide the Company with compensation for work performed and costs of
termination. Defense Products are sold both directly to the federal government
and to other prime contractors to the federal government.
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GENERAL INFORMATION CONCERNING INDUSTRY SEGMENTS
No material portion of the Company's business is seasonal or has special
working capital requirements. The Company does not consider backlog orders to be
a material factor in its industry segments, and, except as noted above, no
material portion of its business in its other industry segments is dependent
upon any one customer or subject to renegotiation of profits or termination of
contracts at the election of the federal government. Compliance with federal,
state and local regulations relating to the discharge of materials into the
environment, or otherwise relating to the protection of the environment, is not
expected to result in material capital expenditures by the Company or to have a
material effect on the Company's earnings or competitive position. See, however,
"Legal Proceedings," included as Item 3 of this Report, for a discussion of
certain pending proceedings concerning environmental matters. In general, raw
materials required by the Company are obtainable from various sources and in the
quantities desired.
INTERNATIONAL OPERATIONS
The Company, through its subsidiaries, has businesses located in Germany,
Italy and the United Kingdom. Products manufactured by the Company outside of
the United States include forged automotive component parts and
constant-velocity joints. In addition, the Company provides engineering services
outside of the United States, primarily serving automotive manufacturers in the
United Kingdom and Germany. From 1992 through 1994, the Company's annual net
export sales from the United States to other countries, as a percentage of
annual consolidated net sales from continuing operations, approximated six
percent.
The Company's foreign operations are subject to political, monetary,
economic and other risks attendant generally to international businesses. These
risks generally vary from country to country.
EQUITY INVESTMENTS
TriMas Corporation
The Company owns approximately 41 percent of the outstanding common stock
of TriMas Corporation ("TriMas"), as a result of the transactions described in
the Note to the Company's Consolidated Financial Statements captioned "Equity
and Other Investments in Affiliates," included in Item 8 of this Report. TriMas
is a diversified proprietary products company with leadership positions in
commercial, industrial and consumer niche markets. TriMas manufactures a number
of industrial products, including standard and custom-designed ferrous,
non-ferrous and special alloy fasteners for the building construction, farm
implement, medium and heavy-duty truck, appliance, aerospace, electronics and
other industries. TriMas also provides metal treating services for manufacturers
of fasteners and comparable products. TriMas manufactures towing systems
products, including vehicle hitches, jacks, winches, couplers and related
accessories for the passenger car, light truck, recreational vehicle, marine,
agricultural and industrial markets. TriMas also manufactures specialty
container products, including industrial container closures and dispensing
products primarily for the chemical, agricultural, refining, food, petroleum and
health care industries, as well as high-pressure seamless compressed gas
cylinders used primarily for shipping, storing and dispensing oxygen, nitrogen,
argon and helium, specialty industrial gaskets for refining, petrochemical and
other industrial applications, and a complete line of low-pressure welded
cylinders used to contain and dispense acetylene gas for the welding and cutting
industries. In addition, TriMas manufactures flame-retardant facings and
jacketings used in conjunction with fiberglass insulation, principally for
commercial and industrial construction applications, pressure-sensitive
specialty tape products and a variety of specialty precision tools such as
center drills, cutters, end mills, reamers, master gears, gages and punches.
Emco Limited
The Company owns approximately 43 percent of the outstanding common stock
and convertible debentures of Emco Limited ("Emco"), as a result of the
transactions described in the Note to the Company's Consolidated Financial
Statements captioned "Equity and Other Investments in Affiliates" and
"Shareholders' Equity," included in Item 8 of this Report. Emco is a major,
publicly traded, Canadian-based manufacturer and distributor of building and
home improvement products, including roofing materials, wood
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fiber products, vinyl siding, stainless steel sinks and vinyl windows, and a
distributor of plumbing and related products. In addition, Emco manufactures
custom components, brass and aluminum forgings, plastic components, tools, dies
and molds. Emco also provides other services on a contract basis for original
equipment manufacturers and others.
Titan Wheel International, Inc.
The Company owns approximately 20 percent of the outstanding common stock
of Titan Wheel International, Inc. ("Titan"), as a result of the transactions
described in the Note to the Company's Consolidated Financial Statements
captioned "Equity and Other Investments in Affiliates," included in Item 8 of
this Report. Titan is a manufacturer of wheels, tires and other products for
agricultural, construction and other off-highway equipment. Titan also
manufactures wheels for automotive original equipment manufacturers and the
automotive aftermarket.
Other Equity Investments
In addition to its equity and other investments in the publicly traded
affiliates described in the preceding paragraphs, the Company has investments in
privately-held manufacturers of automotive components, including the Company's
common equity ownership interest acquired in mid-1994 in Delco Remy America,
Inc., a manufacturer of automotive electric motors and other components.
PATENTS AND TRADEMARKS
The Company holds a number of patents, patent applications, licenses,
trademarks and trade names. The Company considers its patents, patent
applications, licenses, trademarks and trade names to be valuable, but does not
believe that there is any reasonable likelihood of a loss of such rights which
would have a material adverse effect on the Company's industry segments or its
present business as a whole.
COMPETITION
The major domestic and foreign markets for the Company's products in its
industry segments are highly competitive. Competition is based primarily on
price, performance, quality and service, with the relative importance of such
factors varying among products. Government procurement practices are an
additional factor in the case of Defense Products. In the case of
Transportation-Related Products, the Company's competitors include a large
number of other well-established independent manufacturers as well as certain
customers who have their own metalworking and engineering capabilities. Although
a number of companies of varying size compete with the Company in its industry
segments, no single competitor is in substantial competition with the Company
with respect to more than a few of its product lines and services.
EMPLOYEES
At December 31, 1994, the Company employed approximately 12,700 people.
Satisfactory relations have generally prevailed between the Company and its
employees.
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ITEM 2. PROPERTIES.
The following list includes the Company's principal manufacturing
facilities by location and the industry segments utilizing such facilities:
Arizona.................. Chandler (2)
California............... Vernon (3) and Yuba City (1)
Florida.................. Auburndale (2), Deerfield Beach (1) and Orlando (2)
Georgia.................. Adel (1)
Indiana.................. Fort Wayne (1), Kendallville (1) and North Vernon (1)
Iowa..................... Dubuque (2)
Kentucky................. Nicholasville (1)
Michigan................. Auburn Hills (1)(1)(1), Brighton (1), Burton (1), Coopersville
(1), Dearborn (1), Detroit (1)(1)(1), Farmington Hills (1), Fraser
(1), Green Oak Township (1 and 3), Hamburg (1 and 3), Holland (1),
Livonia (1), Mesick (1), Mt. Clemens (1), Oxford (1)(1)(1), Port
Huron (1), Redford (1), Royal Oak (1), Shelby Township (1),
St. Clair (1), St. Clair Shores (1), Sterling Heights (1),
Traverse City (1)(1)(1)(1)(1), Troy (1)(1), Warren (1), West Branch (2)
and Ypsilanti (1)
Mississippi.............. Nesbit (2)
New York................. Brooklyn (2) and Maspeth (2)
Ohio..................... Blue Ash (2), Bluffton (1), Canal Fulton (1), Columbus (2), Lima
(1), Minerva (1), Perrysburg (2), Port Clinton (1), Shelby (1) and
Upper Sandusky (1)
Oklahoma................. Tulsa (1)
Pennsylvania............. Ridgway (1)
Virginia................. Duffield (1) and Salem (1)
Germany.................. Zell am Harmersbach (1 and 3)
Italy.................... Poggio Rusco (1)
United Kingdom........... Wednesfield, England (1)
Note: Multiple footnotes within the same parenthesis indicate the facility
is engaged in significant activities relating to more than one segment.
Multiple footnotes to the same municipality denote separate facilities in
that location. Industry segments in the preceding table are identified as
follows: (1) Transportation-Related Products; (2) Specialty Products -
Architectural; and (3) Specialty Products - Other.
The Company's largest manufacturing facility is located in Vernon,
California and is a multi-plant facility of approximately 920,000 square feet.
The Company owns the largest plant, comprising approximately 540,000 square feet
and operates the remaining portions of this facility under leases, the earliest
of which expires at the end of 1996. Except for the foregoing facility and an
additional manufacturing facility covering approximately 605,000 square feet,
the Company's manufacturing facilities range in size from approximately 10,000
square feet to 325,000 square feet, are owned by the Company or leased and are
not subject to significant encumbrances. The Company's executive offices are
located in Taylor, Michigan, and are provided by Masco Corporation to the
Company under a corporate services agreement.
The Company's buildings, machinery and equipment have been generally well
maintained, are in good operating condition, and are adequate for current
production requirements.
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The following list identifies the manufacturing facilities of TriMas by
location and the industry segments utilizing such facilities:
California............................... Commerce (a)
Illinois................................. Wood Dale (a)
Indiana.................................. Auburn (c), Elkhart (b), Frankfort (a) and Mongo (b)
Louisiana................................ Baton Rouge (c)
Massachusetts............................ Plymouth (d)
Michigan................................. Canton (b), Detroit (a) and Warren (d)(d)(d)(d)
New Jersey............................... Edison (d) and Netcong (d)
Ohio..................................... Lakewood (a)
Texas.................................... Houston (c) and Longview (c)
Wisconsin................................ Mosinee (b)
Australia................................ Hampton Park, Victoria (b)
Canada................................... Brampton, Ontario (c), Fort Erie, Ontario (c),
Oakville, Ontario (b) and Sarnia, Ontario (c)
Mexico................................... Mexico City (c)
Note: Multiple footnotes to the same municipality denote separate
facilities in that location. Industry segments in the preceding table are
identified as follows: (a) Specialty Fasteners; (b) Towing Systems; (c)
Specialty Container Products; and (d) Corporate Companies.
TriMas' buildings, machinery and equipment have been generally well
maintained, are in good operating condition, and are adequate for current
production requirements.
ITEM 3. LEGAL PROCEEDINGS.
A civil suit was filed in the United States District Court for the Central
District of California in April, 1983 by the United States of America and the
State of California against 30 defendants, including the Company's NI
Industries, Inc. subsidiary ("NI"), for alleged release into the environment of
hazardous waste disposed of at the Stringfellow Disposal Site in California. The
plaintiffs have requested, among other things, that the defendants clean up the
contamination at that site. A consent decree has been entered into by the
plaintiffs and the defendants, including NI, providing that the consenting
parties perform partial remediation at the site. Another civil suit was filed in
the United States District Court for the Central District of California in
December, 1988 by the United States of America and the State of California
against more than 180 defendants, including NI, for alleged release into the
environment of hazardous waste disposed of at the Operating Industries, Inc.
site in California. This site served for many years as a depository for
municipal and industrial waste. The plaintiffs have requested, among other
things, that the defendants clean up the contamination at that site. Two partial
consent decrees have been entered into by the plaintiffs and a group of the
defendants, including NI, providing that the consenting parties perform certain
interim remedial work at the site and reimburse the plaintiffs for certain past
costs incurred by the plaintiffs at the site. Based upon its present knowledge
and subject to future legal and factual developments, the Company does not
believe that any of this litigation will have a material adverse effect on its
consolidated financial position.
During the fourth quarter of 1991, a division of the Company was assessed a
civil penalty in excess of $100,000 by a municipal sewer authority for alleged
past violations of limitations of waste-water discharges into the authority's
sanitary sewer system. This assessment was appealed by the division, and in the
first quarter of 1995 was remanded by the appellate panel to the municipal sewer
authority with instructions to recalculate the amount of the civil penalty. The
Company believes that the penalties, if ultimately assessed, would be immaterial
to the Company.
The Company is subject to other claims and litigation in the ordinary
course of its business, but does not believe that any such claim or litigation
will have a material adverse effect on its consolidated financial position.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
SUPPLEMENTARY ITEM. EXECUTIVE OFFICERS OF REGISTRANT (PURSUANT TO INSTRUCTION 3
TO ITEM 401(B) OF REGULATION S-K).
OFFICER
NAME POSITION AGE SINCE
--------------------------------- --------------------------------------------------- ---- -------
Richard A. Manoogian............. Chairman of the Board and Chief Executive Officer 58 1984
Lee M. Gardner................... President and Chief Operating Officer 48 1992
Timothy Wadhams.................. Vice President -- Controller and Treasurer 46 1984
Each of the executive officers is elected to a term of one year or less and
serves at the discretion of the Board of Directors. Mr. Manoogian is and has
been for over five years a Director, Chairman of the Board and the Chief
Executive Officer of Masco Corporation, an affiliate of the Company that is a
manufacturer of home improvement, building and home furnishings products for the
home and family. Mr. Manoogian also is a Director and Chairman of the Board of
TriMas Corporation. Mr. Gardner was appointed President and Chief Operating
Officer of the Company in October 1992. Prior to his appointment, Mr. Gardner
was President -- Automotive. He joined the Company in 1987, and in 1990 assumed
responsibility for all of the Company's businesses serving the transportation
industry.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock commenced trading on the New York Stock Exchange
("NYSE") on June 23, 1993 under the symbol "MSX." The Company's Common Stock was
previously traded over-the-counter and quoted on the National Association of
Securities Dealers Automated Quotation System -- National Market System
("NASDAQ-NMS") under the symbol "MASX." The following table sets forth for the
periods indicated the high and low sales prices of the Company's Common Stock as
reported on the NASDAQ-NMS for the periods prior to June 23, 1993 and as
reported on the NYSE Composite Tape commencing June 23, 1993 and Common Stock
dividends declared for the periods indicated:
DIVIDENDS
HIGH LOW DECLARED
---- ---- ---------
1993
First Quarter....................................... $17 1/4 $11 3/8 --
Second Quarter...................................... $21 $15 3/4 $ .02
Third Quarter....................................... $22 5/8 $19 1/2 .02
Fourth Quarter...................................... $28 1/8 $18 3/4 .02
-----
$ .06
=====
DIVIDENDS
HIGH LOW DECLARED
---- ---- ---------
1994
First Quarter....................................... $27 7/8 $19 7/8 $ .02
Second Quarter...................................... $23 1/4 $13 .03
Third Quarter....................................... $15 1/4 $11 .03
Fourth Quarter...................................... $13 3/8 $11 .03
-----
$ .11
=====
On March 15, 1995 there were approximately 4,850 holders of record of the
Company's Common Stock.
The Company commenced paying cash dividends on its Common Stock in August,
1993. Future declarations of dividends on the Common Stock are discretionary
with the Board of Directors and will depend upon the Company's earnings, capital
requirements, financial condition and other factors. Dividends may not be paid
on Company Common Stock if there are any dividend arrearages on the Company's
outstanding Preferred Stock. In addition, certain of the Company's long-term
debt instruments contain provisions that restrict the dividends that it may pay
on its capital stock. See the Note to the Company's Consolidated Financial
Statements captioned "Long-Term Debt," included in Item 8 of this Report.
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ITEM 6. SELECTED FINANCIAL DATA.
The following table sets forth summary consolidated financial information
of the Company, for the years and dates indicated:
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
Net sales.......................... $1,702,260 $1,582,880 $1,455,320 $1,266,210 $1,373,060
Operating profit (loss)............ $ (277,850) $ 145,720 $ 111,840 $ 43,590 $ 70,560
From continuing operations before
extraordinary items:
Income (loss).................... $ (234,420) $ 70,890 $ 39,040 $ (10,350) $ (26,840)
Earnings (loss) per common
share......................... $(4.20) $.91 $.49 $(.33) $(.36)
Per share of common stock:
Dividends declared............... $.11 $.06 -- -- --
Dividends paid................... $.10 $.04 -- -- --
At December 31:
Total assets..................... $1,530,690 $1,789,910 $1,807,310 $1,973,280 $2,080,470
Long-term debt................... $ 868,240 $ 788,360 $1,065,390 $1,224,990 $1,349,510
Shareholders' equity............. $ 381,140 $ 667,630 $ 353,400 $ 326,690 $ 356,010
Results for 1994 include a pre-tax charge of $400 million ($315 million
after-tax or $5.35 per common share), reflecting the estimated loss on the
planned disposition of a number of the Company's businesses. See the Note to the
Company's Consolidated Financial Statements captioned "Dispositions of
Operations," included in Item 8 of this Report.
Results for 1994 include pre-tax gains of approximately $17.9 million
related to the sale by the Company of a portion of its common stock holdings of
an equity affiliate.
Results for 1994 are before the effect of a gain aggregating approximately
$18 million pre-tax ($11.7 million after-tax or $.20 per common share) related
to the reversal of the charge established in 1993 for the disposition of the
Company's energy segment. See the Note to the Company's Consolidated Financial
Statements captioned "Dispositions of Operations," included in Item 8 of this
Report.
Results for 1994 are before the effect of $4.4 million pre-tax
extraordinary income ($2.6 million after-tax or $.04 per common share) related
to the early extinguishment of convertible debt.
Results for 1993 and 1992 include pre-tax income of approximately $9
million and $25 million, respectively, as a result of gains associated with the
sale of common stock through public offerings by equity affiliates and, in 1992,
a prepayment premium related to the redemption of debentures held by the
Company. This income was largely offset by costs and expenses related to
cost-reduction initiatives, the restructuring of certain operations and product
lines, adjustments to the carrying value of certain long-term assets, and other
costs and expenses.
Results for 1993 were reduced by a charge of approximately $.03 per common
share reflecting the application of the increased 1993 federal corporate income
tax rate to adjust deferred tax balances as of December 31, 1992.
Results for 1993 are before the effect of a $5.8 million pre-tax
extraordinary charge ($3.7 million after-tax or $.06 per common share) related
to the early extinguishment of subordinated debt. See the Note to the Company's
Consolidated Financial Statements captioned "Long-Term Debt," included in Item 8
of this Report. 1993 results are also before an after-tax charge of
approximately $22 million ($.39 per common share) related to the disposition of
a segment of the Company's business. See the Note to the Company's Consolidated
Financial Statements captioned "Dispositions of Operations," included in Item 8
of this Report. Net income for 1993 before preferred dividends was $47.6 million
or $.57 per common share.
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Income from continuing operations per common share in 1993 is presented on
a fully diluted basis. Primary earnings from continuing operations per common
share were $.97 in 1993. For all other years presented, the assumed conversion
of dilutive securities is anti-dilutive.
Income (loss) from continuing operations before extraordinary income (loss)
attributable to common stock was $(247.4) million, $56.0 million, $29.7 million,
and $(20.0) million after preferred stock dividends in 1994, 1993, 1992 and
1991, respectively.
Results for 1991 include the effect of charges for restructurings and other
costs, aggregating approximately $41 million pre-tax, which reduced operating
profit and income from continuing operations before extraordinary income by $27
million and earnings per common share by $.45.
Results for 1990 include the effect of charges for restructurings and other
costs, aggregating approximately $40 million pre-tax, which reduced operating
profit by $38 million, income from continuing operations before extraordinary
income by $26 million and earnings per common share by $.35.
Results for 1990 are before the effect of extraordinary income of $8.2
million after-tax or $.11 per common share related to the early extinguishment
of debt.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
MASCOTECH
Masco Corporation undertook a major corporate restructuring during 1984,
transferring its Products for Industry businesses to the Company at their
historical net book value. MascoTech became a separate public company in
mid-1984, when Masco Corporation distributed common shares of MascoTech as a
special dividend to its shareholders. At December 31, 1994, Masco Corporation
owned approximately 44 percent of MascoTech Common Stock.
In 1993 the Company changed its name to MascoTech, Inc. from Masco
Industries, Inc. to reflect the significance of technology in the design,
engineering and manufacturing of many of the Company's products.
CORPORATE DEVELOPMENT
Since mid-1984, the Company has invested more than $1.3 billion in capital
expenditures and acquisitions combined to expand the Company's product and
technological positions in its industrial markets.
Since late 1988, the Company has divested several businesses as part of its
long-term strategic plan to de-leverage its balance sheet and focus on its core
operating capabilities. The Company's divestiture activity included several
businesses transferred to its equity affiliate, TriMas Corporation ("TriMas"),
and in late 1993 the announcement of the Company's plan to dispose of its energy
segment. In addition, in late 1994 the Company announced the planned disposition
of a number of businesses including its Architectural Products, Defense and
certain Transportation-Related Products businesses. The Company has realized
cash proceeds of approximately $440 million through December 31, 1994 from its
divestiture activity, which have been applied to reduce the Company's
indebtedness.
In early 1993, the Company acquired from Masco Corporation 10 million
shares of Company Common Stock, $77.5 million of the Company's 12% Exchangeable
Preferred Stock held by Masco Corporation, and Masco Corporation's holdings of
Emco Limited ("Emco") common stock and convertible debentures. In exchange,
Masco Corporation received from the Company $87.5 million in cash, $100 million
of the Company's 10% Exchangeable Preferred Stock (subsequently redeemed in
1993) and seven-year warrants to purchase 10 million shares of Company Common
Stock at $13 per share. As part of this transaction, as modified in late 1993,
Masco Corporation agreed to purchase from the Company, at the Company's option
through March 1997, up to $200 million of subordinated debentures.
DISPOSITION OF NON-CORE BUSINESSES
In late 1994, the Company adopted a plan to dispose, by sale or
liquidation, a number of businesses, including its Architectural Products,
Defense and certain of its Transportation-Related Products businesses, as part
of its long-term strategic plan to increase the focus on its core operating
capabilities. The disposition of these businesses is expected to primarily occur
in 1995 with the cash portion of the proceeds applied to reduce the Company's
indebtedness and to provide capital to invest in its core businesses. The
disposition of these businesses does not meet the criteria for discontinued
operations treatment for accounting purposes; accordingly, the sales and results
of operations of these businesses will be included in continuing operations
until disposition. The businesses to be disposed had annual sales of $675
million, $715 million and $675 million in 1994, 1993 and 1992, respectively, and
operating profit (loss), before the charge recorded in 1994, of $(2) million,
$22 million and $30 million in 1994, 1993 and 1992, respectively.
The Company's carrying value of a number of the businesses to be disposed
exceeded the estimated proceeds expected from such dispositions. To reflect the
estimated loss on the disposition of these businesses, the Company recorded a
non-cash charge aggregating $400 million pre-tax (approximately $315 million
after-tax or $5.35 per common share) for those businesses for which a loss is
anticipated.
Future periods will include the operating results of the businesses to be
sold and any additional anticipated costs to be incurred in connection with the
sale or liquidation of the remaining businesses which cannot be accrued at
December 31, 1994, as well as the result of differences between estimated and
actual
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proceeds. Management expects that certain of the businesses to be disposed may
be sold for gains; such gains will be recognized when realized. These expected
gains will be substantially offset by anticipated future expenses relating to
the disposition.
DISCONTINUED OPERATIONS
In late 1993, the Company adopted a plan to divest the business units in
its energy segment. This plan met the criteria for discontinued operations
accounting treatment; accordingly, the financial statements and related notes
present the Company's energy segment as discontinued operations. During 1993,
two such business units were sold for approximately $93 million, including the
sale of one business unit to the Company's equity affiliate, TriMas, for $60
million cash. The expected loss from the disposition of the Company's energy
segment resulted in a fourth quarter 1993 pre-tax charge of approximately $41
million (approximately $22 million after-tax). Certain of the remaining business
units were sold at prices greater than those used in estimating the loss on
disposition in 1993, resulting in a reversal in 1994 of approximately $18
million pre-tax ($11.7 million after-tax) relating to the charge established in
1993.
Net sales attributable to the discontinued energy operations during 1993
(through the decision to discontinue) and 1992 were $192 million and $202
million, respectively. The discontinued energy operations had operating profit
of approximately $6 million and $3 million in 1993 and 1992, respectively. The
results of operations for the period after the decision to discontinue have been
charged to the reserve established in 1993.
PROFIT MARGINS -- CONTINUING OPERATIONS
Operating profit margins from continuing operations, excluding the $400
million charge in 1994 for the disposition of businesses, were seven percent in
1994, nine percent in 1993 and eight percent in 1992. The decrease in the
operating profit margin from continuing operations in 1994 compared with the
previous two years is primarily attributable to increased costs and expenses
reflecting start-up costs associated with the Company's expanded capital
investment programs, launch costs for new products and increased steel costs in
its Transportation-Related Products businesses. In addition, margins in 1994 for
businesses which the Company intends to dispose, were hampered by the depressed
industry conditions affecting the construction and defense markets and by the
completion of certain major programs at businesses in the Transportation-Related
Products segment.
CASH FLOWS AND CAPITAL EXPENDITURES
Net cash flow from operating activities, including discontinued energy
operations, decreased to $38 million in 1994 from $103 million in 1993
principally as a result of increased net working capital requirements
(particularly prepaid customer tooling) to support increased sales volumes, and
from additional investments in marketable securities.
In January 1994, the Company issued, in a public offering, approximately
$345 million of 4 1/2% Convertible Subordinated Debentures due December 15,
2003. These debentures are convertible into Company Common Stock at $31 per
share. The net proceeds of approximately $337 million were used to redeem $250
million of 10 1/4% Senior Subordinated Notes on February 1, 1994 and to reduce
other indebtedness. Reflecting the favorable long-term prospects for MascoTech,
the Company's Board of Directors authorized in 1994 the repurchase of 10 million
shares of Company Common Stock and Convertible Preferred Stock. Pursuant to this
authorization, the Company repurchased and retired approximately four million
shares of Company Common Stock during 1994 at a cost of approximately $54
million.
The Company has made significant expenditures and commitments in 1994 for
capital programs, including new advanced manufacturing technologies, to support
the Company's core Transportation-Related Products businesses. These additional
investments, which will continue in 1995 and are expected to aggregate
approximately $260 million for the two years, reflect the Company's belief in
the businesses' favorable long-term outlook and are planned to meet increased
demand for certain current product programs. These expenditures will also
provide capacity for new products that the Company expects to begin producing
over the
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next several years, and enhance the Company's leadership positions in advanced
manufacturing technologies related to its forging and metal-forming businesses.
INVENTORIES
The Company's investment in inventories decreased to approximately $92
million at December 31, 1994. This decrease was the result of the
reclassification of inventories related to the businesses being disposed into
net current assets of businesses held for disposition at December 31, 1994.
Inventories, excluding the reclassification of businesses held for disposition,
increased by approximately $23 million at December 31, 1994 reflecting increased
sales volumes and strategic purchases of raw material, particularly steel. The
Company's continued emphasis on inventory management, utilizing Just-In-Time
(JIT) and other inventory management techniques, has contributed to higher
inventory turnover rates in recent years.
FINANCIAL POSITION AND LIQUIDITY
The Company's financial position was impacted by the non-cash charge of
$400 million pre-tax ($315 million after-tax) for the planned disposition of
certain businesses. As a result of the charge, the Company's debt as a percent
of debt plus equity increased to 70 percent at December 31, 1994 from 54 percent
at December 31, 1993. The Company expects that this ratio will decrease
substantially upon the receipt of proceeds from sales of businesses, which will
be utilized to reduce indebtedness.
At December 31, 1994 current assets, which aggregated approximately $598
million, were in excess of three times current liabilities. In addition, the
Company has significant financial assets, including 20 percent or more ownership
positions in the securities of three publicly traded companies with an aggregate
carrying value of approximately $162 million. This compares with an aggregate
quoted market value at December 31, 1994 (which may differ from the amounts that
could have been realized upon disposition) of approximately $430 million.
The Company's cash, marketable securities, additional borrowings available
under the Company's revolving credit agreement and otherwise, and anticipated
internal cash flow are expected to provide sufficient liquidity to fund its
near-term working capital, capital expansion programs and other investment
needs, including the retirement of 10% Senior Subordinated Notes maturing in
1995. The Company believes that its longer-term working capital and other
general corporate requirements will be satisfied through its internal cash flow,
revolving credit agreement, divestiture of non-core businesses and certain
additional financial assets and, to the extent necessary, future financings in
the financial markets.
The Company's revolving credit agreement contains restrictions including
limitations on intangible assets, the ratio of senior debt to earnings and the
ratio of debt to equity. At December 31, 1994, the unused portion of the
revolving credit agreement was principally available to refinance the 10% Senior
Subordinated Notes and other indebtedness. Cash dividends and any acquisition of
Company Common Stock and Convertible Preferred Stock could be accomplished with
future internal cash flows and through future reductions of cash investments and
marketable securities.
The Company has an expected net capital loss carryforward benefit of
approximately $20 million at December 31, 1994. This capital loss is expected to
be realized through the sale of common stock of equity affiliates that result in
capital gains, or through the sale of businesses at a gain.
GENERAL FINANCIAL ANALYSIS
1994 VERSUS 1993 -- CONTINUING OPERATIONS
In 1994, net sales from continuing operations increased eight percent to
$1.70 billion from $1.58 billion in 1993, the highest level in the Company's
history. Excluding sales of businesses to be disposed, net sales increased
approximately 18 percent.
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Earnings per common share from continuing operations after preferred stock
dividends (excluding the impact of: discontinued operations; extraordinary
income (1994) and loss (1993); and the 1994 restructuring charge) would have
increased to a record $1.08 in 1994 from $.91 in 1993 on a fully diluted basis.
The Company plans to dispose of a number of businesses, including its
Architectural Products, Defense and certain of its Transportation-Related
Products businesses, as part of its long-term strategic plan to increase the
focus on its core operating capabilities. The businesses to be disposed have
annual sales of approximately $700 million, and in 1994 performed at an
approximate break-even operating profit level. The Company believes that these
businesses, which had net assets of approximately $700 million prior to the
charge, will be disposed for after-tax net cash and other proceeds of
approximately $400 million. The disposition of these businesses is expected to
primarily occur in 1995, with the cash portion of the proceeds applied to reduce
the Company's indebtedness and to provide additional capital to invest in its
core Transportation-Related Products businesses. The Company has recorded a
non-cash charge of $400 million pre-tax ($315 million after-tax or $5.35 per
common share) to reflect the estimated loss on the disposition of these
businesses. The operating results of the business units held for disposition
will be included in the results of continuing operations in future periods
through the date of disposition.
The disposition of the Company's energy segment (announced in late 1993 and
accounted for as discontinued operations for all periods presented) has been
completed and resulted in income of approximately $18 million pre-tax ($11.7
million after-tax) in the fourth quarter of 1994 relating to the partial
reversal of a $41 million pre-tax charge established in the fourth quarter of
1993. This reversal resulted from certain energy segment business units being
sold at prices greater than those used in estimating the loss on disposition in
1993.
Including the results of continuing operations and discontinued operations,
the restructuring charge and an extraordinary gain ($2.6 million after-tax)
related to the early extinguishment of debt, net loss after preferred stock
dividends for 1994 was $3.96 per common share, compared with earnings, after
preferred stock dividends, of $.57 per common share in 1993.
Sales of Transportation-Related Products increased 11 percent in 1994,
principally due to increased levels of automotive production and new product
introductions, which were partially offset by the completion of certain
automotive programs. Operating profit in 1994 for Transportation-Related
Products, excluding the charge for the disposition of businesses, decreased to
approximately $140 million from $160 million in 1993. Transportation-Related
Products businesses held for disposition accounted for the majority of this
decrease. Operating margins in 1994 were also negatively impacted by increased
costs and expenses reflecting start-up costs associated with the Company's
expanded capital investment programs, launch costs for new products and
increased steel costs.
Sales of Specialty Products in 1994 decreased approximately four percent
from 1993 levels, reflecting the continued unfavorable market conditions for the
Company's Architectural and Defense Products. Operating loss in 1994, excluding
the charge for disposition of businesses, was $5 million compared to operating
profit of $1 million in 1993. This loss was principally related to the continued
deterioration in the Company's Defense operations.
Other income, net in 1994 was $13 million compared with expense of $25
million in 1993. Other income, net in 1994 benefitted from reduced interest
expense resulting from a reduction of debt in late 1993 and from the redemption
of higher cost subordinated debt in early 1994. In addition, other income, net
in 1994 benefitted from increased income from affiliates, including gains of
approximately $17.9 million pre-tax from sales of a portion of the Company's
common stock holdings of an equity affiliate.
Other expense, net for 1993 includes gains aggregating approximately $13
million pre-tax, resulting from the sale of stock through public offerings by
equity affiliates. This income was largely offset by costs and expenses related
to cost reduction initiatives, the restructuring of certain operations and
product lines, adjustments to the carrying values of certain long-term assets
and other costs and expenses.
The Company's 1994 effective tax rate differs from the statutory rate
principally because a significant part of the $400 million charge does not
result in a tax benefit.
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1993 VERSUS 1992 -- CONTINUING OPERATIONS
In 1993, net sales from continuing operations increased nine percent to
$1.58 billion from $1.46 billion in 1992. Income from continuing operations in
1993, after preferred stock dividends, was $56.0 million or $.91 per common
share, assuming full dilution, compared with income from continuing operations,
after preferred stock dividends, of $29.7 million or $.49 per common share in
1992.
Including the results of discontinued operations and the loss upon
disposition of those businesses, and an extraordinary loss ($3.7 million
after-tax) related to the early extinguishment of debt, earnings for 1993, after
preferred stock dividends, were $.57 per common share, compared with earnings,
after preferred stock dividends, of $.48 per common share in 1992.
Sales of Transportation-Related Products increased 13 percent, principally
due to increased levels of automotive production. Sales also benefitted from new
product introductions which were partially offset by the phase-out of existing
programs, including the mid-1993 completion of the Company's conversion program
for the Ford Mustang convertible. Operating profit in 1993 for
Transportation-Related Products increased to $160 million from $124 million in
1992. Operating margins in 1993 continued to be favorably impacted by higher
sales volumes for most of the Company's Transportation-Related Products. Margins
in both 1993 and 1992 have benefitted from the internal cost reductions and
restructuring initiatives that the Company has undertaken in recent years.
Sales of Specialty Products in 1993 decreased approximately two percent
from 1992 levels, reflecting the continued unfavorable market conditions for the
Company's Architectural and Defense Products. Operating profit declined to $1
million in 1993 from $5 million in 1992 as a result of the $4 million operating
loss for Architectural Products in 1993. This loss was principally the result of
costs and expenses related to the consolidation of certain operating activities,
start-up costs associated with a new manufacturing process and the unfavorable
conditions existing in the markets served by these products.
Other expense, net decreased to $25 million in 1993 from $44 million in
1992. Other expense, net in 1993 benefitted from reduced interest expense
resulting from a reduction in debt and lower interest rates; and from increased
equity and interest income from affiliates related primarily to the Company's
Emco holdings. Additionally, 1993 and 1992 results benefitted from pre-tax gains
from sales of marketable securities of approximately $11.5 million and $4.0
million, respectively.
Other expense, net for 1993 and 1992 also include gains aggregating
approximately $13 million and $25 million pre-tax, respectively, from the sale
of stock through public offerings by equity affiliates (including in 1993,
affiliate shares held by the Company) and, in 1992, a prepayment premium related
to the redemption of debentures held by the Company. The Company's equity
affiliates may, from time to time, issue additional common equity depending upon
their financing requirements. These gains were largely offset by costs and
expenses related to cost reduction initiatives, the restructuring of certain
operations and product lines, adjustments to the carrying values of certain
long-term assets, and other costs and expenses.
Earnings in 1993 were reduced by an extraordinary charge of $3.7 million
after-tax related to the early extinguishment of debt. Although the federal
statutory corporate tax rate increased in 1993, the Company's effective tax rate
on income from continuing operations declined slightly in 1993 as compared with
1992. This decrease was the result of the relationship of substantially higher
pre-tax income in 1993 to certain book expenses that are not deductible for tax
purposes and to the Company's foreign and state tax expenses. In addition, the
application of the increased tax rate to deferred tax balances at December 31,
1992 resulted in a 1993 third quarter one-time charge of approximately $.03 per
common share.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholders of MascoTech, Inc.:
We have audited the accompanying consolidated balance sheet of MascoTech,
Inc. and subsidiaries as of December 31, 1994 and 1993, and the related
consolidated statements of operations and cash flows for each of the three years
in the period ended December 31, 1994, and the financial statement schedule as
listed in Item 14(a)(2)(i) of this Form 10-K. These financial statements and the
financial statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
the financial statement schedule 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 financial statements referred to above present fairly,
in all material respects, the consolidated financial position of MascoTech, Inc.
and subsidiaries as of December 31, 1994 and 1993, and the consolidated results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1994, in conformity with generally accepted accounting
principles. In addition, in our opinion, the financial statement schedule
referred to above, when considered in relation to the basic financial statements
taken as a whole, presents fairly, in all material respects, the information
required to be included therein.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
February 17, 1995
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MASCOTECH, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1994 AND 1993
ASSETS
1994 1993
-------------- --------------
Current assets:
Cash and cash investments................................... $ 61,950,000 $ 83,200,000
Marketable securities....................................... 62,110,000 27,790,000
Receivables................................................. 171,870,000 238,820,000
Inventories................................................. 91,950,000 140,040,000
Deferred and refundable income taxes........................ 23,800,000 41,780,000
Prepaid expenses and other assets........................... 39,800,000 24,210,000
Net current assets of businesses held for disposition....... 146,690,000 28,830,000
-------------- --------------
Total current assets................................... 598,170,000 584,670,000
Equity and other investments in affiliates.................... 173,230,000 170,510,000
Property and equipment, net................................... 379,330,000 490,190,000
Excess of cost over net assets of acquired companies.......... 93,820,000 439,760,000
Notes receivable and other assets............................. 53,770,000 66,100,000
Net non-current assets of businesses held for disposition..... 232,370,000 38,680,000
-------------- --------------
Total assets........................................... $1,530,690,000 $1,789,910,000
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................ $ 111,860,000 $ 95,520,000
Accrued liabilities......................................... 72,090,000 103,260,000
Current portion of long-term debt........................... 3,670,000 2,830,000
-------------- --------------
Total current liabilities.............................. 187,620,000 201,610,000
Long-term debt................................................ 868,240,000 788,360,000
Deferred income taxes and other long-term liabilities......... 93,690,000 132,310,000
-------------- --------------
Total liabilities...................................... 1,149,550,000 1,122,280,000
-------------- --------------
Shareholders' equity:
Preferred stock, $1 par: Authorized: 25 million;
Outstanding: 10.8 million (liquidation value -- $216
million)................................................. 10,800,000 10,800,000
Common stock, $1 par: Authorized: 250 million; Outstanding:
56.6 million and 60.5 million............................ 56,610,000 60,510,000
Paid-in capital............................................. 318,960,000 367,290,000
Retained earnings (deficit)................................. (7,590,000) 232,120,000
Cumulative translation adjustments.......................... 2,360,000 (3,090,000)
-------------- --------------
Total shareholders' equity............................. 381,140,000 667,630,000
-------------- --------------
Total liabilities and shareholders' equity............. $1,530,690,000 $1,789,910,000
============== ==============
The accompanying notes are an integral part of the consolidated financial
statements.
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MASCOTECH, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1994 1993 1992
--------------- --------------- ---------------
Net sales................................... $ 1,702,260,000 $ 1,582,880,000 $ 1,455,320,000
Cost of sales............................... (1,385,430,000) (1,257,480,000) (1,159,050,000)
--------------- --------------- ---------------
Gross profit........................... 316,830,000 325,400,000 296,270,000
Selling, general and administrative
expenses.................................. (194,680,000) (179,680,000) (184,430,000)
Charge for disposition of businesses........ (400,000,000) -- --
--------------- --------------- ---------------
Operating profit (loss)................ (277,850,000) 145,720,000 111,840,000
--------------- --------------- ---------------
Other income (expense), net:
Interest expense, Masco Corporation....... -- (6,990,000) (7,800,000)
Other interest expense.................... (49,830,000) (74,370,000) (78,190,000)
Equity and interest income from
affiliates............................. 29,810,000 21,000,000 15,750,000
Gain from change in investment of
equity affiliates...................... -- 9,490,000 16,700,000
Other, net................................ 33,380,000 26,330,000 9,950,000
--------------- --------------- ---------------
13,360,000 (24,540,000) (43,590,000)
--------------- --------------- ---------------
Income (loss) from continuing
operations before income taxes
(credit) and extraordinary income
(loss)............................... (264,490,000) 121,180,000 68,250,000
Income taxes (credit)....................... (30,070,000) 50,290,000 29,210,000
--------------- --------------- ---------------
Income (loss) from continuing
operations before extraordinary
income (loss)........................ (234,420,000) 70,890,000 39,040,000
Discontinued energy operations (net of
income taxes):
Income (loss) from operations of
discontinued energy segment.......... -- 2,630,000 (610,000)
Gain (loss) on disposition............. 11,700,000 (22,270,000) --
--------------- --------------- ---------------
Income (loss) before extraordinary
income (loss)........................ (222,720,000) 51,250,000 38,430,000
Extraordinary income (loss) (net of
income taxes)............................. 2,600,000 (3,650,000) --
--------------- --------------- ---------------
Net income (loss)...................... $ (220,120,000) $ 47,600,000 $ 38,430,000
=============== =============== ===============
Preferred stock dividends................... $ 12,960,000 $ 14,930,000 $ 9,300,000
=============== =============== ===============
Earnings (loss) attributable to
common stock......................... $ (233,080,000) $ 32,670,000 $ 29,130,000
=============== =============== ===============
1993
-------------------
ASSUMING
1994 FULL 1992
PRIMARY PRIMARY DILUTION PRIMARY
------- ------- -------- -------
Earnings (loss) per common and common equivalent share:
Continuing operations.................................... $ (4.20) $ .97 $.91 $ .49
Discontinued energy operations:
Income (loss) from operations of discontinued
energy segment...................................... -- .05 .04 (.01)
Gain (loss) on disposition............................ .20 (.39) * --
------- ----- ---- -----
Income (loss) before extraordinary income (loss)......... (4.00) .63 .63 .48
Extraordinary income (loss).............................. .04 (.06) * --
------- ----- ---- -----
Earnings (loss) attributable to common stock............. $ (3.96) $ .57 $.57 $ .48
======= ===== ==== =====
* Anti-dilutive
The accompanying notes are an integral part of the consolidated financial
statements.
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MASCOTECH, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1994 1993 1992
------------- ------------- -------------
CASH FROM (USED FOR):
OPERATING ACTIVITIES:
Net income (loss)............................. $(220,120,000) $ 47,600,000 $ 38,430,000
Adjustments to reconcile net income (loss) to
net cash provided by operating activities,
excluding reclassification of businesses held
for disposition:
Charge for disposition of businesses....... 400,000,000 -- --
Gain from change in investment of equity
affiliates............................... -- (9,490,000) (16,700,000)
Gains from sales of TriMas common stock.... (17,900,000) -- --
Depreciation and amortization.............. 66,760,000 59,810,000 59,920,000
Equity earnings, net of dividends.......... (23,720,000) (12,000,000) (5,250,000)
(Decrease) increase in deferred taxes...... (67,760,000) 15,590,000 3,130,000
(Increase) decrease in marketable
securities, net.......................... (34,320,000) 2,980,000 3,150,000
(Increase) in receivables.................. (37,940,000) (5,900,000) (23,930,000)
(Increase) in inventories.................. (23,390,000) (2,990,000) (2,920,000)
(Increase) decrease in prepaid expenses.... (33,490,000) (11,650,000) 4,010,000
Increase (decrease) in accounts payable and
accrued liabilities...................... 65,330,000 (5,900,000) (12,930,000)
Other, net, including extraordinary income
(loss)................................... (5,370,000) 8,180,000 13,540,000
Net assets of businesses held for
disposition, net......................... (30,410,000) 16,700,000 830,000
------------- ------------- -------------
Net cash from operating activities....... 37,670,000 102,930,000 61,280,000
------------- ------------- -------------
FINANCING ACTIVITIES:
Issuance of convertible debt.................. 337,240,000 -- --
Increase in other debt........................ 82,730,000 -- 11,670,000
Payment or repurchase of other debt........... (349,230,000) (150,020,000) (135,490,000)
Issuance of preferred stock................... -- 209,520,000 --
Retirement of Company Common Stock............ (54,130,000) -- --
Retirement of preferred stock................. -- (100,000,000) --
Payment of dividends.......................... (18,980,000) (16,020,000) (9,300,000)
Other, net.................................... (5,010,000) 3,770,000 (2,240,000)
------------- ------------- -------------
Net cash used for financing activities... (7,380,000) (52,750,000) (135,360,000)
------------- ------------- -------------
INVESTING ACTIVITIES:
Cash received from sales or redemption of
TriMas securities............................ 18,180,000 -- 88,000,000
Cash paid Masco Corporation................... -- (87,500,000) --
Cash received from sale of energy
businesses................................. 41,220,000 93,450,000 --
Capital expenditures.......................... (115,220,000) (59,540,000) (60,000,000)
Receipt of cash from notes receivable......... 14,640,000 14,000,000 3,830,000
Other, net.................................... (10,360,000) (3,390,000) 300,000
------------- ------------- -------------
Net cash (used for) from investing
activities............................ (51,540,000) (42,980,000) 32,130,000
------------- ------------- -------------
CASH AND CASH INVESTMENTS:
Increase (decrease) for the year.............. (21,250,000) 7,200,000 (41,950,000)
At January 1.................................. 83,200,000 76,000,000 117,950,000
------------- ------------- -------------
At December 31........................... $ 61,950,000 $ 83,200,000 $ 76,000,000
============= ============= =============
The accompanying notes are an integral part of the consolidated financial
statements.
21
23
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ACCOUNTING POLICIES:
Principles of Consolidation. The consolidated financial statements include
the accounts of the Company and all majority-owned subsidiaries. All significant
intercompany transactions have been eliminated. Corporations that are 20 to 50
percent owned are accounted for by the equity method of accounting. Capital
transactions by equity affiliates, which reduce the Company's ownership interest
at amounts differing from the Company's carrying amount, are reflected in other
income or expense and equity and other investments in affiliates.
Certain amounts for the years ended December 31, 1993 and 1992 have been
reclassified to conform to the presentation adopted in 1994. The balance sheet
at December 31, 1994 reflects the segregation of net current and net non-current
assets related to the plan, adopted in late 1994, to dispose of certain
businesses. The financial statements and related notes have been reclassified to
present the energy segment as discontinued operations (see "Dispositions of
Operations" note).
The Company has a corporate services agreement with Masco Corporation,
which at December 31, 1994 owned approximately 44 percent of the Company's
Common Stock. Under the terms of the agreement, the Company pays fees to Masco
Corporation for various corporate staff support and administrative services,
research and development and facilities. Such fees, which are determined
principally as a percentage of net sales, including net sales related to
businesses held for disposition, aggregated approximately $11 million in each of
1994, 1993 and 1992.
Cash and Cash Investments. The Company considers all highly liquid debt
instruments with an initial maturity of three months or less to be cash and cash
investments. The carrying amount reported in the balance sheet for cash and cash
investments approximates fair value.
Marketable Securities. The Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities", in 1994. At December 31, 1994 marketable equity securities
have been categorized as trading securities, and, as a result, are stated at
fair value. At December 31, 1993 marketable equity securities were stated at the
lower of cost or market. Derivative financial instruments, consisting
principally of S&P 500 futures contracts, are held for purposes other than
trading and are carried at market value. Changes in market value of outstanding
futures contracts are recognized as incurred.
Receivables. Receivables are presented net of allowances for doubtful
accounts of approximately $1.6 million and $5.1 million at December 31, 1994 and
1993, respectively.
Inventories. Inventories are stated at the lower of cost or net realizable
value, with cost determined principally by use of the first-in, first-out
method.
Property and Equipment, Net. Property and equipment additions, including
significant betterments, are recorded at cost. Upon retirement or disposal of
property and equipment, the cost and accumulated depreciation are removed from
the accounts, and any gain or loss is included in income. Repair and maintenance
costs are charged to expense as incurred.
Depreciation and Amortization. Depreciation is computed principally using
the straight-line method over the estimated useful lives of the assets. Annual
depreciation rates are as follows: buildings and land improvements, 2 1/2 to 10
percent, and machinery and equipment, 6 2/3 to 33 1/3 percent. Deferred
financing costs are amortized over the lives of the related debt securities. The
excess of cost over net assets of acquired companies is amortized using the
straight-line method over the period estimated to be benefitted, not exceeding
40 years. At each balance sheet date, management assesses whether there has been
a permanent impairment of the excess of cost over net assets of acquired
companies by comparing anticipated undiscounted future cash flows from operating
activities with the carrying amount of the excess of cost over net assets of
acquired companies. The factors considered by management in performing this
assessment include current
22
24
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
operating results, business prospects, market trends, potential product
obsolescence, competitive activities and other economic factors. Based on this
assessment there was no permanent impairment related to the excess of cost over
net assets of acquired companies not held for disposition at December 31, 1994.
At December 31, 1994 and 1993, accumulated amortization of the excess of
cost over net assets of acquired companies and patents was $34.5 million and
$86.5 million, respectively. Amortization expense was $22.9 million, $22.2
million and $22.8 million in 1994, 1993 and 1992, respectively, including
amortization expense of approximately $1.6 million in both 1993 and 1992 related
to discontinued operations.
Income Taxes. In January 1993, the Company adopted Statement of Financial
Accounting Standards No. 109 ("SFAS No. 109"), "Accounting for Income Taxes."
SFAS No. 109 is an asset and liability approach that requires the recognition of
deferred tax assets and liabilities for the expected future tax consequences of
events that have been recognized in the Company's financial statements or tax
returns. In estimating future tax consequences, SFAS No. 109 generally allows
consideration of all expected future events other than enactments of changes in
the tax law or tax rates. There was no income statement impact from the adoption
of SFAS No. 109. Provision has not been made for U.S. or additional foreign
taxes on approximately $28 million of undistributed earnings of foreign
subsidiaries as those earnings are intended to be permanently reinvested.
Generally, such earnings become taxable upon the remittance of dividends and
under certain other circumstances. It is not practicable to estimate the amount
of deferred tax liability on such undistributed earnings.
Earnings (Loss) Per Common Share. Primary loss per common share in 1994 is
based on 58.9 million weighted average shares of common stock outstanding. The
effect of stock options and warrants in 1994 would be anti-dilutive. Primary
earnings per common share are based on weighted average shares of common stock
and common stock equivalents outstanding (including the dilutive effect of stock
options and warrants, utilizing the treasury stock method) of 57.4 million and
60.9 million in 1993 and 1992, respectively. Primary earnings (loss) per common
share are calculated on earnings (loss) after deducting preferred stock
dividends of $13.0 million, $14.9 million and $9.3 million in 1994, 1993 and
1992, respectively.
Fully diluted earnings (loss) per common share are only presented when the
assumed conversion of convertible securities is dilutive. Fully diluted earnings
per common share in 1993 was calculated based on 68.8 million weighted average
common shares outstanding. Convertible securities did not have a dilutive effect
on earnings (loss) per common share in 1994 or 1992.
In late 1993, approximately 10.4 million common shares were issued as a
result of the conversion of the 6% Convertible Subordinated Debentures (see
"Shareholders' Equity" note). If such conversion had taken place at the
beginning of 1993, the primary earnings per common and common equivalent share
amounts would have approximated the amounts presented for earnings per common
and common equivalent share, assuming full dilution, in 1993.
Adoption of Statements of Financial Accounting Standards. The Company
expects that the adoption of Statement of Financial Accounting Standards No.
114, "Accounting by Creditors for Impairment of a Loan", will not have a
material impact on the financial position or the results of operations of the
Company when adopted in 1995.
SUPPLEMENTARY CASH FLOWS INFORMATION:
Significant transactions not affecting cash were: in 1993: in addition to
the payment by the Company of $87.5 million, the non-cash portion of the
issuance of Company Preferred Stock and warrants in exchange for Company Common
Stock, Company Preferred Stock and Masco Corporation's holdings of Emco Limited
common stock and convertible debentures (see "Shareholders' Equity" note);
conversion of $187 million of convertible debentures into Company Common Stock
(see "Shareholders' Equity" note); and conversion of
23
25
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
the Company's TriMas Corporation ("TriMas") convertible preferred stock holdings
into TriMas common stock (see "Equity and Other Investments in Affiliates"
note).
Income taxes paid were $28 million, $32 million and $23 million in 1994,
1993 and 1992, respectively. Interest paid was $61 million, $82 million and $91
million in 1994, 1993 and 1992, respectively.
DISPOSITIONS OF OPERATIONS:
In late 1994, the Company adopted a plan to dispose, by sale or
liquidation, a number of businesses, including its Architectural Products,
Defense and certain of its Transportation-Related Products businesses, as part
of its long-term strategic plan to increase the focus on its core operating
capabilities. The disposition of these businesses is expected to primarily occur
in 1995 with the cash portion of the proceeds applied to reduce the Company's
indebtedness and to provide capital to invest in its core businesses. The
disposition of these businesses does not meet the criteria for discontinued
operations treatment for accounting purposes; accordingly, the sales and results
of operations of these businesses will be included in continuing operations
until disposition. The businesses to be disposed had annual sales of $675
million, $715 million and $675 million in 1994, 1993 and 1992, respectively, and
operating profit (loss), before the charge recorded in 1994, of $(2) million,
$22 million and $30 million in 1994, 1993 and 1992, respectively.
The expected proceeds from the sale or liquidation of the businesses to be
disposed was estimated by the Company's management based on a variety of factors
including: historical and projected operating performance, competitive market
position, perceived strategic value to potential acquirors, tangible asset
values and other relevant factors. In addition, management's estimate of the
expected proceeds included input from independent parties familiar with business
valuations of this nature. The Company's carrying value of a number of the
businesses to be disposed exceeded the estimated proceeds expected from such
dispositions. To reflect the estimated loss on the disposition of these
businesses, the Company recorded a non-cash charge aggregating $400 million
pre-tax (approximately $315 million after-tax or $5.35 per common share) for
those businesses for which a loss is anticipated. The approximate components of
the charge are as follows (in thousands):
Write-down of assets due to anticipated net proceeds being less
than carrying value:
Excess of cost over net assets of acquired companies.......... $270,000
Other assets, principally property and equipment.............. 105,000
Expenses of sale or liquidation accruable at December 31, 1994..... 25,000
--------
Pre-tax charge.............................................. $400,000
========
Future periods will include the operating results of the businesses to be
sold and any additional anticipated costs to be incurred in connection with the
sale or liquidation of the remaining businesses which cannot be accrued at
December 31, 1994, as well as the result of differences between estimated and
actual proceeds. In addition, management expects that certain of the businesses
to be disposed may be sold for gains; such gains will be recognized when
realized.
In late 1993, the Company adopted a plan to divest the business units in
its energy segment. This plan met the criteria for discontinued operations
accounting treatment; accordingly, the financial statements and related notes
present the Company's energy segment as discontinued operations. During 1993,
two such business units were sold for approximately $93 million, including the
sale of one business unit to the Company's equity affiliate, TriMas, for $60
million cash. The expected loss from the disposition of the Company's energy
segment resulted in a fourth quarter 1993 pre-tax charge of approximately $41
million (approximately $22 million after-tax), including a provision for the
businesses not sold in 1993 and the deferral of a portion of the gain
(approximately $6 million after-tax) related to the sale of the business to
24
26
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
TriMas. Certain of the remaining business units were sold at prices greater than
those used in estimating the loss on disposition in 1993, resulting in a
reversal in 1994 of approximately $18 million pre-tax ($11.7 million after-tax)
relating to the charge established in 1993.
Selected financial information for the Company's discontinued energy
segment is as follows for the period up to the decision to discontinue in 1993,
and for the year ended December 31, 1992:
(IN THOUSANDS)
1993 1992
-------- --------
Net sales................................................ $191,930 $201,520
======== ========
Operating income......................................... $ 5,540 $ 3,050
Other expense............................................ (480) (960)
-------- --------
Pre-tax income........................................... 5,060 2,090
Income taxes............................................. 2,430 2,700
-------- --------
Income (loss) from discontinued operations............... $ 2,630 $ (610)
======== ========
The unusual relationship of income taxes to pre-tax income in 1992 results
principally from foreign losses for which no tax benefit was recorded.
Amounts included in the consolidated balance sheet for net assets of
businesses held for disposition consist of the following at December 31, 1994
and 1993, after reflecting the anticipated loss on disposition:
(IN THOUSANDS)
1994 1993
--------- --------
Receivables............................................. $ 107,760 $ 34,890
Other current assets, principally inventories........... 141,140 41,250
Current liabilities, including accrued exit costs....... (102,210) (47,310)
--------- --------
Net current assets.................................... 146,690 28,830
--------- --------
Property and equipment, net............................. 120,350 30,060
Other non-current assets and liabilities, net, including
deferred tax assets................................... 112,020 8,620
--------- --------
Net non-current assets................................ 232,370 38,680
--------- --------
Net assets of businesses held for disposition........... $ 379,060 $ 67,510
========= ========
INVENTORIES:
(IN THOUSANDS)
AT DECEMBER 31
-------------------
1994 1993
------- --------
Finished goods............................................ $15,990 $ 39,400
Work in process........................................... 29,260 38,240
Raw material.............................................. 46,700 62,400
------- --------
$91,950 $140,040
======= ========
25
27
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
EQUITY AND OTHER INVESTMENTS IN AFFILIATES:
Equity and other investments in affiliates consist primarily of the
following common stock interests in publicly traded affiliates:
AT DECEMBER 31
--------------------
1994 1993 1992
---- ---- ----
TriMas Corporation........................................ 41% 43% 28%
Emco Limited.............................................. 43% 43% --
Titan Wheel International, Inc. .......................... 20% 21% 47%
The carrying amount of investments in affiliates at December 31, 1994 and
1993 and quoted market values at December 31, 1994 for publicly traded
affiliates (which may differ from the amounts that could have been realized upon
disposition) are as follows:
(IN THOUSANDS)
1994
QUOTED 1994 1993
MARKET CARRYING CARRYING
VALUE AMOUNT AMOUNT
-------- -------- --------
Common stock:
TriMas Corporation......................... $303,820 $ 60,090 $ 40,550
Emco Limited............................... 55,680 50,130 50,470
Titan Wheel International, Inc. ........... 40,900 20,180 15,500
-------- -------- --------
Common stock holdings........................ 400,400 130,400 106,520
-------- -------- --------
Convertible debt:
Emco Limited............................... 29,950 31,560 30,700
-------- -------- --------
Convertible debt holdings.................... 29,950 31,560 30,700
-------- -------- --------
Investments in publicly traded affiliates.... $430,350 161,960 137,220
========
Other non-public affiliates.................. 11,270 33,290
-------- --------
Total........................................ $173,230 $170,510
======== ========
In 1988, the Company transferred several businesses to TriMas, a publicly
traded, diversified manufacturer of commercial, industrial and consumer
products. In exchange, the Company received $128 million principal amount of 14%
Subordinated Debentures (which were subsequently redeemed resulting in
prepayment premium income to the Company of $9 million pre-tax in 1992), $70
million (liquidation value) of 10% Convertible Participating Preferred Stock and
9.3 million shares of TriMas common stock.
During the second quarter of 1992, TriMas sold 9.2 million shares of newly
issued common stock at $9.75 per share in a public offering, which reduced the
Company's common equity ownership interest in TriMas to 28 percent from 41
percent. As a result, the Company recognized a pre-tax gain of $16.7 million
from the change in the Company's common equity ownership interest in TriMas. In
late 1993, the TriMas 10% Convertible Participating Preferred Stock held by the
Company was converted at a conversion price of $9 per share into 7.8 million
shares of TriMas common stock, increasing the Company's common equity ownership
interest in TriMas to 43 percent. During 1994, the Company sold a portion of its
common stock holdings in TriMas, decreasing the Company's common equity
ownership interest in TriMas to 41 percent, and resulting in a pre-tax gain of
$17.9 million.
The Company's holdings in Emco Limited ("Emco") were acquired from Masco
Corporation in 1993 (see "Shareholders' Equity" note). Emco is a major, publicly
traded, Canadian-based manufacturer and distributor of building and other
industrial products with annual sales of approximately $800 million.
26
28
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
At December 31, 1992, the Company had an approximate 47 percent common
equity ownership interest in Titan Wheel International, Inc. ("Titan"), a
manufacturer of wheels, tires and other products for agricultural, construction
and other off-highway equipment markets. In May 1993, Titan completed an initial
public offering of three million shares of common stock at $15 per share
(including 292,000 shares held by the Company), reducing the Company's common
equity ownership interest in Titan to 24 percent. The Company's ownership
interest was further reduced in late 1993 to 21 percent as a result of the
issuance of additional common shares by Titan in connection with an acquisition
by Titan. These transactions resulted in 1993 gains aggregating approximately
$12.8 million pre-tax (principally in the second quarter) as a result of the
sale of shares held by the Company and from the change in the Company's common
equity ownership interest in Titan.
In addition to its equity and other investments in publicly traded
affiliates, the Company has equity and other investment interests in privately
held manufacturers of automotive components, including the Company's common
equity ownership interest in Delco Remy America, Inc. ("Delco Remy"), a
manufacturer of automotive electric motors and other components in which the
Company acquired an interest in mid-1994.
Approximate combined condensed financial data of the Company's equity
affiliates, including Delco Remy and Emco subsequent to the Company's investment
in these affiliates, are as follows:
(IN THOUSANDS)
AT DECEMBER 31
------------------------
1994 1993
--------- ---------
Current assets....................................... $ 881,150 $ 657,680
Current liabilities.................................. (320,400) (222,580)
--------- ---------
Working capital................................. 560,750 435,100
Property and equipment, net.......................... 524,140 349,740
Excess of cost over net assets of acquired
companies.......................................... 198,620 170,760
Other assets......................................... 80,710 69,540
Long-term debt....................................... (780,220) (628,520)
Deferred income taxes and other long-term
liabilities........................................ (75,730) (34,950)
--------- ---------
Shareholders' equity............................ $ 508,270 $ 361,670
========= =========
FOR THE YEARS ENDED DECEMBER 31
------------------------------------
1994 1993 1992
---------- ---------- --------
Net sales.................................... $1,989,670 $1,412,620 $655,120
========== ========== ========
Operating profit............................. $ 174,850 $ 119,780 $ 77,860
========== ========== ========
Earnings attributable to common stock........ $ 74,870 $ 52,030 $ 23,200
========== ========== ========
27
29
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Equity and interest income from affiliates consists of the following:
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31
-------------------------------
1994 1993 1992
------- ------- -------
The Company's equity in affiliates' earnings
available for common shareholders.............. $25,970 $12,890 $ 5,250
Dividends on TriMas preferred stock.............. -- 5,250 7,000
Interest income.................................. 3,840 2,860 3,500
------- ------- -------
Equity and interest income from affiliates....... $29,810 $21,000 $15,750
======= ======= =======
PROPERTY AND EQUIPMENT, NET:
(IN THOUSANDS)
AT DECEMBER 31
--------------------
1994 1993
-------- --------
Cost:
Land and land improvements............................. $ 15,180 $ 33,720
Buildings.............................................. 103,630 158,750
Machinery and equipment................................ 507,190 605,600
-------- --------
626,000 798,070
Less accumulated depreciation............................ 246,670 307,880
-------- --------
$379,330 $490,190
======== ========
Depreciation expense totalled $44 million, $48 million and $46 million in
1994, 1993 and 1992, respectively. These amounts include depreciation expense of
approximately $8 million in each of 1993 and 1992 related to the discontinued
energy segment.
ACCRUED LIABILITIES:
(IN THOUSANDS)
AT DECEMBER 31
--------------------
1994 1993
------- --------
Salaries, wages and commissions.......................... $18,050 $ 22,970
Income taxes............................................. 2,740 5,930
Interest................................................. 9,020 20,420
Insurance................................................ 16,940 11,010
Property, payroll and other taxes........................ 6,730 9,360
Other.................................................... 18,610 33,570
------- --------
$72,090 $103,260
======= ========
28
30
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
LONG-TERM DEBT:
(IN THOUSANDS)
AT DECEMBER 31
--------------------
1994 1993
-------- --------
Bank revolving credit agreement, due 1998................ $280,000 $295,000
10% Senior Subordinated Notes, due 1995 (noncallable).... 233,150 233,150
10 1/4% Senior Subordinated Notes, due 1997.............. -- 250,000
4 1/2% Convertible Subordinated Debentures, due 2003..... 310,000 --
Other.................................................... 48,760 13,040
-------- --------
871,910 791,190
Less current portion of long-term debt................... 3,670 2,830
-------- --------
Long-term debt........................................... $868,240 $788,360
======== ========
In 1993, the Company entered into a new $675 million revolving credit
agreement with a group of banks, replacing its prior bank credit agreement.
During 1994, the Company amended this agreement, resulting in an extension of
the due date to July 1998 from January 1997. The interest rates applicable to
the revolving credit agreement are principally at alternative floating rates
provided for in the agreement (approximately six percent at December 31, 1994).
The revolving credit agreement contains restrictions including limitations
on intangible assets, ratio of senior debt to earnings and the ratio of debt to
equity. At December 31, 1994, the unused portion of the revolving credit
agreement was principally available to refinance the 10% Senior Subordinated
Notes and other indebtedness. Cash dividends and any acquisition of Company
Common Stock and Convertible Preferred Stock could be accomplished with future
internal cash flows and through future reductions of cash investments and
marketable securities.
In January 1994, the Company issued, in a public offering, $345 million of
4 1/2% Convertible Subordinated Debentures due December 15, 2003. These
debentures are convertible into Company Common Stock at $31 per share. The net
proceeds of approximately $337 million were used to redeem the $250 million of
10 1/4% Senior Subordinated Notes on February 1, 1994 and to reduce other
indebtedness. In the fourth quarter of 1993, the Company recognized a $5.8
million pre-tax extraordinary charge ($3.7 million after-tax) related to the
call premium (1.25%) and unamortized prepaid debenture expense associated with
the early extinguishment of the $250 million of 10 1/4% Senior Subordinated
Notes. The 10% Senior Subordinated Notes are due March 15, 1995 but are
classified as non-current at December 31, 1994 as the Company has the intent and
the ability to maintain these borrowings on a long-term basis (due to available
borrowings under the Company's revolving credit agreement). During 1994, the
Company recognized extraordinary income of $4.4 million pre-tax ($2.6 million
after-tax) related to the early extinguishment of a portion of the 4 1/2%
Convertible Subordinated Debentures.
The maturities of debt during the next five years are as follows (in
millions): 1995 -- $237; 1996 -- $1; 1997 -- $0; 1998 -- $316; and 1999 -- $0.
29
31
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SHAREHOLDERS' EQUITY:
(IN THOUSANDS)
RETAINED CUMULATIVE
PREFERRED COMMON PAID-IN EARNINGS TRANSLATION SHAREHOLDERS'
STOCK STOCK CAPITAL (DEFICIT) ADJUSTMENTS EQUITY
--------- -------- -------- --------- ----------- -------------
Balance, January 1, 1992......... $ 780 $ 59,450 $ 83,800 $ 173,530 $ 9,130 $ 326,690
Net income.................. -- -- -- 38,430 -- 38,430
Preferred stock dividends... -- -- -- (9,300) -- (9,300)
Translation adjustments,
net....................... -- -- -- -- (3,080) (3,080)
Exercise of stock options... -- 70 590 -- -- 660
-------- -------- -------- --------- ------- ---------
Balance, December 31, 1992....... 780 59,520 84,390 202,660 6,050 353,400
Net income.................. -- -- -- 47,600 -- 47,600
Preferred stock dividends... -- -- -- (14,930) -- (14,930)
Common stock dividends...... -- -- -- (3,210) -- (3,210)
Retirement of 12%
Preferred................. (780) -- (76,720) -- -- (77,500)
Issuance of 10% Preferred... 1,000 -- 99,000 -- -- 100,000
Issuance of warrants........ -- -- 70,800 -- -- 70,800
Issuance of DECS............ 10,800 -- 198,720 -- -- 209,520
Retirement of common
stock..................... -- (10,000) (90,000) -- -- (100,000)
Retirement of 10%
Preferred................. (1,000) -- (99,000) -- -- (100,000)
Conversion of convertible
debentures................ -- 10,370 174,120 -- -- 184,490
Translation adjustments,
net....................... -- -- -- -- (9,140) (9,140)
Exercise of stock options... -- 620 5,980 -- -- 6,600
-------- -------- -------- --------- ------- ---------
Balance, December 31, 1993....... 10,800 60,510 367,290 232,120 (3,090) 667,630
Net loss.................... -- -- -- (220,120) -- (220,120)
Preferred stock dividends... -- -- -- (12,960) -- (12,960)
Common stock dividends...... -- -- -- (6,630) -- (6,630)
Retirement of common
stock..................... -- (4,070) (50,060) -- -- (54,130)
Translation adjustments,
net....................... -- -- -- -- 5,450 5,450
Exercise of stock options... -- 170 1,730 -- -- 1,900
-------- -------- -------- --------- ------- ---------
Balance, December 31, 1994....... $ 10,800 $ 56,610 $318,960 $ (7,590) $ 2,360 $ 381,140
======== ======== ======== ========= ======= =========
On March 31, 1993, the Company acquired from Masco Corporation 10 million
shares of Company Common Stock, recorded at $100 million, $77.5 million of the
Company's previously outstanding 12% Exchangeable Preferred Stock, and Masco
Corporation's holdings of Emco Limited common stock and convertible debentures,
recorded at $80.8 million. In exchange, Masco Corporation received $100 million
(liquidation value) of the Company's 10% Exchangeable Preferred Stock,
seven-year warrants to purchase 10 million shares of Company Common Stock at $13
per share, recorded at $70.8 million, and $87.5 million in cash. The
transferable warrants are not exercisable by Masco Corporation if an exercise
would increase Masco Corporation's common equity ownership interest in the
Company above 35 percent. The cash portion of this transaction is included in
the accompanying statement of cash flows as cash used for investing activities
of $87.5 million. As part of this transaction, as modified in late 1993, Masco
Corporation agreed to purchase from the Company, at the Company's option through
March 1997, up to $200 million of subordinated debentures. In late 1993, the
Company redeemed the 10% Exchangeable Preferred Stock for its $100 million
liquidation value.
In July 1993, the Company issued 10.8 million shares of 6% Dividend
Enhanced Convertible Stock (DECS, classified as Convertible Preferred Stock) at
$20 per share ($216 million aggregate liquidation amount) in a public offering.
The net proceeds from this issuance were used to reduce the Company's
indebtedness. On July 1, 1997, each of the then outstanding shares of the DECS
will convert into one share of
30
32
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Company Common Stock, if not previously redeemed by the Company or converted at
the option of the holder, in both cases for Company Common Stock.
Each share of the DECS is convertible at the option of the holder anytime
prior to July 1, 1997 into .806 of a share of Company Common Stock, equivalent
to a conversion price of $24.81 per share of Company Common Stock. Dividends are
cumulative and each share of the DECS has 4/5 of a vote, voting together as one
class with holders of Company Common Stock.
Beginning July 1, 1996, the Company, at its option, may redeem the DECS at
a call price payable in shares of Company Common Stock principally determined by
a formula based on the then current market price of Company Common Stock.
Redemption by the Company, as a practical matter, will generally not result in a
call price that exceeds one share of Company Common Stock or is less than .806
of a share of Company Common Stock (resulting from the holder's conversion
option).
The Company's 6% Convertible Subordinated Debentures were called for
redemption in late 1993. Substantially all holders, including Masco Corporation,
exercised their right to convert these debentures into Company Common Stock (at
a conversion price of $18 per share), resulting in the issuance of approximately
10.4 million shares of Company Common Stock.
During 1994, the Company repurchased and retired approximately four million
shares of its common stock in open-market purchases, pursuant to a Board of
Directors' authorized repurchase program. At December 31, 1994, the Company may
repurchase approximately six million additional shares of Company Common Stock
and Convertible Preferred Stock pursuant to this repurchase authorization.
The Company commenced paying cash dividends on its Common Stock in August
1993. On the basis of amounts paid (declared), cash dividends per Common Share
were $.10 ($.11) in 1994 and $.04 ($.06) in 1993.
STOCK OPTIONS AND AWARDS:
For the three years ended December 31, 1994, stock option data pertaining
to stock option plans for key employees of the Company and affiliated companies
are as follows:
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
1994 1993 1992
------- ------ -------
Options outstanding, January 1........... 3,810 4,540 3,770
Options granted.......................... 20 30 900
Option price per share................. $17-25 1/8 $13-26 $6 1/8-10 3/4
Options cancelled........................ 40 -- 60
Option price per share................. $4 1/2 -- $4 1/2
Options exercised........................ 170 760 70
Option price per share................. $4 1/2-9 1/8 $4 1/2-9 1/8 $9 1/8
------------ ------------ -------------
Options outstanding, December 31......... 3,620 3,810 4,540
============ ============ =============
Options exercisable, December 31......... 1,080 680 880
============ ============ =============
At December 31, 1994, options have been granted and are outstanding with
exercise prices ranging from $4 1/2 to $26 per share, the fair market value at
the dates of grant.
Pursuant to restricted stock incentive plans, the Company granted long-term
incentive awards, net, for 213,000, 202,000 and 251,000 shares of Company Common
Stock during 1994, 1993 and 1992, respectively, to key employees of the Company
and affiliated companies. The unamortized costs of incentive awards,
31
33
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
aggregating approximately $22 million at December 31, 1994, are being amortized
over the ten-year vesting periods.
At December 31, 1994 and 1993, a combined total of 5,773,000 and 5,631,000
shares, respectively, of Company Common Stock were available for the granting of
options and incentive awards under the above plans.
EMPLOYEE BENEFIT PLANS:
Pension and Profit-Sharing Benefits. The Company sponsors defined-benefit
pension plans for most of its employees. In addition, substantially all salaried
employees participate in noncontributory profit-sharing plans, to which payments
are approved annually by the Directors. Aggregate charges to income under these
plans were $9.8 million in 1994, $10.9 million in 1993 and $10.3 million in
1992, including approximately $.9 million in each of 1993 and 1992 related to
the discontinued energy segment.
Net periodic pension cost for the Company's defined-benefit pension plans
includes the following components for the three years ended December 31, 1994:
(IN THOUSANDS)
1994 1993 1992
------- ------- -------
Service cost -- benefits earned during the
year.......................................... $ 4,800 $ 4,110 $ 4,150
Interest cost on projected benefit
obligations................................... 5,800 5,540 5,090
Actual (return) loss on assets.................. 1,850 (7,730) (3,820)
Net amortization and deferral................... (8,240) 1,600 (1,800)
------- ------- -------
Net periodic pension cost....................... $ 4,210 $ 3,520 $ 3,620
======= ======= =======
Major assumptions used in accounting for the Company's defined-benefit
pension plans are as follows:
1994 1993 1992
----- ----- -----
Discount rate for obligations........................ 8.5% 7.0% 8.25%
Rate of increase in compensation levels.............. 5.0% 5.0% 6.0%
Expected long-term rate of return on plan assets..... 13.0% 13.0% 13.0%
In 1995, the Company changed its assumption for the expected long-term rate
of return on plan assets to 11 percent.
32
34
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The funded status of the Company's defined-benefit pension plans at
December 31, 1994 and 1993 is as follows (at December 31, 1994, no plans had
assets which exceeded accumulated benefits):
(IN THOUSANDS)
1994 1993
----------- --------------------------
ACCUMULATED ASSETS ACCUMULATED
BENEFITS EXCEED BENEFITS
EXCEED ACCUMULATED EXCEED
RECONCILIATION OF FUNDED STATUS ASSETS BENEFITS ASSETS
------------------------------- ----------- ----------- -----------
Actuarial present value of benefit obligations:
Vested benefit obligation............................... $ 60,300 $ 23,040 $ 34,280
========= ======== =========
Accumulated benefit obligation.......................... $ 64,570 $ 24,450 $ 38,650
========= ======== =========
Projected benefit obligation............................ $ 75,000 $ 35,270 $ 39,920
Assets at fair value...................................... 53,280 29,550 26,560
--------- -------- ---------
Projected benefit obligation in excess of plan assets... (21,720) (5,720) (13,360)
Reconciling items:
Unrecognized net loss................................... 10,890 7,140 8,810
Unrecognized prior service cost......................... 7,950 460 3,250
Unrecognized net (asset) obligation at transition....... (1,330) (1,340) (160)
Adjustment required to recognize minimum liability...... (10,010) -- (10,840)
--------- -------- ---------
(Accrued) prepaid pension cost............................ $ (14,220) $ 540 $ (12,300)
========= ======== =========
Postretirement Benefits. The Company provides postretirement medical and
life insurance benefits for certain of its active and retired employees.
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 106 ("SFAS 106"), "Employers' Accounting for
Postretirement Benefits Other Than Pensions", for its postretirement benefit
plans. This statement requires the accrual method of accounting for
postretirement health care and life insurance based on actuarially determined
costs to be recognized over the period from the date of hire to the full
eligibility date of employees who are expected to qualify for such benefits. In
conjunction with the adoption of SFAS 106, the Company elected to recognize the
transition obligation on a prospective basis and accordingly, the net transition
obligation is being amortized over 20 years. Net periodic postretirement benefit
cost includes the following components for the years ended December 31, 1994 and
1993:
(IN THOUSANDS)
1994 1993
------ ------
Service cost................................................. $ 400 $ 300
Interest cost................................................ 1,800 1,900
Net amortization............................................. 1,300 1,200
------ ------
Net periodic postretirement benefit cost..................... $3,500 $3,400
====== ======
The incremental cost in 1994 and 1993 of accounting for postretirement
health care and life insurance benefits under SFAS 106, as compared to 1992,
amounted to approximately $2 million in each year.
33
35
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Postretirement benefit obligations, none of which is funded, are summarized
as follows at December 31, 1994 and 1993:
(IN THOUSANDS)
1994 1993
-------- --------
Accumulated postretirement benefit obligations:
Retirees............................................... $ 16,400 $ 19,400
Fully eligible active plan participants................ 1,000 1,400
Other active participants.............................. 5,500 6,400
-------- --------
Total accumulated postretirement benefit obligation...... 22,900 27,200
Unrecognized net gain (loss)........................... 1,800 (2,900)
Unamortized transition obligation...................... (17,100) (22,500)
-------- --------
Accrued postretirement benefits.......................... $ 7,600 $ 1,800
======== ========
The discount rates used in determining the accumulated postretirement
benefit obligation were 8.5 percent and 7.0 percent in 1994 and 1993,
respectively. The assumed health care cost trend rate in 1994 was 12 percent,
decreasing to an ultimate rate in the year 2000 of seven percent. If the assumed
medical cost trend rates were increased by one percent, the accumulated
postretirement benefit obligation would increase by $2.1 million and the
aggregate of the service and interest cost components of net periodic
postretirement benefit cost would increase by $.3 million. Included in the
Company's 1994 charge for the disposition of certain businesses are curtailment
costs for postretirement benefit obligations relating to these businesses of
approximately $3.7 million.
SEGMENT INFORMATION:
The Company's business segments involve the production and sale of the
following:
Transportation-Related Products:
Precision products, generally produced using advanced metalworking
technologies with significant proprietary content, and
aftermarket products for the transportation industry.
Specialty Products:
Architectural -- Doors, windows, security grilles and office panels
and partitions for commercial and residential markets.
Other -- Products manufactured principally for the defense industry.
Corporate assets consist primarily of cash and cash investments, marketable
securities, equity and other investments in affiliates, notes receivable and net
assets of the discontinued energy segment.
34
36
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS)
NET SALES OPERATING PROFIT(B)(C) ASSETS EMPLOYED AT DECEMBER 31(D)
------------------------------------ ------------------------------- ------------------------------------
1994 1993 1992 1994 1993 1992 1994 1993 1992
---------- ---------- ---------- --------- -------- -------- ---------- ---------- ----------
The Company's
operations by
industry
segment are:
Transportation-
Related
Products (A).. $1,332,000 $1,195,000 $1,058,000 $ (55,000) $160,000 $124,000 $ 796,000 $ 883,000 $ 851,000
Specialty
Products:
Architectural. 277,000 289,000 291,000 (118,000) (4,000) 2,000 149,000 313,000 321,000
Other......... 93,000 99,000 106,000 (78,000) 5,000 3,000 32,000 104,000 109,000
---------- ---------- ---------- --------- -------- -------- ---------- ---------- ----------
Total..... $1,702,000 $1,583,000 $1,455,000 (251,000) 161,000 129,000 977,000 1,300,000 1,281,000
========== ========== ==========
Other income
(expense),
net........... 13,000 (25,000) (44,000)
General
corporate
expense....... (26,000) (15,000) (17,000)
--------- -------- --------
Income (loss)
from
continuing
operations
before income
taxes (credit)
and
extraordinary
income
(loss)........ $(264,000) $121,000 $ 68,000
========= ======== ========
Corporate
assets........ 554,000 490,000 526,000
---------- ---------- ----------
Total
assets... $1,531,000 $1,790,000 $1,807,000
========== ========== ==========
DEPRECIATION AND
PROPERTY ADDITIONS AMORTIZATION
----------------------------- ------------------------------------
1994 1993 1992 1994 1993 1992
--------- ------- ------- ---------- ---------- ----------
The Company's operations by industry segment are:
Transportation-Related Products.......................... $101,000 $52,000 $47,000 $48,000 $42,000 $42,000
Specialty Products:
Architectural.......................................... 5,000 5,000 8,000 12,000 12,000 13,000
Other.................................................. 9,000 3,000 5,000 7,000 6,000 5,000
-------- ------- ------- ------- ------- -------
Total............................................ $115,000 $60,000 $60,000 $67,000 $60,000 $60,000
======== ======= ======= ======= ======= =======
(A) Included within this segment are sales to one customer of $322 million, $324
million and $268 million in 1994, 1993 and 1992, respectively; sales to
another customer of $225 million, $186 million and $184 million in 1994,
1993 and 1992, respectively; and sales to a third customer of $212 million,
$222 million and $216 million in 1994, 1993 and 1992, respectively.
(B) Other income (expense), net in 1992, includes approximately $15 million to
reflect disposition costs related to idle facilities and other long-term
assets.
(C) Operating profit in 1994 includes the impact of a pre-tax charge in the
amount of $400 million for the disposition of businesses. The charge impacts
the Company's business segments as follows: Transportation-Related Products
-- $196 million; Architectural -- $116 million; and Other Specialty Products
-- $75 million. The remaining $13 million of the charge is included in
General Corporate Expense.
(D) Assets employed at December 31, 1994 include net assets related to the
disposition of certain operations (see "Dispositions of Operations" note).
35
37
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
OTHER INCOME (EXPENSE), NET:
(IN THOUSANDS)
1994 1993 1992
------- ------- -------
Other, net:
Net realized and unrealized gains and losses from
marketable securities......................... $ 4,360 $11,550 $ 4,020
Gains from sales of TriMas common stock.......... 17,900 -- --
Interest income.................................. 5,490 9,570 9,260
Dividend income.................................. 2,880 3,150 1,750
Other, net....................................... 2,750 2,060 (5,080)
------- ------- -------
$33,380 $26,330 $ 9,950
======= ======= =======
Gains and losses realized from sales of marketable securities and gains
from sales of common stock of equity affiliates are determined on a specific
identification basis at the time of sale.
INCOME TAXES:
(IN THOUSANDS)
1994 1993 1992
--------- -------- -------
Income (loss) from continuing operations before
income taxes (credit) and extraordinary income
(loss):
Domestic...................................... $(280,900) $105,470 $57,880
Foreign....................................... 16,410 15,710 10,370
--------- -------- -------
$(264,490) $121,180 $68,250
========= ======== =======
Provision for income taxes (credit):
Federal, current.............................. $ 36,660 $ 17,940 $12,750
State and local............................... 8,880 8,350 5,170
Foreign....................................... (7,850) 8,410 8,160
Deferred, principally federal................. (67,760) 15,590 3,130
--------- -------- -------
Income taxes (credit) on income (loss) from
continuing operations before
extraordinary income (loss).............. $ (30,070) $ 50,290 $29,210
========= ======== =======
36
38
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The components of deferred taxes at December 31, 1994 and 1993 are as
follows:
(IN THOUSANDS)
1994 1993
------- --------
Deferred tax assets:
Inventories............................................. $ 3,400 $ 8,430
Expected capital loss benefit related to businesses held
for disposition...................................... 53,000 --
Other, principally deductions reported in different
periods for financial reporting and tax purposes..... 19,260 25,780
------- --------
75,660 34,210
------- --------
Deferred tax liabilities:
Depreciation and amortization........................... 57,390 90,350
Other, principally equity in undistributed earnings of
affiliates........................................... 27,430 18,450
------- --------
84,820 108,800
------- --------
Net deferred tax liability................................ $ 9,160 $ 74,590
======= ========
Net current and net non-current assets of businesses held for disposition
at December 31, 1994 include approximately $60 million of net deferred tax
assets, including an expected net capital loss carryforward benefit of
approximately $20 million. This capital loss is expected to be realized through
the sale of common stock of equity affiliates that result in capital gains, or
through the sale of businesses at a gain.
The following is a reconciliation of tax computed at the U.S. federal
statutory rate to the provision for income taxes (credit) allocated to income
(loss) from continuing operations before extraordinary income (loss):
(IN THOUSANDS)
1994 1993 1992
-------- ------- -------
U.S. federal statutory rate....................... 35% 35% 34%
Tax (credit) at U.S. federal statutory rate....... $(92,570) $42,410 $23,210
State and local taxes, net of federal tax
benefit......................................... 5,770 5,430 3,390
Higher effective foreign tax rate................. 3,380 2,910 4,670
Tax benefit on distributed foreign earnings,
net............................................. (4,200) -- --
Dividends-received deduction...................... (690) (2,290) (2,320)
Non-deductible portion of charge for disposition
of businesses................................... 54,600 -- --
Amortization in excess of tax, net................ 2,190 3,820 4,780
Other, net........................................ 1,450 (1,990) (4,520)
-------- ------- -------
Income taxes (credit) on income (loss) from
continuing operations before extraordinary
income (loss)................................ $(30,070) $50,290 $29,210
======== ======= =======
37
39
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS:
In accordance with Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financial Instruments," the following methods
were used to estimate the fair value of each class of financial instruments:
MARKETABLE SECURITIES, NOTES RECEIVABLE AND OTHER ASSETS
Fair values of financial instruments included in marketable securities,
notes receivable and other assets were estimated using various methods including
quoted market prices and discounted future cash flows based on the incremental
borrowing rates for similar types of investments. In addition, for variable-rate
notes receivable that fluctuate with the prime rate, the carrying amounts
approximate fair value.
LONG-TERM DEBT
The carrying amount of bank debt and certain other long-term debt
instruments approximate fair value as the floating rates inherent in this debt
reflect changes in overall market interest rates. The fair values of the
Company's subordinated debt instruments are based on quoted market prices. The
fair values of certain other debt instruments are estimated by discounting
future cash flows based on the Company's incremental borrowing rate for similar
types of debt instruments.
The carrying amounts and fair values of the Company's financial instruments
at December 31, 1994 and 1993 are as follows:
(IN THOUSANDS)
1994 1993
-------------------- --------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------
Cash and cash investments........................... $ 61,950 $ 61,950 $ 83,200 $ 83,200
Marketable securities, notes receivable and other
assets............................................ $101,900 $ 99,600 $ 72,650 $ 80,220
Long-term debt:
Bank debt......................................... $316,000 $316,000 $295,000 $295,000
10% Senior Subordinated Notes..................... $233,150 $233,910 $233,150 $243,640
10 1/4% Senior Subordinated Notes................. -- -- $250,000 $254,380
4 1/2% Convertible Subordinated Debentures........ $310,000 $234,050 -- --
Other long-term debt.............................. $ 9,090 $ 8,990 $ 9,120 $ 9,150
DERIVATIVES
The Company has limited involvement with derivative financial instruments,
and does not use derivatives for trading purposes. The derivatives, principally
consisting of S&P 500 futures contracts, are intended to reduce the market risk
associated with the Company's marketable equity securities portfolio. The
Company's investment in futures contracts increases in value as a result of
decreases in the underlying index and decreases in value when the underlying
index increases. The contracts are financial instruments (with off balance sheet
market risk), as they are required to be settled in cash. At December 31, 1994
the notional amount of the derivatives was $33.2 million. The notional amounts
do not represent the amounts exchanged by the parties, and thus are not a
measure of the exposure of the Company through its use of derivatives. The
Company's market risk is subject to the price differential between the contract
market value and contract cost.
Futures contracts trade on organized exchanges, and as a result, settlement
of such contracts has little credit risk. Initial margin requirements are met in
cash or other instruments, and changes in the contract values are settled
periodically. Initial margin requirements are recorded as cash investments in
the balance
38
40
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
sheet. Futures contracts are short-term in nature, usually less than six months.
Related gains and losses are reported as income or loss in other income
(expense) as part of marketable securities gain or loss. At December 31, 1994,
based upon the current index, the Company's obligation amounted to $.3 million
and is included in marketable securities.
INTERIM AND OTHER SUPPLEMENTAL FINANCIAL DATA (UNAUDITED):
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
FOR THE QUARTERS ENDED
----------------------------------------------
DECEMBER SEPTEMBER JUNE MARCH
31ST 30TH 30TH 31ST
--------- --------- -------- --------
1994:
Net sales.......................................... $ 440,570 $ 416,500 $432,780 $412,410
Gross profit....................................... $ 73,390 $ 73,440 $ 89,710 $ 80,290
Income (loss) from continuing operations before
extraordinary income (loss):
Income (loss).................................... $(305,940) $ 15,780 $ 29,440 $ 26,300
Per common and common equivalent share:
Primary....................................... $(5.46) $.21 $.39 $.34
Assuming full dilution........................ $(5.46) $.21 $.37 $.32
Net income (loss):
Income (loss).................................... $(294,240) $ 18,380 $ 29,440 $ 26,300
Income (loss) attributable to common stock....... $(297,480) $ 15,140 $ 26,200 $ 23,060
Per common and common equivalent share:
Primary....................................... $(5.25) $.25 $.39 $.34
Assuming full dilution........................ $(5.25) $.25 $.37 $.32
Market price per common share:
High............................................. $13 3/8 $15 1/4 $23 1/4 $27 7/8
Low.............................................. $11 $11 $13 $19 7/8
1993:
Net sales.......................................... $ 392,600 $ 373,680 $412,530 $404,070
Gross profit....................................... $ 76,440 $ 78,600 $ 85,610 $ 84,750
Income from continuing operations before
extraordinary income (loss):
Income........................................... $ 18,510 $ 15,000 $ 21,310 $ 16,070
Per common and common equivalent share:
Primary....................................... $.23 $.17 $.34 $.22
Assuming full dilution........................ $.22 $.17 $.31 $.22
Net income (loss):
Income (loss)................................. $ (6,980) $ 15,320 $ 21,740 $ 17,520
Income (loss) attributable to common stock....... $ (11,660) $ 9,900 $ 19,240 $ 15,190
Per common and common equivalent share:
Primary....................................... $(.20) $.18 $.35 $.25
Assuming full dilution........................ $(.15) $.18 $.32 $.24
Market price per common share:
High............................................. $28 1/8 $22 5/8 $21 $17 1/4
Low.............................................. $18 3/4 $19 1/2 $15 3/4 $11 3/8
39
41
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Results for the fourth quarter of 1994 include a non-cash pre-tax charge of
$400 million ($315 million after-tax or $5.56 per common share in the fourth
quarter of 1994) reflecting the anticipated loss on the disposition of certain
businesses (see "Dispositions of Operations" note).
Net income (loss) for the fourth quarter of 1994 also includes income
aggregating approximately $18 million pre-tax ($11.7 million after-tax or $.21
per common share) relating to the reversal of the charge established in the
fourth quarter of 1993 for the disposition of the Company's energy segment (see
"Dispositions of Operations" note).
Net income (loss) for the third quarter of 1994 includes $4.4 million
pre-tax of extraordinary income ($2.6 million after-tax or $.04 per common
share) related to the early extinguishment of convertible debt.
Results for the first, second and third quarters of 1994 include pre-tax
gains of approximately $9.8 million, $7.1 million and $1.0 million,
respectively, from the sale by the Company of a portion of its common stock
holdings of an equity affiliate.
The 1994 income (loss) per common share amounts for the quarters do not
total to the full year amounts due to the purchase and retirement of shares
throughout the year and a lower dilutive effect from outstanding options and
warrants on the year-to-date calculation.
Results for the second quarter of 1993 include pre-tax income of
approximately $9 million as a result of gains associated with the sale of common
stock through public offerings by equity affiliates. This income was largely
offset by costs and expenses related to cost reduction initiatives, the
restructuring of certain operations and product lines, adjustments to the
carrying value of certain long-term assets, and other costs and expenses.
Results for the third quarter of 1993 were reduced by a charge of
approximately $.04 per common share reflecting the increased 1993 federal
corporate income tax rate.
The fourth quarter of 1993 net loss includes the effect of a $5.8 million
pre-tax extraordinary loss ($3.7 million after-tax or $.06 per common share)
related to the early extinguishment of subordinated debt (see "Long-Term Debt"
note). The fourth quarter of 1993 net loss also includes an after-tax charge of
approximately $22 million ($.38 per common share) related to the disposition of
a segment of the Company's business (see "Dispositions of Operations" note).
The 1993 results include the benefit of approximately $11.5 million pre-tax
income ($6.7 million after-tax or $.12 per common share), primarily in the third
and fourth quarters, resulting from net gains from sales of marketable
securities.
The 1993 income (loss) per common share amounts for the quarters do not
total to the full year amounts due to the changes in the number of common shares
outstanding during the year and the dilutive effect of first, second and third
quarter 1993 results.
The calculation of earnings per common and common equivalent share for the
fourth quarter of 1993 results in dilution for income from continuing
operations, assuming full dilution. Therefore, the fully diluted earnings per
share computation is used for all computations, even though the result is
anti-dilutive for one of the per share amounts.
The following supplemental unaudited financial data combine the Company
with TriMas and have been presented for analytical purposes. The Company had a
common equity ownership interest in TriMas of approximately 41 percent at
December 31, 1994 and 43 percent at December 31, 1993. The interests of the
40
42
MASCOTECH, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONCLUDED)
other common shareholders are reflected below as "Equity of other shareholders
of TriMas." All significant intercompany transactions have been eliminated.
(IN THOUSANDS)
AT DECEMBER 31
--------------------------
1994 1993
----------- -----------
Current assets...................................... $ 861,380 $ 799,640
Current liabilities................................. (243,260) (252,810)
----------- -----------
Working capital................................ 618,120 546,830
Property and equipment, net......................... 547,710 652,420
Excess of cost over net assets of acquired
companies......................................... 182,470 526,260
Other assets........................................ 432,850 269,460
Bank and other debt................................. (1,106,840) (1,027,250)
Deferred income taxes and other long-term
liabilities....................................... (123,170) (161,500)
Equity of other shareholders of TriMas.............. (170,000) (138,590)
----------- -----------
Equity of shareholders of MascoTech............ $ 381,140 $ 667,630
=========== ===========
FOR THE YEARS ENDED DECEMBER 31
--------------------------------------
1994 1993 1992
---------- ---------- ----------
Net sales.................................. $2,232,430 $2,022,240 $1,841,570
========== ========== ==========
Operating profit (loss).................... $ (186,450) $ 215,740 $ 170,460
========== ========== ==========
Income (loss) from continuing operations
before extraordinary income (loss)....... $ (234,420) $ 70,890 $ 39,040
========== ========== ==========
41
43
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not Applicable
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information regarding executive officers required by this Item is set forth
as a Supplementary Item at the end of Part I hereof (pursuant to Instruction 3
to Item 401(b) of Regulation S-K). Other information required by this Item will
be contained in the Company's definitive Proxy Statement for its 1995 Annual
Meeting of Stockholders, to be filed on or before April 28, 1995 and such
information is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
Information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1995 Annual Meeting of Stockholders, to be
filed on or before April 28, 1995, and such information is incorporated herein
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1995 Annual Meeting of Stockholders, to be
filed on or before April 28, 1995, and such information is incorporated herein
by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required by this Item will be contained in the Company's
definitive Proxy Statement for its 1995 Annual Meeting of Stockholders, to be
filed on or before April 28, 1995, and such information is incorporated herein
by reference.
42
44
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(A) LISTING OF DOCUMENTS.
(1) Financial Statements. The Company's Consolidated Financial
Statements included in Item 8 hereof, as required at December 31,
1994 and 1993, and for the years ended December 31, 1994, 1993 and
1992, consist of the following:
Consolidated Balance Sheet
Consolidated Statement of Operations
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules.
(i) Financial Statement Schedule of the Company appended hereto,
as required for the years ended December 31, 1994, 1993 and
1992, consists of the following:
II. Valuation and Qualifying Accounts
(ii) (A) TriMas Corporation and Subsidiaries Consolidated Financial
Statements appended hereto, as required at December 31,
1994 and 1993, and for the years ended December 31, 1994,
1993 and 1992, consist of the following:
Consolidated Statements of Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(ii) (B) TriMas Corporation and Subsidiaries Financial Statement
Schedule appended hereto, as required for the years ended
December 31, 1994, 1993 and 1992, consists of the
following:
II. Valuation and Qualifying Accounts
(3) Exhibits.
3.i Restated Certificate of Incorporation of MascoTech, Inc. and amendments
thereto.
3.ii Bylaws of MascoTech, Inc., as amended.(3)
4.a.i Indenture dated as of November 1, 1986 between Masco Industries, Inc.
(now known as MascoTech, Inc.) and Morgan Guaranty Trust Company of New
York, as Trustee, and Directors' resolutions establishing the Company's
4 1/2% Convertible Subordinated Debentures Due 2003.(2)
4.a.ii Agreement of Appointment and Acceptance of Successor Trustee dated as of
August 4, 1994 among MascoTech, Inc., Morgan Guaranty Trust Company of
New York and The First National Bank of Chicago.(1)
4.a.iii Supplemental Indenture dated as August 5, 1994 between MascoTech, Inc.
and The First National Bank of Chicago, as trustee.(1)
43
45
4.b Credit Agreement dated as of September 2, 1993 by and among MascoTech,
Inc., the banks party thereto, NBD Bank, N.A. (now known as NBD Bank),
as Agent, and Comerica Bank, The Bank of New York, The First National
Bank of Chicago, Morgan Guaranty Trust Company of New York and
NationsBank of North Carolina, N.A., as Co-Agents(4), First Amendment
thereto dated as of June 29, 1994(1) and Second Amendment thereto dated
as of December 21, 1994.
4.c Indenture dated as of August 1, 1993 between TriMas Corporation and
Continental Bank, National Association (now known as Bank of America
Illinois), as Trustee, and Directors' resolutions establishing TriMas
Corporation's 5% Convertible Subordinated Debentures Due 2003.
4.d Credit Agreement dated February 1, 1993 among TriMas Corporation,
Certain Banks and NationsBank of North Carolina, N.A., as Agent.(5)
NOTE: Other instruments, notes or extracts from agreements defining the rights
of holders of long-term debt of MascoTech, Inc. or its subsidiaries have
not been filed since (i) in each case the total amount of long-term debt
permitted thereunder does not exceed 10% of MascoTech, Inc.'s
consolidated assets, and (ii) such instruments, notes and extracts will
be furnished by MascoTech, Inc. to the Securities and Exchange
Commission upon request.
10.a Assumption and Indemnification Agreement dated as of May 1, 1984 between
Masco Industries, Inc. (now known as MascoTech, Inc.) and Masco
Corporation.(7)
10.b Corporate Services Agreement dated as of January 1, 1987 between Masco
Industries, Inc. (now known as MascoTech, Inc.) and Masco
Corporation.(5)
10.c Corporate Opportunities Agreement dated as of May 1, 1984 between Masco
Industries, Inc. (now known as MascoTech, Inc.) and Masco
Corporation.(7)
10.d Stock Repurchase Agreement dated as of May 1, 1984 between Masco
Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation
and related forfeiture letter dated September 20, 1985, Amendment to
Stock Repurchase Agreement dated as of December 20, 1990 and Agreement
dated as of November 23, 1993 including an amendment to Stock Repurchase
Agreement.(2)
NOTE: Exhibits 10.e through 10.p constitute the management contracts and
executive compensatory plans or arrangements in which certain of the
Directors and executive officers of the Company participate.
10.e MascoTech, Inc. 1991 Long-Term Stock Incentive Plan (Restated September
14, 1993).(2)
10.f MascoTech, Inc. 1984 Restricted Stock Incentive Plan (Restated September
14, 1993).(2)
10.g MascoTech, Inc. 1984 Stock Option Plan (Restated September 14, 1993).(2)
10.h Masco Corporation 1991 Long Term Stock Incentive Plan.(6)
10.i Masco Corporation 1988 Restricted Stock Incentive Plan (Restated
September 11, 1990).(7)
10.j Masco Corporation 1988 Stock Option Plan (Restated September 11,
1990).(7)
10.k Masco Corporation 1984 Restricted Stock (Industries) Incentive Plan
(Restated September 14, 1993).
10.l Masco Corporation 1984 Stock Option Plan (Restated September 14, 1993).
10.m Masco Corporation Restricted Stock Incentive Plan (Restated September
14, 1993).
10.n MascoTech, Inc. Supplemental Executive Retirement and Disability Plan.
10.o MascoTech, Inc. Benefits Restoration Plan.
10.p Form of Agreement dated June 29, 1989 between Masco Industries, Inc.
(now known as MascoTech, Inc.) and certain of its officers.
10.q Assumption and Indemnification Agreement dated as of December 27, 1988
between Masco Industries, Inc. (now known as MascoTech, Inc.) and TriMas
Corporation.(5)
44
46
10.r Corporate Opportunities Agreement dated as of December 27, 1988 among
Masco Industries, Inc. (now known as MascoTech, Inc.), Masco Corporation
and TriMas Corporation.(5)
10.s Stock Repurchase Agreement dated as of December 27, 1988 among Masco
Industries, Inc. (now known as MascoTech, Inc.), Masco Corporation and
TriMas Corporation.(5)
10.t Registration Agreement dated as of December 27, 1988 among Masco
Industries, Inc. (now known as MascoTech, Inc.), Masco Corporation and
TriMas Corporation together with Amendment to Registration Agreement
dated as of January 5, 1993(5) and amendment dated as of May 26, 1994.
10.u Stock Purchase Agreement between Masco Corporation and Masco Industries,
Inc. (now known as MascoTech, Inc.) dated as of December 23, 1991
(regarding Masco Capital Corporation).(6)
10.v Exchange Agreement dated December 18, 1990 between Masco Industries,
Inc. (now known as MascoTech, Inc.) and Masco Corporation.(7)
10.w Amended and Restated Securities Purchase Agreement dated as of November
23, 1993 between MascoTech, Inc. and Masco Corporation, including form
of Note.(3)
10.x Registration Agreement dated as of March 31, 1993 between Masco
Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation.
11 Computation of Earnings (Loss) Per Common Share.
12 Computation of Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends.
21 List of Subsidiaries.
23.a Consent of Coopers & Lybrand L.L.P. relating to MascoTech, Inc.'s
Financial Statements and Financial Statement Schedule.
23.b Consent of Coopers & Lybrand L.L.P. relating to TriMas Corporation's
Financial Statements and Financial Statement Schedule.
27 Financial Data Schedule.
---------------
(1) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended June 30, 1994.
(2) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1993.
(3) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Current Report on Form 8-K dated November 22, 1993.
(4) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Quarterly Report on Form 10-Q for the quarter ended September 30, 1993.
(5) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1992.
(6) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1991.
(7) Incorporated by reference to the Exhibits filed with MascoTech, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1990.
(B) REPORTS ON FORM 8-K.
None
45
47
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MASCOTECH, INC.
By /s/ TIMOTHY WADHAMS
--------------------------------------
TIMOTHY WADHAMS
Vice President -- Controller and
Treasurer
March 24, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
PRINCIPAL EXECUTIVE OFFICER:
/s/ RICHARD A. MANOOGIAN Chairman of the Board
------------------------------------- and Chief Executive Officer
RICHARD A. MANOOGIAN
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER:
/s/ TIMOTHY WADHAMS Vice President -- Controller
------------------------------------- and Treasurer
TIMOTHY WADHAMS
/s/ ERWIN H. BILLIG Director
-------------------------------------
ERWIN H. BILLIG
March 24, 1995
/s/ PETER A. DOW Director
-------------------------------------
PETER A. DOW
/s/ EUGENE A. GARGARO, JR. Director
-------------------------------------
EUGENE A. GARGARO, JR.
/s/ JOHN A. MORGAN Director
-------------------------------------
JOHN A. MORGAN
/s/ RICHARD G. MOSTELLER Director
-------------------------------------
RICHARD G. MOSTELLER
46
48
MASCOTECH, INC.
FINANCIAL STATEMENT SCHEDULES
PURSUANT TO ITEM 14(A)(2) OF FORM 10-K
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
FOR THE YEAR ENDED DECEMBER 31, 1994
Schedules, as required for the years ended December 31, 1994, 1993 and 1992:
PAGE
-----
II. Valuation and Qualifying Accounts................................................. F-2
TriMas Corporation and Subsidiaries Consolidated Financial Statements and Financial
Statement Schedule.................................................................. F-3
F-1
49
MASCOTECH, INC.
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
--------------------------------- ----------- --------------------------- ---------- -------------
ADDITIONS
---------------------------
CHARGED
BALANCE AT CHARGED (CREDITED)
BEGINNING TO COSTS TO OTHER BALANCE AT
DESCRIPTION OF PERIOD AND EXPENSES ACCOUNTS DEDUCTIONS END OF PERIOD
--------------------------------- ----------- ------------ ----------- ---------- -------------
(A) (B)
Allowance for doubtful accounts,
deducted from accounts
receivable in the balance
sheet:
1994........................... $ 5,130,000 $3,480,000 $(4,310,000) $2,710,000 $ 1,590,000
=========== ========== =========== ========== ===========
1993........................... $ 7,190,000 $2,470,000 $(1,820,000) $2,710,000 $ 5,130,000
=========== ========== =========== ========== ===========
1992........................... $ 7,810,000 $3,040,000 -- $3,660,000 $ 7,190,000
=========== ========== =========== ========== ===========
NOTES:
(A) Allowance of companies reclassified for businesses held for disposition in
1994, and for discontinuance of Energy-related segment in 1993.
(B) Deductions, representing uncollectible accounts written off, less
recoveries of accounts written off in prior years.
F-2
50
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors
and Shareholders of TriMas Corporation:
We have audited the consolidated financial statements and the financial
statement schedule of TriMas Corporation and subsidiaries listed in Item
14(a)(2)(ii) of this Form 10-K. These financial statements and the financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and the
financial statement schedule 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 financial statements referred to above present fairly,
in all material respects, the consolidated financial position of TriMas
Corporation and subsidiaries as of December 31, 1994 and 1993, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1994 in conformity with generally
accepted accounting principles. In addition, in our opinion, the financial
statement schedule referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information required to be included therein.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
February 8, 1995
F-3
51
TRIMAS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------------
1994 1993 1992
------------- ------------- -------------
Net sales....................................... $ 535,480,000 $ 443,230,000 $ 388,230,000
Cost of sales................................... (361,520,000) (301,130,000) (266,110,000)
Selling, general and administrative expenses.... (82,560,000) (72,080,000) (63,500,000)
------------- ------------- -------------
Operating profit........................... 91,400,000 70,020,000 58,620,000
Interest expense:
MascoTech, Inc............................. (3,490,000)
Other...................................... (12,930,000) (9,420,000) (9,400,000)
Other income (expense), net..................... 5,030,000 3,270,000 4,070,000
------------- ------------- -------------
Income before income taxes and
extraordinary charge..................... 83,500,000 63,870,000 49,800,000
Income taxes.................................... 33,400,000 25,870,000 20,020,000
------------- ------------- -------------
Income before extraordinary charge......... 50,100,000 38,000,000 29,780,000
Extraordinary charge related to the early
extinguishment of debt, net of income taxes... (5,740,000)
------------- ------------- -------------
Net income................................. $ 50,100,000 $ 38,000,000 $ 24,040,000
============= ============= =============
Preferred stock dividends, MascoTech, Inc....... $ 5,250,000 $ 7,000,000
============= =============
Earnings available for common stock............. $ 50,100,000 $ 32,750,000 $ 17,040,000
============= ============= =============
Primary earnings per common share:
Before extraordinary charge................... $1.35 $1.05 $.87
===== ===== ====
Earnings per common share..................... $1.35 $1.05 $.65
===== ===== ====
Fully diluted earnings per common share:
Before extraordinary charge................... $1.28 $1.01 $.87
===== ===== ====
Earnings per common share..................... $1.28 $1.01 $.65
===== ===== ====
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
52
TRIMAS CORPORATION
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
----------------------------
1994 1993
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents...................................... $107,670,000 $ 69,770,000
Receivables.................................................... 64,190,000 58,710,000
Inventories.................................................... 79,560,000 76,700,000
Prepaid expenses............................................... 11,790,000 9,790,000
------------ ------------
Total current assets................................... 263,210,000 214,970,000
Property and equipment........................................... 168,380,000 162,230,000
Excess of cost over net assets of acquired companies............. 149,160,000 152,210,000
Notes receivable................................................. 9,960,000 8,160,000
Other assets..................................................... 23,610,000 26,560,000
------------ ------------
Total assets........................................... $614,320,000 $564,130,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................... $ 21,590,000 $ 20,330,000
Accrued liabilities............................................ 33,770,000 30,550,000
Current portion of long-term debt.............................. 280,000 320,000
------------ ------------
Total current liabilities.............................. 55,640,000 51,200,000
Deferred income taxes and other.................................. 29,480,000 29,190,000
Long-term debt................................................... 238,600,000 238,890,000
------------ ------------
Total liabilities...................................... 323,720,000 319,280,000
------------ ------------
Shareholders' equity:
Common stock, $.01 par value, authorized 100 million shares,
outstanding 36.6 million shares............................. 370,000 370,000
Paid-in capital................................................ 155,210,000 154,190,000
Retained earnings.............................................. 136,310,000 91,700,000
Cumulative translation adjustments............................. (1,290,000) (1,410,000)
------------ ------------
Total shareholders' equity............................. 290,600,000 244,850,000
------------ ------------
Total liabilities and shareholders' equity............. $614,320,000 $564,130,000
============ ============
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
53
TRIMAS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------
1994 1993 1992
------------ ------------- ------------
CASH FROM (USED FOR):
OPERATIONS:
Net income................................... $ 50,100,000 $ 38,000,000 $ 24,040,000
Adjustments to reconcile net income to net
cash from operations:
Extraordinary charge.................... 5,740,000
Depreciation and amortization........... 20,580,000 18,470,000 16,920,000
Deferred income taxes................... 3,210,000 500,000 1,140,000
(Increase) decrease in receivables...... (7,280,000) (4,250,000) 1,040,000
(Increase) decrease in inventories...... (2,860,000) (8,120,000) 1,470,000
Increase (decrease) in accounts payable
and accrued liabilities............... 5,110,000 3,770,000 3,470,000
Other, net.............................. (1,190,000) 1,730,000 3,980,000
------------ ------------- ------------
Net cash from operations.............. 67,670,000 50,100,000 57,800,000
------------ ------------- ------------
INVESTMENTS:
Capital expenditures......................... (24,310,000) (26,280,000) (20,480,000)
Acquisitions, net of cash acquired........... (60,280,000)
------------ ------------- ------------
Net cash from (used for)
investments........................ (24,310,000) (86,560,000) (20,480,000)
------------ ------------- ------------
FINANCING:
Long-term debt:
Issuance................................ 60,000,000
Retirement.............................. (330,000) (115,150,000) (140,000)
Issuance of convertible subordinated debt,
net........................................ 112,030,000
Issuance of common shares, net............... 85,150,000
Retirement of subordinated debt, MascoTech,
Inc., including redemption premium......... (96,970,000)
Preferred stock dividends paid to
MascoTech, Inc............................. (12,250,000) (7,000,000)
Common stock dividends paid.................. (5,130,000) (3,170,000) (720,000)
------------ ------------- ------------
Net cash from (used for) financing.... (5,460,000) 41,460,000 (19,680,000)
------------ ------------- ------------
CASH AND CASH EQUIVALENTS:
Increase (decrease) for the year................ 37,900,000 5,000,000 17,640,000
At beginning of the year........................ 69,770,000 64,770,000 47,130,000
------------ ------------- ------------
At end of the year........................... $107,670,000 $ 69,770,000 $ 64,770,000
============ ============= ============
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
54
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of TriMas
Corporation and its majority owned subsidiaries (the "Company"). All significant
intercompany transactions have been eliminated. Certain amounts in prior period
financial statements have been reclassified to conform with current year
presentation.
AFFILIATES
As of December 31, 1994, MascoTech, Inc.'s common stock ownership in the
Company approximated 41.5 percent, and Masco Corporation's common stock
ownership approximated 5.3 percent. The Company has a corporate services
agreement with Masco Corporation. Under the terms of the agreement, the Company
pays a fee to Masco Corporation for various corporate support staff,
administrative services, and research and development services. Such fee equals
.8 percent of the Company's net sales, subject to certain adjustments.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents. At December 31, 1994,
the Company had $90.5 million invested in prime commercial paper of several
United States issuers having the highest rating given by one of the two
principal rating agencies.
INVENTORIES
Inventories are stated at the lower of cost or net realizable value, with
cost determined principally by use of the first-in, first-out method.
PROPERTY AND EQUIPMENT
Property and equipment additions, including significant betterments, are
recorded at cost. Upon retirement or disposal of property and equipment, the
cost and accumulated depreciation are removed from the accounts and any gain or
loss is included in income. Maintenance and repair costs are charged to expense
as incurred.
DEPRECIATION AND AMORTIZATION
Depreciation is computed principally using the straight-line method over
the estimated useful lives of the assets. Annual depreciation rates are as
follows: buildings and land improvements, 2 1/2 to 5 percent, and machinery and
equipment, 6 2/3 to 33 1/3 percent. The excess of cost over net assets of
acquired companies is being amortized using the straight-line method over the
periods estimated to be benefited, not exceeding 40 years. At December 31, 1994
and 1993, accumulated amortization of the excess of cost over net assets of
acquired companies and other intangible assets was $26.8 million and $21.5
million, respectively. Amortization expense was $5.3 million, $4.5 million and
$4.2 million in 1994, 1993 and 1992, respectively.
As of each balance sheet date management assesses whether there has been an
impairment in the value of excess of cost over net assets of acquired companies
by comparing anticipated undiscounted future cash flows from the related
operating activities with the carrying value. The factors considered by
management in performing this assessment include current operating results,
trends and prospects, as well as the effects of obsolescence, demand,
competition and other economic factors. Based on this assessment there was no
impairment at December 31, 1994.
F-7
55
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
The Company uses the liability method of accounting for income taxes.
Deferred income taxes result from temporary differences between the tax basis of
assets and liabilities and the basis as reported in the consolidated financial
statements. The Company has not provided for taxes on $12.3 million of
undistributed earnings of foreign subsidiaries at December 31, 1994, because
such earnings are generally considered permanently reinvested.
FOREIGN CURRENCY TRANSLATION
Net assets of the Company's operations outside of the United States are
translated into U.S. dollars using current exchange rates with the effects of
translation adjustments deferred and included as a separate component of
shareholders' equity. Revenues and expenses are translated at the average rates
of exchange during the period.
EARNINGS PER COMMON SHARE
Primary earnings per common share in 1994, 1993 and 1992 were calculated on
the basis of 37.0 million, 31.1 million and 26.0 million weighted average common
and common equivalent shares outstanding. Fully diluted earnings per common
share in 1994, 1993 and 1992 were calculated on the basis of 42.1 million, 39.1
million and 33.9 million weighted average common and common equivalent shares
outstanding. Common shares outstanding and per common share amounts have been
adjusted to reflect the 100 percent stock distribution in July 1993.
In 1993 MascoTech, Inc. converted all of the $100 Convertible Participating
Preferred Stock into 7.8 million shares of Company common stock.
NOTE 2. ACQUISITIONS
During 1993 the Company acquired all of the capital stock of Lamons Metal
Gasket Co. ("Lamons") from MascoTech, Inc. for $60.3 million cash and the
assumption of certain liabilities. The acquisition was accounted for as a
purchase. The excess of cost over net assets acquired of approximately $46.6
million is being amortized on a straight-line basis over 40 years. The results
of operations of Lamons have been included in the consolidated financial
statements from the effective date of the transaction. Additional purchase price
amounts, contingent upon the achievement of specified levels of future
profitability by Lamons, may be payable to MascoTech, Inc. beginning in 1997.
These payments, if required, will be recorded as additional excess of cost over
net assets of acquired businesses.
F-8
56
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3. SUPPLEMENTAL CASH FLOWS INFORMATION
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------
1994 1993 1992
------- ------- -------
Interest paid.................................................. $12,110 $ 7,470 $13,770
======= ======= =======
Income taxes paid.............................................. $30,440 $21,540 $13,620
======= ======= =======
Significant noncash transactions:
Preferred stock dividends declared, payable to MascoTech,
Inc. in subsequent year................................... $ 7,000
=======
Common stock dividends declared, payable in subsequent
year...................................................... $ 1,460 $ 1,100 $ 720
======= ======= =======
Assumption of liabilities as partial consideration for the
assets of companies acquired.............................. $ 7,380
=======
NOTE 4. RECEIVABLES
(IN THOUSANDS)
AT DECEMBER 31,
------------------
1994 1993
------- -------
Accounts receivable....................................................... $59,400 $54,320
Current portion of notes receivable....................................... 4,790 4,390
------- -------
$64,190 $58,710
======= =======
Accounts receivable are presented net of an allowance for doubtful accounts
of $2.0 million and $1.8 million at December 31, 1994 and 1993, respectively.
Accounts receivable at December 31, 1993 included approximately $3.2 million due
from MascoTech, Inc. relating to the acquisition of Lamons Metal Gasket Co.
NOTE 5. INVENTORIES
(IN THOUSANDS)
AT DECEMBER 31,
------------------
1994 1993
------- -------
Finished goods............................................................ $44,860 $41,950
Work in process........................................................... 10,440 12,230
Raw material.............................................................. 24,260 22,520
------- -------
$79,560 $76,700
======= =======
NOTE 6. PROPERTY AND EQUIPMENT
(IN THOUSANDS)
AT DECEMBER 31,
--------------------
1994 1993
-------- --------
Cost:
Land and land improvements............................................ $ 13,500 $ 13,170
Buildings............................................................. 63,770 58,250
Machinery and equipment............................................... 194,380 183,090
-------- --------
271,650 254,510
Less accumulated depreciation........................................... 103,270 92,280
-------- --------
$168,380 $162,230
======== ========
Depreciation expense was $15.2 million, $13.9 million and $12.7 million in
1994, 1993 and 1992, respectively.
F-9
57
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7. NOTES RECEIVABLE
Notes receivable are net of an allowance for doubtful accounts of $.7
million at both December 31, 1994 and 1993, and consist principally of the
long-term portion of notes receivable arising from the sale of certain products
in the normal course of business. These notes bear various fixed interest rates
and mature through 2000. At December 31, 1994, the carrying value of these notes
receivable approximated their estimated fair value as calculated using the
interest rates in effect on that date.
NOTE 8. ACCRUED LIABILITIES
(IN THOUSANDS)
AT DECEMBER 31,
------------------
1994 1993
------- -------
Employee wages and benefits............................................... $14,720 $11,440
Interest.................................................................. 3,180 2,620
Property taxes............................................................ 2,330 2,630
Current income taxes...................................................... 1,540 2,050
Dividends................................................................. 1,460 1,100
Other..................................................................... 10,540 10,710
------- -------
$33,770 $30,550
======= =======
NOTE 9. LONG-TERM DEBT
(IN THOUSANDS)
AT DECEMBER 31,
--------------------
1994 1993
-------- --------
Borrowings from banks................................................... $122,000 $122,000
5% Convertible Subordinated Debentures Due 2003......................... 115,000 115,000
Other................................................................... 1,880 2,210
-------- --------
238,880 239,210
Less current maturities................................................. 280 320
-------- --------
$238,600 $238,890
======== ========
Borrowings from banks are owing under the Company's $350.0 million
revolving credit facility, maturing in 1998, with a group of domestic and
international banks. The facility permits the Company to borrow under several
different interest rate options. At December 31, 1994, the blended interest rate
on these borrowings equaled 6.3 percent. The facility contains certain
restrictive covenants, the most restrictive of which, at December 31, 1994,
required $211.4 million of shareholders' equity. The Company had available
credit of $228.0 million under its revolving credit facility at December 31,
1994.
The 5% Convertible Subordinated Debentures are convertible into Company
common stock at $22 5/8 per share, subject to adjustment in certain events. The
Debentures are redeemable, at a premium, at the Company's option after August 1,
1996.
In 1992 the Company retired subordinated debentures due in 1999, held by
MascoTech, Inc., and recognized a $9.0 million pre-tax extraordinary charge
($5.7 million after tax, or $.22 per common share) relative to the payment of
the redemption premium associated with the early extinguishment.
F-10
58
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10. SHAREHOLDERS' EQUITY
(IN THOUSANDS)
CUMULATIVE
PREFERRED COMMON PAID-IN RETAINED TRANSLATION
STOCK STOCK CAPITAL EARNINGS ADJUSTMENTS TOTAL
--------- ------ -------- -------- ----------- --------
Balance, January 1, 1992.............. $ 70 $100 $ 68,250 $46,900 $ 250 $115,570
Net income.......................... 24,040 24,040
Common shares issued................ 40 85,110 85,150
Common stock dividends.............. (1,440 ) (1,440)
Preferred stock dividends........... (7,000 ) (7,000)
Other............................... 380 (1,260) (880)
----- ---- -------- ------- ------- --------
Balance, December 31, 1992............ 70 140 153,740 62,500 (1,010) 215,440
Net income.......................... 38,000 38,000
Common stock distribution........... 150 (150)
Common stock dividends.............. (3,550 ) (3,550)
Preferred stock dividends........... (5,250 ) (5,250)
Preferred stock conversion.......... (70) 80 (10)
Other............................... 610 (400) 210
----- ---- -------- ------- ------- --------
Balance, December 31, 1993............ -0- 370 154,190 91,700 (1,410) 244,850
Net income.......................... 50,100 50,100
Common stock dividends.............. (5,490 ) (5,490)
Other............................... 1,020 120 1,140
----- ---- -------- ------- ------- --------
Balance, December 31, 1994............ $ -0- $370 $155,210 $136,310 $(1,290) $290,600
===== ==== ======== ======== ======= ========
During 1993 the dividends on the $100 Convertible Participating Preferred
Stock, held by MascoTech, Inc., converted from an annual to a quarterly payment
schedule. Therefore, the Company paid $12.3 million in preferred stock dividends
in 1993 representing dividends accrued through the first three quarters of 1993
and the full year 1992. In December 1993 MascoTech, Inc. converted all of the
preferred stock into 7.8 million shares of Company common stock.
On the basis of amounts paid (declared), cash dividends per common share
were $.14 ($.15) in 1994, $.11 ($.115) in 1993 and $.025 ($.05) in 1992.
NOTE 11. STOCK OPTIONS AND AWARDS
The Company has a Stock Option Plan and a Restricted Stock Incentive Plan
which permit the grant of up to a combined total of 2,000,000 shares of Company
common stock for stock options or awards to key employees of the Company and its
affiliates. Shares available for grant through these two plans were 331,826 and
419,944 at December 31, 1994 and December 31, 1993, respectively.
Stock option data are as follows (option prices are the fair market value
at the dates of grant):
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------
1994 1993 1992
------- ------- -------
Options outstanding, January 1............................... 604,000 606,000 622,000
Options cancelled............................................ 16,000
Option price per share..................................... $8 7/8
Options exercised............................................ 9,800 2,000
Option price per share..................................... $8 7/8 $8 7/8
Options outstanding, December 31............................. 594,200 604,000 606,000
Option price per share..................................... $7 1/2-$8 7/8 $7 1/2-$8 7/8 $7 1/2-$8 7/8
Exercisable, December 31..................................... 218,000 167,200 64,000
F-11
59
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11. STOCK OPTIONS AND AWARDS (CONTINUED)
Restricted long-term incentive stock awards of a net total of 1,062,174
shares had been granted as of December 31, 1994, with the related costs being
expensed over the ten year vesting period. At December 31, 1994, nonvested
incentive stock awards had an aggregate carrying value of $8.7 million.
NOTE 12. RETIREMENT PLANS
The Company has noncontributory retirement benefit plans, both defined
benefit plans and profit-sharing and other defined contribution plans, for most
of its employees. At December 31, 1994, the combined assets of the Company's
defined benefit plans exceeded the combined accumulated benefit obligation by
$4.3 million.
The annual expense for all plans was:
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER
31,
------------------------------
1994 1993 1992
------ ------ ------
Defined contribution plans..................................... $3,320 $2,300 $2,210
Defined benefit plans.......................................... 890 500 200
------ ------ ------
$4,210 $2,800 $2,410
====== ====== ======
Contributions to profit-sharing and other defined contribution plans are
generally determined as a percentage of the covered employee's annual salary.
Defined benefit plans provide retirement benefits for salaried employees
based primarily on years of service and average earnings for the five highest
consecutive years of compensation. Defined benefit plans covering hourly
employees generally provide benefits of stated amounts for each year of service.
These plans are funded based on an actuarial evaluation and review of the
assets, liabilities and requirements of each plan. Plan assets are held by a
trustee and invested principally in cash equivalents and marketable equity and
fixed income instruments.
Net periodic pension cost of defined benefit plans included the following
components:
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1994 1993 1992
------- ------- -------
Service cost................................................ $ 2,490 $ 2,030 $ 1,710
Interest cost............................................... 3,310 2,920 2,680
Actual (return)/loss on assets.............................. 1,820 (5,900) (2,920)
Net amortization and deferral............................... (6,730) 1,450 (1,270)
------- ------- -------
$ 890 $ 500 $ 200
======= ======= =======
Net amortization and deferral consists of amortization of the net asset or
overfunded position at the date of adoption and deferral and amortization of
subsequent net gains and losses caused by the actual plan and investment
experience differing from that assumed.
Weighted average rate assumptions used were as follows:
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1994 1993 1992
----- ----- -----
Discount rate................................................ 8.5% 7.0% 8.2%
Rate of increase in compensation levels...................... 5.1% 5.1% 6.0%
Expected long-term rate of return on plan assets............. 10.7% 12.5% 12.1%
F-12
60
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12. RETIREMENT PLANS (CONTINUED)
The following table sets forth the funded status of the defined benefit
plans:
(IN THOUSANDS)
AT DECEMBER 31,
--------------------------------------------------------
1994 1993
-------------------------- --------------------------
PLANS PLANS PLANS PLANS
WHERE WHERE WHERE WHERE
ASSETS ACCUMULATED ASSETS ACCUMULATED
EXCEED BENEFITS EXCEED BENEFITS
ACCUMULATED EXCEED ACCUMULATED EXCEED
BENEFITS ASSETS BENEFITS ASSETS
----------- ----------- ----------- -----------
Actuarial present value of:
Vested benefit obligation.......... $25,410 $ 6,220 $27,450 $ 6,870
======= ======= ======= =======
Accumulated benefit obligation..... $23,860 $ 9,540 $27,970 $ 7,580
======= ======= ======= =======
Projected benefit obligation....... $30,840 $10,310 $37,110 $ 7,580
Plan assets at fair value............ 30,390 7,310 35,440 5,790
------- ------- ------- -------
Projected benefit obligation (in
excess of) or less than plan
assets............................. (450) (3,000) (1,670) (1,790)
Unrecognized net (asset) or
obligation......................... (1,340) 440 (1,870) (360)
Unrecognized prior service cost...... 480 1,750 590 740
Unrecognized net (gain) or loss...... 2,910 810 4,580 1,500
------- ------- ------- -------
Prepaid pension cost or (pension
liability).................... $ 1,600 $ -0- $ 1,630 $ 90
======= ======= ======= =======
The Company provides postretirement health care and life insurance benefits
for certain eligible retired employees under unfunded plans. Some of the plans
have cost-sharing provisions. In 1992 the expense recognized for postretirement
health care and life insurance benefits was based on actual expenditures.
Effective January 1, 1993, the estimated costs of these postretirement benefits
are being accrued during the eligible employees' service periods. The Company is
amortizing the unrecognized accumulated postretirement benefit obligation
existing at January 1, 1993, over 20 years.
Net periodic postretirement benefit cost included the following components:
(IN THOUSANDS)
FOR THE
YEARS ENDED
DECEMBER 31,
--------------
1994 1993
---- ----
Service cost................................................................ $230 $210
Interest cost............................................................... 420 520
Net amortization and deferral............................................... 170 240
---- ----
$820 $970
==== ====
Rate assumptions used were as follows:
FOR THE
YEARS ENDED
DECEMBER 31,
--------------
1994 1993
----- -----
Discount rate................................................................ 8.5% 7.0%
Rate of increase in health care costs through the year 2000.................. 12.0% 12.0%
Long-term rate of increase in health care costs subsequent to the year
2000....................................................................... 7.0% 7.0%
F-13
61
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12. RETIREMENT PLANS (CONTINUED)
The following table sets forth the status of the unfunded postretirement
benefit plans:
(IN THOUSANDS)
AT DECEMBER 31,
--------------------
1994 1993
------- -------
Accumulated postretirement benefit obligation:
Retirees............................................................. $(1,920) $(2,270)
Fully eligible active plan participants.............................. (800) (920)
Other active plan participants....................................... (2,630) (3,100)
------- -------
(5,350) (6,290)
Unrecognized transition obligation..................................... 4,320 4,560
Unrecognized net (gain) or loss........................................ (1,770) (560)
------- -------
Accrued postretirement benefit obligation............................ $(2,800) $(2,290)
======= =======
A one percentage point increase each year in the assumed rate of increase
in health care costs would have increased the aggregate of the service and
interest cost components of net periodic postretirement benefit cost by
approximately $.1 million during 1994, and would have increased the accumulated
postretirement benefit obligation at December 31, 1994, by approximately $.7
million.
NOTE 13. OTHER INCOME (EXPENSE), NET
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER
31,
------------------------------
1994 1993 1992
------ ------ ------
Interest income................................................ $4,730 $3,570 $3,600
Other, net..................................................... 300 (300) 470
------ ------ ------
$5,030 $3,270 $4,070
====== ====== ======
F-14
62
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 14. BUSINESS SEGMENT INFORMATION
The Company's operations in its business segments consist principally
of the manufacture and sale of the following:
Specialty Fasteners: Cold formed fasteners and related metallurgical
processing.
Towing Systems: Vehicle hitches, jacks, winches, couplers and related
towing accessories.
Specialty Container Products: Industrial container closures,
pressurized gas cylinders and metallic and nonmetallic gaskets.
Corporate Companies: Specialty drills, cutters and specialized metal
finishing services, and flame-retardant facings and jacketings and
pressure-sensitive tapes.
Corporate assets consist primarily of cash and cash equivalents and
notes receivable.
F-15
63
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 14. BUSINESS SEGMENT INFORMATION (CONTINUED)
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------
1994 1993 1992
-------- -------- --------
NET SALES
Specialty Fasteners.............................. $138,720 $122,740 $113,020
Towing Systems................................... 163,130 139,790 122,960
Specialty Container Products..................... 163,880 118,970 94,090
Corporate Companies.............................. 69,750 61,730 58,160
-------- -------- --------
Total net sales............................... $535,480 $443,230 $388,230
======== ======== ========
OPERATING PROFIT
Specialty Fasteners.............................. $ 24,280 $ 19,250 $ 17,340
Towing Systems................................... 25,660 22,150 17,670
Specialty Container Products..................... 39,060 28,820 22,830
Corporate Companies.............................. 9,850 7,110 6,670
-------- -------- --------
Total operating profit........................ 98,850 77,330 64,510
Other income (expense), net........................ (7,900) (6,150) (8,820)
General corporate expense.......................... (7,450) (7,310) (5,890)
-------- -------- --------
Income before income taxes and extraordinary
charge...................................... $ 83,500 $ 63,870 $ 49,800
======== ======== ========
IDENTIFIABLE ASSETS AT DECEMBER 31
Specialty Fasteners.............................. $137,190 $131,110 $127,570
Towing Systems................................... 148,890 142,340 133,240
Specialty Container Products..................... 150,360 144,890 73,240
Corporate Companies.............................. 55,210 53,060 52,710
-------- -------- --------
491,650 471,400 386,760
Corporate........................................ 122,670 92,730 79,860
-------- -------- --------
Total assets.................................. $614,320 $564,130 $466,620
======== ======== ========
CAPITAL EXPENDITURES
Specialty Fasteners.............................. $ 9,140 $ 9,170 $ 3,830
Towing Systems................................... 6,720 7,930 10,240
Specialty Container Products..................... 5,420 14,870 3,480
Corporate Companies.............................. 3,000 1,320 2,900
-------- -------- --------
24,280 33,290 20,450
Corporate........................................ 30 20 30
-------- -------- --------
Total capital expenditures.................... $ 24,310 $ 33,310(A) $ 20,480
======== ======== ========
DEPRECIATION AND AMORTIZATION
Specialty Fasteners.............................. $ 6,970 $ 6,490 $ 6,230
Towing Systems................................... 5,390 5,250 4,950
Specialty Container Products..................... 5,790 4,410 3,530
Corporate Companies.............................. 2,360 2,240 2,130
-------- -------- --------
20,510 18,390 16,840
Corporate........................................ 70 80 80
-------- -------- --------
Total depreciation and amortization........... $ 20,580 $ 18,470 $ 16,920
======== ======== ========
Operations are located principally in the United States.
(A) Including $7.0 million from a business acquired.
F-16
64
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 15. INCOME TAXES
(IN THOUSANDS)
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1994 1993 1992
------- ------- -------
Income before income taxes and extraordinary charge:
Domestic................................................... $79,040 $60,630 $46,340
Foreign.................................................... 4,460 3,240 3,460
------- ------- -------
$83,500 $63,870 $49,800
======= ======= =======
Provision for income taxes:
Federal.................................................... $24,240 $20,980 $15,160
State and local............................................ 4,100 2,870 2,280
Foreign.................................................... 1,850 1,520 1,440
Deferred, principally federal.............................. 3,210 500 1,140
------- ------- -------
Income taxes on income before income taxes and
extraordinary charge.................................. 33,400 25,870 20,020
Tax (credit) related to extraordinary charge............... (3,230)
------- ------- -------
Net income taxes........................................ $33,400 $25,870 $16,790
======= ======= =======
The following is a reconciliation of the U.S. federal statutory tax rate to
the effective tax rate applicable to income before income taxes and
extraordinary charge:
FOR THE YEARS ENDED
DECEMBER 31,
---------------------------
1994 1993 1992
----- ----- -----
U.S. federal statutory tax rate............................... 35.0% 35.0% 34.0%
State and local taxes, net of federal tax benefit............. 3.2 2.9 3.0
Foreign taxes in excess of U.S. federal tax rate.............. .3 .6 .9
Nondeductible amortization of excess of cost over net assets
of acquired companies....................................... .8 1.7 2.1
Other, net.................................................... .7 .3 .2
---- ---- ----
Effective tax rate before extraordinary charge........... 40.0% 40.5% 40.2%
==== ==== ====
Items that gave rise to deferred taxes:
(IN THOUSANDS)
AT DECEMBER 31,
------------------------------------------------------------
1994 1993
---------------------------- ----------------------------
DEFERRED TAX DEFERRED TAX DEFERRED TAX DEFERRED TAX
ASSETS LIABILITIES ASSETS LIABILITIES
------------ ------------ ------------ ------------
Property and equipment.................. $ 19,620 $ 18,040
Intangible assets....................... 2,600
Inventory............................... $ 740 $ 170
Accrued liabilities..................... 920 3,260
Other................................... 4,580 4,520 4,200 3,550
------ -------- ------ --------
$6,240 $ 26,740 $7,630 $ 21,590
====== ======== ====== ========
At December 31, 1994, capital loss carryforwards, for tax purposes only,
equaled $3.3 million and expire in 1995.
F-17
65
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 16. INTERIM FINANCIAL INFORMATION (UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
QUARTERS ENDED
---------------------------------------------
DECEMBER SEPTEMBER JUNE MARCH
31ST 30TH 30TH 31ST
-------- --------- -------- --------
1994:
Net sales......................................... $120,490 $ 133,590 $146,940 $134,460
Gross profit...................................... $ 39,800 $ 43,580 $ 49,320 $ 41,260
Net income........................................ $ 11,960 $ 12,370 $ 14,940 $ 10,830
Earnings available for common stock............... $ 11,960 $ 12,370 $ 14,940 $ 10,830
Primary earnings per common share................. $.32 $.33 $.40 $.29
Fully diluted earnings per common share........... $.31 $.32 $.38 $.28
Weighted average common and common equivalent
shares outstanding:
Primary...................................... 37,001 37,022 37,038 37,040
Fully diluted................................ 42,084 42,104 42,120 42,123
1993:
Net sales......................................... $108,000 $ 109,710 $118,600 $106,920
Gross profit...................................... $ 36,070 $ 35,020 $ 38,240 $ 32,770
Net income........................................ $ 8,480 $ 9,450 $ 11,650 $ 8,420
Earnings available for common stock............... $ 8,480 $ 7,700 $ 9,900 $ 6,670
Primary earnings per common share................. $.23 $.26 $.34 $.23
Fully diluted earnings per common share........... $.22 $.25 $.32 $.23
Weighted average common and common equivalent
shares outstanding:
Primary...................................... 37,004 29,189 29,171 29,131
Fully diluted................................ 42,120 40,016 36,974 36,926
F-18
66
TRIMAS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONCLUDED)
NOTE 16. INTERIM FINANCIAL INFORMATION (UNAUDITED) (CONTINUED)
Earnings per common share in the fourth quarter of 1994 and 1993 were
improved by $.06 and $.04, net, respectively, resulting from various year-end
adjustments to accrual estimates recorded earlier in each year.
Quarterly earnings per common share amounts for both 1994 and 1993 do not
total to the full year amounts due to rounding in 1994 and to the change in the
number of common shares outstanding occurring during 1993.
QUARTERLY COMMON STOCK PRICE AND DIVIDEND INFORMATION:
MARKET PRICE
1994 -------------- DIVIDENDS
QUARTER HIGH LOW DECLARED
---------------------------------------------- ----- ----- ---------
Fourth........................................ $23 5/8 $18 3/8 $ .04
Third......................................... 24 7/8 21 1/2 .04
Second........................................ 27 1/8 21 5/8 .04
First......................................... 28 1/2 22 3/4 .03
MARKET PRICE
1993 -------------- DIVIDENDS
QUARTER HIGH LOW DECLARED
---------------------------------------------- ----- ----- ---------
Fourth........................................ $24 5/8 $18 1/4 $ .03
Third......................................... 20 17 .03
Second........................................ 18 3/4 15 5/8 .03
First......................................... 16 1/2 14 1/4 .025
F-19
67
TRIMAS CORPORATION
FINANCIAL STATEMENT SCHEDULE
PURSUANT TO ITEM 14(A)(2)(II)(B) OF FORM 10-K
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
Schedule, as required, for the years ended December 31, 1994, 1993 and 1992:
PAGES
-----
II. Valuation and Qualifying Accounts................................................ F-21
F-20
68
TRIMAS CORPORATION
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------------------------------- ---------- -------------------------- ---------- ----------
ADDITIONS
--------------------------
CHARGED CHARGED
BALANCE AT (CREDITED) (CREDITED) BALANCE
BEGINNING TO COST TO OTHER AT END
DESCRIPTION OF PERIOD AND EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD
-------------------------------- ---------- ------------ ---------- ---------- ----------
(A) (B)
Allowance for doubtful accounts,
deducted from accounts
receivable in the balance
sheet:
1994....................... $1,800,000 $620,000 $ -- $380,000 $2,040,000
========== ======== ========= ======== ==========
1993....................... $1,430,000 $800,000 $ 160,000 $590,000 $1,800,000
========== ======== ========= ======== ==========
1992....................... $1,750,000 $440,000 $(310,000) $450,000 $1,430,000
========== ======== ========= ======== ==========
Allowance for doubtful accounts,
deducted from notes receivable
in the balance sheet:
1994....................... $ 650,000 $ -- $ -- $ -- $ 650,000
========== ======== ========= ======== ==========
1993....................... $ 650,000 $ -- $ -- $ -- $ 650,000
========== ======== ========= ======== ==========
1992....................... $ 650,000 $ -- $ -- $ -- $ 650,000
========== ======== ========= ======== ==========
Notes:
(A) Allowance of companies acquired, and other adjustments, net.
(B) Doubtful accounts charged off, less recoveries.
F-21
69
EXHIBIT INDEX
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
------ ------------------------------------------------------------------------ ----------
3.i Restated Certificate of Incorporation of MascoTech, Inc. and amendments
thereto.
4.b Second Amendment dated as of December 21, 1994 to Credit Agreement dated
as of September 2, 1993 by and among MascoTech, Inc., the banks party
thereto, NBD Bank, N.A. (now known as NBD Bank), as Agent, and Comerica
Bank, The Bank of New York, The First National Bank of Chicago, Morgan
Guaranty Trust Company of New York and NationsBank of North Carolina,
N.A., as Co-Agents.
4.c Indenture dated as of August 1, 1993 between TriMas Corporation and
Continental Bank, National Association (now known as Bank of America
Illinois), as Trustee, and Directors' resolutions establishing TriMas
Corporation's 5% Convertible Subordinated Debentures Due 2003.
10.k Masco Corporation 1984 Restricted Stock (Industries) Incentive Plan
(Restated September 14, 1993).
10.l Masco Corporation 1984 Stock Option Plan (Restated September 14, 1993).
10.m Masco Corporation Restricted Stock Incentive Plan (Restated September
14, 1993).
10.n MascoTech, Inc. Supplemental Executive Retirement and Disability Plan.
10.o MascoTech, Inc. Benefits Restoration Plan.
10.p Form of Agreement dated June 29, 1989 between Masco Industries, Inc.
(now known as MascoTech, Inc.) and certain of its officers.
10.t Amendment dated as of May 26, 1994 to Registration Agreement dated as of
December 27, 1988 among Masco Industries, Inc.(now known as MascoTech,
Inc.), Masco Corporation and TriMas Corporation as amended.
10.x Registration Agreement dated as of March 31, 1993 between Masco
Industries, Inc. (now known as MascoTech, Inc.) and Masco Corporation.
11 Computation of Earnings (Loss) Per Common Share.
12 Computation of Ratio of Earnings to Combined Fixed Charges and Preferred
Stock Dividends.
21 List of Subsidiaries.
23.a Consent of Coopers & Lybrand L.L.P. relating to MascoTech, Inc.'s
Financial Statements and Financial Statement Schedule.
23.b Consent of Coopers & Lybrand L.L.P. relating to TriMas Corporation's
Financial Statements and Financial Statement Schedule.
27 Financial Data Schedule.
EX-3.I
2
RESTATED CERTIFICATE OF INCORPORATION
OF
MASCO INDUSTRIES, INC.
* * * * *
MASCO INDUSTRIES, INC., a corporation organized and existing under the
Laws of the State of Delaware (the "Company"), hereby certifies as follows:
FIRST: The name of the Company is MASCO INDUSTRIES, INC. The date of
filing its original Certificate of Incorporation with the Secretary of State was
March 15, 1984.
SECOND: This Restated Certificate of Incorporation only restates and
integrates and does not further amend the provisions of the Certificate of
Incorporation of this corporation as heretofore amended or supplemented and
there is no discrepancy between those provisions and the provisions of this
Restated Certificate of Incorporation.
THIRD: The text of the Certificate of Incorporation as amended or
supplemented heretofore is hereby restated without further amendments or changes
to read as herein set forth in full:
1. The name of the corporation is:
MASCO INDUSTRIES, INC.
2. The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
3. The nature of the business or purpose to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
4. The total number of shares of stock the corporation shall have
authority to issue is two hundred seventy-five million (275,000,000) shares.
Two hundred fifty million (250,000,000) of such shares shall consist of
common shares, par value one dollar ($1.00) per share, and twenty-five million
(25,000,000) of such shares shall consist of preferred shares, par value one
dollar ($1.00) per share.
The designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions thereof are as follows:
A. Each share of common stock shall be equal in all respects to all
other shares of such stock, and each share of outstanding common stock is
entitled to one vote.
B. Each share of preferred stock shall have or not have voting
rights as determined by the Board of Directors prior to issuance.
Dividends on all outstanding shares of preferred stock must be
declared and paid, or set aside for payment, before any dividends can be
declared and paid, or set aside for payment, on the shares of common stock
with respect to the same dividend period.
In the event of any liquidation, dissolution or winding up of the
affairs of the Company, whether voluntary or involuntary, the holders of
the preferred stock shall be entitled, before any assets of the Company
shall be distributed among or paid over to the holders of the common
stock, to an amount per share to be determined before issuance by the
Board of Directors, together with a sum of money equivalent to the amount
of any dividends declared thereon and remaining unpaid at the date of such
liquidation, dissolution or winding up of the Company. After the making
of such payments to the holders of the preferred stock, the remaining
assets of the Company shall be distributed among the holders of the common
stock alone, according to the number of shares held by each. If, upon
such liquidation, dissolution or winding up, the assets of the Company
distributable as aforesaid among the holders of the preferred stock shall
be insufficient to permit the payment to them of said amount, the entire
assets shall be distributed ratably among the holders of the preferred
stock.
The Board of Directors shall have authority to divide the shares of
preferred stock into series and fix, from time to time before issuance,
the number of shares to be included in any series and the designation,
relative rights, preferences and limitations of all shares of such series.
The authority of the Board of Directors with respect to each series shall
include the determination of any or all of the following, and the shares
of each series may vary from the shares of any other in the following
respects: (a) the number of shares
2
constituting such series and the designation thereof to distinguish the
shares of such series from the shares of all other series; (b) the rate of
dividend, cumulative or noncumulative, and the extent of further
participation in dividend distribution, if any; (c) the prices at which
issued (at not less than par) and the terms and conditions upon which the
shares may be redeemable by the Company; (d) sinking fund provisions for
the redemption or purchase of shares; (e) the voting rights; and (f) the
terms and conditions upon which the shares are convertible into other
classes of stock of the Company, if such shares are to be convertible.
C. No holder of any class of stock issued by this Company shall be
entitled to pre-emptive rights.
D. The number of authorized shares of each class of stock may be
increased or decreased (but not below the number of shares thereof then
outstanding) by the affirmative vote of the holders of a majority of the
stock of the Company entitled to vote, voting together as a single class.
5. (a) The business and affairs of the Company shall be managed by or
under the direction of a Board of Directors consisting of not less than five nor
more than twelve directors, the exact number of directors to be determined from
time to time by resolution adopted by affirmative vote of a majority of the
entire Board of Directors. The directors shall be divided into three classes,
designated Class I, Class II and Class III. Each class shall consist, as nearly
as may be possible, of one-third of the total number of directors constituting
the entire Board of Directors. At the 1988 Annual Meeting of stockholders,
Class I directors shall be elected for a one-year term, Class II directors for a
two-year term and Class III directors for a three-year term. At each succeeding
Annual Meeting of stockholders beginning in 1989, successors to the class of
directors whose term expires at that annual meeting shall be elected for a
three-year term. If the number of directors is changed, any increase or
decrease shall be apportioned among the classes so as to maintain the number of
directors in each class as nearly equal as possible, and any additional director
of any class elected to fill a vacancy resulting from an increase in such class
shall hold office for a term that shall coincide with the remaining term of that
class, but in no case will a decrease in the number of directors shorten the
term of any incumbent director. A director shall hold office until the annual
meeting for the year in which his term expires and until his successor shall be
elected and shall qualify, subject, however, to prior death, resignation,
retirement or removal from office. Except as otherwise required by law, any
vacancy on the Board of Directors that results from an increase in the number of
directors shall be filled only by a majority of the Board of Directors then in
office, provided that a quorum is present, and any other vacancy occurring in
the Board of Directors shall be filled only by a
3
majority of the directors then in office, even if less than a quorum, or by a
sole remaining director. Any director elected to fill a vacancy not resulting
from an increase in the number of directors shall serve for the remaining term
of his predecessor.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of preferred stock or any other class of stock issued by the
Company shall have the right, voting separately by class or series, to elect
directors at an annual or special meeting of stockholders, the election, term of
office, filling of vacancies and other features of such directorships shall be
governed by the terms of the Certificate of Designation with respect to such
stock, such directors so elected shall not be divided into classes pursuant to
this Article 5, and the number of such directors shall not be counted in
determining the maximum number of directors permitted under the foregoing
provisions of this Article 5, in each case unless expressly provided by such
terms.
(b) Nominations for the election of directors may be made by the Board of
Directors or by any stockholder entitled to vote in the election of directors.
Any stockholder entitled to vote in the election of directors, however, may
nominate one or more persons for election as director only if written notice of
such stock- holder's intent to make such nomination or nominations has been
given either by personal delivery or by United States mail, postage prepaid, to
the Secretary of the Company not later than (i) with respect to an election to
be held at an Annual Meeting of stock- holders, 45 days in advance of the date
on which the Company's proxy statement was released to stockholders in
connection with the previous year's Annual Meeting of stockholders and (ii) with
respect to an election to be held at a special meeting of stock- holders for the
election of directors, the close of business on the seventh day following the
day on which notice of such meeting is first given to stockholders. Each such
notice shall include: (A) the name and address of the stockholder who intends
to make the nomination or nominations and of the person or persons to be
nominated; (B) a representation that the stockholder is a holder of record of
stock of the Company entitled to vote at such meeting and intends to appear in
person or by proxy at the meeting to nominate the person or persons specified in
the notice; (C) a description of all arrangements or understanding between such
stockholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations is or are to be made
by the stockholder; (D) such other information regarding each nominee proposed
by such stockholder as would have been required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission if the nominee had been nominated by the Board of Directors; and (E)
the written consent of each nominee to serve as a director of the Company if
elected. The chairman of any
4
meeting of stockholders may refuse to acknowledge the nomination of any person
if not made in compliance with the foregoing procedure.
(c) Notwithstanding any other provision of this Certificate of
Incorporation or the by-laws (and notwithstanding the fact that a lesser
percentage may be specified by law, this Certificate of Incorporation or the by-
laws), and in addition to any affirmative vote required by law, the affirmative
vote of the holders of at least 80% of the voting power of the outstanding
capital stock of the Company entitled to vote, voting together as a single
class, shall be required to amend, adopt in this Certificate of Incorporation or
in the by-laws any provision inconsistent with, or repeal this Article 5.
6. Any action required or permitted to be taken by the stockholders of
the Company must be effected at a duly called annual or special meeting of such
holders and may not be effected by any consent in writing by any such holders.
Except as otherwise required by law, special meetings of stockholders of the
Company may be called only by the Chairman of the Board, the President or a
majority of the Board of Directors, subject to the rights of holders of any one
or more classes or series of preferred stock or any other class of stock issued
by the Company which shall have the right, voting separately by class or series,
to elect directors. Notwithstanding any other provision of this Certificate of
Incorporation or the by-laws (and notwithstanding that a lesser percentage may
be specified by law, this Certificate of Incorporation or the by-laws), and in
addition to any affirmative vote required by law, the affirmative vote of the
holders of at least 80% of the voting power of the outstanding capital stock of
the Company entitled to vote, voting together as single class, shall be required
to amend, adopt in this Certificate of Incorporation or in the by-laws any
provision inconsistent with, or repeal this Article 6.
7. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized:
To make, alter or repeal the by-laws of the Company.
To authorize and cause to be executed mortgages and liens upon the real
and personal property of the Company.
To set apart out of any of the funds of the Company available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
When and as authorized by the affirmative vote of the holders of a
majority of the stock issued and outstanding having voting power given at a
stockholders' meeting duly called for that purpose, to sell, lease or exchange
all of the property and assets
5
of the Company, including its good will and its corporate franchises, upon such
terms and conditions and for such consideration, which may be in whole or in
part shares of stock in, and/or other securities of, any other corporation or
corporations, as its Board of Directors shall deem expedient and for the best
interests of the Company.
8. The private property of the stockholders shall not be subject to the
payment of corporate debts to any extent whatever.
9. Whenever a compromise or arrangement is proposed between the Company
and its creditors or any class of them and/or between the Company and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of the Company or
of any creditor or stockholder thereof, or on the application of any receiver or
receivers appointed for the Company under the provisions of Section 279 of Title
8 of the Delaware Code, order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the Company, as the case
may be, to be summoned in such manner as the said court directs. If a majority
in number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of the Company,
as the case may be, agree to any compromise or arrangement and to any
reorganization of the Company as consequence of such compromise or arrangement,
the said compromise or arrangement and the said reorganization shall, if
sanctioned by the court to which the said application has been made, be binding
on all the creditors or class of creditors, and/or on all the stockholders or
class of stockholders, of the Company, as the case may be, and also on the
Company.
10. Meetings of stockholders may be held outside the State of Delaware,
if the bylaws so provide. The books of the Company may be kept (subject to any
provision contained in the statutes) outside the State of Delaware at such place
or places as may be designated from time to time by the Board of Directors or in
the bylaws of the Company. Elections of Directors need not be by ballot unless
the bylaws of the Company shall so provide.
11. The Company reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
12. A. The affirmative vote of the holders of 95% of all shares of
stock of the Company entitled to vote in elections of directors, considered for
the purposes of this Article 12 as one class, shall be required for the adoption
or authorization of a business combination (as hereinafter defined) with any
other entity (as hereinafter defined) if, as of the record date for the
6
determination of stockholders entitled to notice thereof and to vote thereon,
such other entity is the beneficial owner, directly or indirectly, of 30% or
more of the outstanding shares of stock of the Company entitled to vote in
elections of directors considered for the purposes of this Article 12 as one
class; provided that such 95% voting requirement shall not be applicable if:
(a) The cash, or fair market value of other consideration, to be
received per share by common stockholders of the Company in such business
combination bears the same or a greater percentage relationship to the
market price of the Company's common stock immediately prior to the
announcement of such business combination as the highest per share price
(including brokerage commissions and soliciting dealers' fees) which such
other entity has theretofore paid for any of the shares of the Company's
common stock already owned by it bears to the market price of the common
stock of the Company immediately prior to the commencement of acquisition
of the Company's common stock by such other entity;
(b) The cash, or fair market value of other consideration, to be
received per share by common stockholders of the Company in such business
combination: (i) is not less than the highest per share price (including
brokerage commissions and soliciting dealers' fees) paid by such other
entity in acquiring any of its holdings of the Company's common stock, and
(ii) is not less than the earnings per share of common stock of the
Company for the four full consecutive fiscal quarters immediately
preceding the record date for solicitation of votes on such business
combination, multiplied by the then price/earnings multiple (if any) of
such other entity as customarily computed and reported in the financial
community;
(c) After such other entity has acquired a 30% interest and prior
to the consummation of such business combination: (i) such other entity
shall have taken steps to ensure that the Company's Board of Directors
included at all times representation by continuing director(s) (as
hereinafter defined) proportionate to the stockholdings of the Company's
public common stockholders not affiliated with such other entity (with a
continuing director to occupy any resulting fractional board position);
(ii) there shall have been no reduction in the rate of dividends payable
on the Company's common stock except as necessary to insure that a
quarterly dividend payment does not exceed 5% of the net income of the
Company for the four full consecutive fiscal quarters immediately
preceding the declaration date of such dividend, or except as may have
been approved by a unanimous vote of the directors; (iii) such other
entity shall not have acquired any newly issued shares of stock, directly
or indirectly, from the Company (except upon conversion of convertible
securities
7
acquired by it prior to obtaining a 30% interest or as a result of a pro
rata stock dividend or stock split); and (iv) such other entity shall not
have acquired any additional shares of the Company's outstanding common
stock or securities convertible into common stock except as a part of the
transaction which results in such other entity acquiring its 30% interest;
(d) Such other entity shall not have (i) received the benefit,
directly or indirectly (except proportionately as a stockholder) of any
loans, advances, guarantees, pledges or other financial assistance or tax
credits of or provided by the Company, or (ii) made any major change in
the Company's business or equity capital structure without the unanimous
approval of the directors, in either case prior to the consummation of
such business combination; and
(e) A proxy statement responsive to the requirements of the United
States securities laws shall be mailed to all common stockholders of the
Company for the purpose of soliciting stockholder approval of such
business combination and shall contain on its first page thereof, in a
prominent place, any recommendations as to the advisability (or
inadvisability) of the business combination which the continuing
directors, or any of them, may choose to state and, if deemed advisable by
a majority of the continuing directors, an opinion of a reputable
investment banking firm as to the fairness (or not) of the terms of such
business combination, from the point of view of the remaining public
stockholders of the Company (such investment banking firm to be selected
by a majority of the continuing directors and to be paid a reasonable fee
for their services by the Company upon receipt of such opinion).
The provisions of this Article 12 shall also apply to a business
combination with any other entity which at any time has been the beneficial
owner, directly or indirectly, of 30% or more the outstanding shares of stock of
the Company entitled to vote in elections of directors considered for the
purposes of this Article 12 as one class, notwithstanding the fact that such
other entity has reduced its shareholdings below 30% if, as of the record date
for the determination of stockholders entitled to notice of and to vote on the
business combination, such other entity is an "affiliate" of the Company (as
hereinafter defined).
B. As used in this Article 12, (a) the term "other entity" shall
include any corporation, person or other entity and any other entity with which
it or its "affiliate" or "associate" (as defined below) has any agreement,
arrangement or understanding, directly or indirectly, for the purpose of
acquiring, holding, voting or disposing of stock of the Company, or which is its
"affiliate" or "associate" as those terms are defined in Rule 12b-2 of the
General
8
Rules and Regulations under the Securities Exchange Act of 1934 as in effect on
March 31, 1984, together with the successors and assigns of such persons in any
transaction or series of transactions not involving a public offering of the
Company's stock within the meaning of the Securities Act of 1933; provided,
however, that an "other entity" shall not in any event include any entity owning
30% or more of the outstanding shares of stock of the Company entitled to vote
in the elections of directors considered for purposes of this Article 12 as one
class at the time of the adoption of this Article 12, any subsidiary of such
entity, or any corporation succeeding to the business of such entity if (i) such
business as conducted immediately prior to such succession is, immediately after
such succession, the sole business of such successor, and (ii) the stockholders
of the corporation conducting such business immediately prior to such succession
are, immediately after such succession, the sole stockholders of the successor
corporation or of a corporation owning all of the capital stock of such succes-
sor corporation; (b) an other entity shall be deemed to be the beneficial owner
of any shares of stock of the Company which the other entity (as defined above)
has the right to acquire pursuant to any agreement, arrangement or understanding
or upon exercise of conversion rights, warrants or options, or otherwise; (c)
the outstanding shares of any class of stock of the Company shall include shares
deemed owned through application of clause; (b) above but shall not include any
other shares which may be issuable pursuant to any agreement, or upon exercise
of conversion rights, warrants or options, or otherwise; (d) the term "business
combination" shall include any merger or consolidation of the Company with or
into any other entity, or the sale or lease of all or any substantial part of
the assets of the Company to, or any sale or lease to the Company or any
subsidiary thereof in exchange for securities of the Company of any assets
(except assets having an aggregate fair market value of less than $5,000,000)
of, any other entity; (e) the term "continuing director" shall mean a person who
was a member of the Board of Directors of the Company elected by stockholders
prior to the time that such other entity acquired in excess of 10% of the stock
of the Company entitled to vote in the election of directors, or a person
recommended to succeed a continuing director by a majority of continuing direc-
tors; and (f) for the purposes of subparagraphs A(a) and (b) of this Article 12
the term "other consideration to be received" shall mean, in addition to other
consideration received, if any, capital stock of the Company retained by its
existing public stockholders in the event of a business combination with such
other entity in which the Company is the surviving corporation; and (g) the
exclusion of an entity from constituting an "other entity" under subparagraph
B(a) of this Article 12 shall only continue to be effective if such entity does
not thereafter decrease such ownership percentage to less than 30% (other than
through the Company's issuance of its capital stock) and subsequently reacquire
such a 30% interest and provided that, upon any such decrease and subsequent
reacquisition, such entity shall be deemed for purposes
9
of this Article 12 to have first become an "other entity" and to first have
acquired capital stock of the Company on the date of such reacquisition.
C. A majority of the continuing directors shall have the power and duty
to determine for the purposes of this Article 12 on the basis of information
known to them whether (a) such other entity beneficially owns 30% or more of the
outstanding shares of stock of the Company entitled to vote in elections of
directors; (b) an other entity is an "affiliate" or "associate" (as defined
above) of another; (c) an other entity has an agreement, arrangement or under-
standing with another; or (d) the assets being acquired by the Company, or any
subsidiary thereof, have an aggregate fair market value of less than $5,000,000.
D. No amendment to the Certificate of Incorporation of the Company
shall amend or repeal any of the provisions of this Article 12, unless the
amendment effecting such amendment or repeal shall receive the affirmative vote
of the holders of 95% of all shares of stock of the corporation entitled to vote
in elections of directors, considered for the purposes of this Article 12 as one
class; provided that this paragraph D shall not apply to, and such 95% vote
shall not be required for, any amendment or repeal unanimously recommended to
the stockholders by the Board of Directors of the Company if all of such
directors are persons who would be eligible to serve as "continuing directors"
within the meaning of paragraph B of this Article 12.
E. Nothing contained in this Article 12 shall be construed to relieve
any other entity from any fiduciary obligation imposed by law.
13. A director of the Company shall not be personally liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty as
a director, except for liability (a) for any breach of the director's duty of
loyalty to the Company or its stockholders, (b) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (c) under Section 174 of the Delaware General Corporation Law, or (d) for
any transaction from which the director derived an improper personal benefit.
If the Delaware General Corporation Law hereafter is amended to authorize the
further limitation or elimination of the liability of directors, then the
liability of a director of the Company, in addition to the limitation on
liability provided herein, shall be limited to the fullest extent permitted by
the Delaware General Corporation Law, as amended. Any repeal or modification of
this Article 13 shall not increase the liability of any director of the Company
for any act or occurrence taking place prior to such repeal or modification, or
otherwise adversely affect any right or protection of a director of the Company
existing at the time of such repeal or modification.
10
14. A. Each person who was or is made a party or is threatened to be
made a party to or is otherwise involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is or was a director, officer or employee of the Company,
whether the basis of such proceeding is alleged action in an official capacity
as a director, officer or employee or in any other capacity while serving as a
director, officer, or employee, shall be indemnified and held harmless by the
Company to the fullest extent permitted by the Delaware General Corporation Law,
as the same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Company to provide
broader indemnification rights than such law permitted the company to provide
prior to such amendment), against all expense, liability and loss (including,
without limitation, attorneys' fees, judgments, fines and amounts paid in
settlement) reasonably incurred or suffered by such person in connection
therewith, and such indemnification shall continue as to a person who has ceased
to be a director, officer or employee and shall inure to the benefit of such
person's heirs, executors and administrators. The Company shall indemnify a
director, officer or employee in connection with an action, suit or proceeding
(other than an action, suit or proceeding to enforce indemnification rights
provided for herein or elsewhere) initiated by such Director, officer or
employee only if such action, suit or proceeding was authorized by the Board of
Directors. The right to indemnification conferred in this Paragraph A shall be
a contract right and shall include the right to be paid by the Company the
expenses incurred in defending any action, suit or proceeding in advance of its
final disposition; provided, however, that, if the Delaware General Corporation
Law requires, the payment of such expenses incurred by a director or officer in
such person's capacity as a director or officer (and not in any other capacity
in which service was or is rendered by such person) in advance of the final
disposition of an action, suit or proceeding shall be made only upon delivery to
the Company of an undertaking, by or on behalf of such director or officer, to
repay all amounts so advanced if it shall ultimately be determined by final
judicial decision from which there is no further right to appeal that such
director or officer is not entitled to be indemnified for such expenses under
this Article 14 or otherwise.
B. The Company may, to the extent authorized from time to time by the
Board of Directors, provide indemnification and the advancement of expenses, to
any agent of the Company and to any person who is or was serving at the request
of the Company as a director, officer, employee or agent of another corporation
or of a partnership, joint venture, trust or other enterprise, to such extent
and to such effect as the Board of Directors shall determine to be appropriate
and permitted by applicable law, as the same exists or may hereafter be amended.
11
C. The rights to indemnification and to the advancement of expenses
conferred in this Article 14 shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation or bylaws of the Company, agreement, vote of
stockholders or disinterested directors or otherwise.
FOURTH: This Restated Certificate of Incorporation was duly adopted by
the Board of Directors in accordance with Section 245 of the General Corporation
Law of Delaware.
IN WITNESS WHEREOF, said MASCO INDUSTRIES, INC. has caused its
corporate seal to be affixed and this Certificate to be signed by Richard A.
Manoogian, its Chairman of the Board, and attested by Timothy Wadhams, its
Assistant Secretary, this 31st day of May, 1988.
MASCO INDUSTRIES, INC.
BY/s/ Richard A. Manoogian
Richard A. Manoogian
Chairman of the Board
ATTEST:
/s/ Timothy Wadhams
Timothy Wadhams
Assistant Secretary
STATE OF MICHIGAN )
)
COUNTY OF WAYNE )
I, , a notary public, do hereby certify that on this
day of May, 1988, personally appeared before me Richard A. Manoogian, who,
being by me first duly sworn, declared that he is the Chairman of the Board that
he signed the foregoing document as the act and deed of said corporation, and
that the statements therein contained are true.
/s/ Terry Lynn Przybylo
Notary Public
Wayne County, Michigan
My commission expires _______
12
MASCO INDUSTRIES, INC.
CERTIFICATE OF THE POWERS, DESIGNATIONS,
PREFERENCES AND RIGHTS OF THE
12% EXCHANGEABLE PREFERRED STOCK
PAR VALUE $1.00 PER SHARE
LIQUIDATION VALUE $100 PER SHARE
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned, the Chairman of the Board of Directors of Masco Indus-
tries, Inc., a Delaware corporation (the "Company"), DOES HEREBY CERTIFY that
the following resolutions have been duly adopted by the Board of Directors of
the Company:
RESOLVED, that pursuant to the authority expressly granted to and vested
in the Board of Directors of the Company by the provisions of the Restated
Certificate of Incorporation of the Company, this Board of Directors hereby
authorizes the issuance of a series (this "Series") of the Preferred Stock of
the Company (the "Preferred Stock") which shall consist of 775,000 shares, and
this Board of Directors hereby fixes the powers, designations, preferences and
relative, participating, optional or other special rights, and the qualifica-
tions, limitations or restrictions thereof, of the shares of this Series (in
addition to the powers, designations, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations or
restrictions thereof, set forth in the Restated Certificate of Incorporation of
the Company which are applicable to the Preferred Stock) as follows:
(i) Designation. The designation of this Series shall be 12% Exchange-
able Preferred Stock. The number of shares of this Series shall be 775,000.
The liquidation value of shares of this Series shall be $100 per share.
(ii) Dividends. (a) The dividend rate on shares of this Series shall be
$12.00 per share per annum. Dividends on shares of this Series shall be fully
cumulative and shall accrue, without interest, from the date of issuance of such
shares, and shall be payable, when and as declared by the Board of Directors out
of funds legally available therefor, in arrears on April 1, 1991 and quarterly
in arrears thereafter on July 1, October 1, January 1 and April 1 of each year.
Holders of shares of this Series shall be entitled to receive such dividends in
preference to and in priority over dividends upon the Common Shares (hereinafter
defined) and all Junior Shares (hereinafter defined), but subject to the rights
of holders of Preference Shares (hereinafter defined) having a preference and a
priority over the payment of dividends on the
1
shares of this Series. Shares of this Series shall be on a parity as to
dividends with all Parity Shares (hereinafter defined). The holders of shares
of this Series shall not be entitled to any dividends other than the dividends
provided in this Clause (ii).
(b) If at any time the Company has failed to pay accrued dividends
on any shares of this Series or any Parity Shares at the time outstanding at the
times such dividends are payable, the Company shall not
(1) declare or pay any dividend on the Common Shares or on any
Junior Shares or make any payment on account of, or set apart money for a
sinking or other analogous fund for, the purchase, redemption or other
retirement of, any Common Shares or any Junior Shares or make any distri-
bution in respect thereof, either directly or indirectly and whether in
cash or property or in obligations or shares of the Company (other than in
Common Shares or Junior Shares),
(2) purchase any shares of this Series or Parity Shares (except for
a consideration payable in Common Shares or Junior Shares) or redeem fewer
than all of the shares of this Series and all of the Parity Shares then
outstanding, or
(3) permit any corporation or other entity directly or indirectly
controlled by the Company to purchase any Common Shares, Junior Shares,
shares of this Series or Parity Shares,
unless, in the case of any such dividend, payment, setting apart, distribution,
purchase, redemption or other retirement, all dividends accrued and payable but
unpaid on shares of this Series and all Parity Shares have been or contemporane-
ously are declared and paid in full or declared and a sum sufficient for the
payment thereof set aside for such payment. Unless and until all dividends
accrued and payable but unpaid on shares of this Series and all Parity Shares at
the time outstanding have been paid in full, all dividends declared by the
Company upon shares of this Series or Parity Shares shall be declared pro rate
with respect to all shares of this Series and all Parity Shares then outstand-
ing, so that the amounts of any dividends declared on shares of this Series and
such Parity Shares shall in all cases bear to each other the same ratio that, at
the time of such declaration, all accrued and payable but unpaid dividends on
shares of this Series and such Parity Shares, respectively, bear to each other.
(iii) Optional Redemptions for Cash. Subject to the restrictions in
Clause (ii) above, shares of this Series shall be redeemable at the option of
the Company in whole or from time to time in part, on any April 1, July 1,
October 1 or January 1, commencing April 1, 1991 in cash at $100 per share, plus
an amount equal to the dividends accrued and unpaid thereon to the redemption
date.
2
Not less than 30 nor more than 60 days prior to the date fixed for any
redemption of shares of this Series pursuant to this Clause (iii), a notice
shall be given by first class mail, postage prepaid, to the holders of record of
the shares of this Series to be redeemed at their respective addresses as the
same shall appear on the books of the Company, specifying the certificate
numbers of such shares, the effective date of the redemption and the place where
certificates for shares of this Series are to be surrendered for redemption and
stating that dividends on such shares of this Series will cease to accrue on and
after the redemption date, but neither failure to mail such notice, nor any
defect therein or in the mailing thereof, to any particular holder shall affect
the sufficiency of the notice or the validity of the proceedings for redemption
with respect to the other holders. Any notice which was mailed in the manner
herein provided shall be conclusively presumed to have been duly given whether
or not the holder receives the notice.
If notice of redemption has been given pursuant to this Clause (iii) and
if, on or before the date fixed for redemption, the funds necessary for such
redemption shall have been set aside by the Company, separate and apart from its
other funds, in trust for the pro rata benefit of the holders of the shares so
called for redemption, then on and after the redemption date, notwithstanding
that any certificates for such shares have not been surrendered for cancella-
tion, dividends shall cease to accrue on the shares of this Series to be
redeemed and the holders of such shares shall cease to be stockholders with
respect to such shares and shall have no interest in or claims against the
Company by virtue thereof and shall have no voting or other rights with respect
to such shares, except the right to receive the moneys payable upon such redemp-
tion, without interest thereon, upon surrender (and endorsement, if required by
the Company) of their certificates, and the shares evidenced thereby shall no
longer be outstanding. Subject to applicable escheat laws, any moneys so set
aside by the Company and unclaimed at the end of one year from the redemption
date shall revert to the general funds of the Company after which reversion the
holders of such shares so called for redemption shall look only to the general
funds of the Company for the payment of the redemption price. Any interest
accrued on funds so deposited shall be paid to the Company from time to tome.
Any holder of record of the shares of this Series to be redeemed pursuant to
this Clause (iii) may waive its right to notice hereunder.
In every case of redemption of less than all of the outstanding shares of
this Series pursuant to this Clause (iii), the shares to be redeemed shall be
selected (a) by lot or by such other manner as may be prescribed by resolution
of the Board of Directors of the Company and (b) in accordance with the Exchange
Agreement as amended from time to time (the "Exchange Agreement") dated as of
December 18, 1990 between the Company and Masco Corporation, a Delaware corpora-
tion ("Masco"), a copy of which Exchange Agreement
3
shall be kept on file with the Secretary of the Company, provided that only
whole shares shall be selected for redemption.
(iv) Optional Redemption through Debenture Exchange.
(a) Subject to the restrictions in subclauses (b) and (d) of this Clause
(iv), shares of this Series shall be redeemable at the option of the Company, in
whole or from time to time in part, on any April 1, July 1, October 1 or April
1, commencing April 1, 1991 through the issuance, in redemption of and in
exchange for shares of this Series, of the Company's Junior Subordinated
Debentures Due 2006 (hereinafter referred to as the "Junior Debentures") in the
manner provided in this Clause (iv). The Junior Debentures shall be issued in
substantially the form of Exhibit B to the Exchange Agreement subject to any
changes that may be made to such Junior Debentures pursuant to the Exchange
Agreement to qualify an indenture with respect to such Junior Debentures. The
Junior Debentures shall be issued in series with the interest rate on such
series being a rate per annum that is the lower of 12% or 400 basis points over
the Treasury Rate (as hereinafter defined) for the week preceding the week in
which the notice of redemption and exchange is given to holders of shares of
this Series as provided in subclause (iv)(c) below. "Treasury Rate" means, the
rate for direct obligations of the United States ("Treasury Notes") having a 10-
year maturity, as published in the Federal Reserve Statistical Release H.15(519)
(or any successor publication provided by the Board of Governors of the Federal
Reserve Board) under the heading "Treasury Constant Maturities." In the event
that a rate for Treasury Notes having a 10-year maturity is not published or
reported for the prior week as provided above by 1:00 p.m., New York City time,
on the third business day preceding the day such notice of redemption and
exchange is given to such holders, then the Treasury Rate shall be calculated by
the Company and shall be a yield to maturity (expressed as a bond equivalent, on
the basis of a year of 365 or 366 days, as applicable, and applied on a daily
basis) of the arithmetic mean of the secondary market bid rates, as of approxi-
mately 1:30 P.M., New York City time, on the date of such notice of redemption
and exchange, of three leading primary United States government securities
dealers selected by the Company for the issue of Treasury Notes with a remaining
maturity of 10 years.
(b) The Junior Debentures will be issued solely in redemption of and in
exchange for shares of this Series at the rate of $100 principal amount of
Junior Debentures for each share of this Series redeemed and exchanged on the
applicable Exchange Date (as defined below). An amount equal to all accrued but
unpaid dividends on such shares to the dividend payment date which coincides
with the date of redemption and exchange shall be paid in cash on the date of
such redemption and exchange. No redemption and exchange shall be for an
aggregate principal amount of Junior Debentures less than $5 million, and no
Junior Debentures in amounts other than $1,000 (and integral multiples thereof)
shall be issued in any redemption
4
and exchange. Cash will be paid in lieu of any such fraction of a Junior
Debenture which would otherwise have been issued.
(c) Not less than 30 nor more than 60 days prior to the date fixed for
the issue of Junior Debentures in redemption of and in exchange for shares of
this Series pursuant to this Clause (iv), a notice shall be given by first class
mail, postage prepaid, to the holders of record of the shares of this Series to
be redeemed and exchanged at their respective addresses as the same shall appear
on the books of the Company, specifying the certificate numbers of such shares,
the effective date of the redemption and exchange (the "Exchange Date") and the
place where certificates for shares of this Series are to be surrendered for
Junior Debentures and stating that dividends on such shares of this Series will
cease to accrue on and after the Exchange Date, but neither failure to mail such
notice, nor any defect therein or in the mailing thereof, to any particular
holder shall affect the sufficiency of the notice or the validity of the
proceedings for redemption and exchange with respect to the other holders. Any
notice which was mailed in the manner herein provided shall be conclusively
presumed to have been duly given whether or not the holder receives the notice.
Any holder of record of the shares of this Series to be redeemed and exchanged
pursuant to this Clause (iv) may waive its right to notice hereunder.
If notice of redemption and exchange has been given pursuant to this
Clause (iv), then on or after the Exchange Date (unless the Company shall
default in issuing Junior Debentures in redemption of and in exchange for shares
of this Series to be redeemed and exchanged on such Exchange Date or shall fail
to pay or set aside accrued and unpaid dividends on such shares of this Series
and notwithstanding that any certificates for such shares of this Series have
not been surrendered for exchange), dividends shall cease to accrue on such
shares of this Series and the holders of such shares shall cease to be stock-
holders with respect to such shares (provided, that the persons entitled to
receive Junior Debentures in exchange for such shares shall be treated for all
purposes as the registered holders of such Junior Debentures) and shall have no
interest in or claims against the Company by virtue thereof (except the right to
receive Junior Debentures) and shall have no voting or other rights with respect
to such shares and such shares of this Series shall no longer be outstanding.
Upon the surrender (and endorsement, if required by the Company) in accordance
with such notice of the certificates for such shares of this Series, such
certificates shall be redeemed and exchanged for Junior Debentures in accordance
with this Clause (iv).
(d) The Company may not redeem and exchange less than all shares of this
Series (1) if, at the time of such redemption and exchange, there are accrued
and unpaid dividends on any shares of this Series and (2) unless, immediately
after such redemption and exchange, at least 50,000 shares of this Series will
be outstand
5
ing. In every case of redemption of less than all of the outstanding shares of
this Series pursuant to this Clause (iv), the shares shall be selected (a) by
lot or by such other manner as may be prescribed by resolution of the Board of
Directors of the Company and (b) in accordance with the Exchange Agreement,
provided that only whole shares shall be selected for redemption.
(v) Liquidation.
(a) The liquidation price of shares of this Series, in case of the
voluntary or involuntary liquidation, dissolution or winding-up of the Company,
shall be $100 per share, plus the amount per share of any dividends accrued
thereon and remaining unpaid at the date of such liquidation, dissolution or
winding-up.
(b) In the event of any voluntary or involuntary liquidation, dissolution
or winding-up of the Company, the holders of shares of this Series shall be
entitled to receive the liquidation price of such shares held by them in
preference to and in priority over any distributions upon the Common Shares and
all Junior Shares, but subject to the rights of holders of Preference Shares
having a preference to and priority over the payment of distributions on the
shares of this Series. Upon payment in full of the liquidation price to which
the holders of shares of this Series are entitled, the holders of shares of this
Series will not be entitled to any further participation in any distribution of
assets by the Company. If the assets of the Company are not sufficient to pay
in full the liquidation price payable to the holders of shares of this Series
and the liquidation price payable to the holders of all Parity Shares, the
holders of all such shares shall share ratably in such distribution of assets in
accordance with the amounts which would be payable on such distribution if the
amounts to which the holders of shares of this Series and the holders of Parity
Shares are entitled were paid in full.
(c) Neither a consolidation or merger of the Company with or into any
other corporation, nor a merger of any other corporation with or into the
Company, nor a sale or transfer of all or any part of the Company's assets for
cash, securities or other property shall be considered a liquidation, dissolu-
tion or winding-up of the Company within the meaning of this Clause (v).
(vi) Reacquired Shares. All shares of this Series which are at any time
redeemed pursuant to Clause (iii) or redeemed and exchanged pursuant to Clause
(iv) above and all shares of this Series which are otherwise reacquired by the
Company and subsequently cancelled by the Board of Directors of the Company
shall have the status of authorized but unissued Preferred Stock, without
designation as to series, subject to reissuance by the Board of Directors of the
Company as shares of this Series or shares of any one or more other series.
6
(vii) Voting Rights. Except as otherwise provided in this Clause (vii)
or as otherwise provided by law or the Restated Certificate of Incorporation of
the Company, holders of shares of this Series have no voting rights.
If at any time dividends payable on the shares of this Series are in
arrears and unpaid in an aggregate amount equal to or exceeding the aggregate
amount of dividends payable thereon for six quarterly dividend periods, the
holders of the shares of this Series, together with the holders of any other
series of Preference Shares as to which dividends are in arrears and unpaid in
an aggregate amount equal to or exceeding the aggregate amount of dividends
payable for six quarterly dividend periods (but only if the holders of the
shares of such other series would otherwise have a right to elect Directors as a
result of a dividend arrearage), will have the exclusive right (superseding the
separate right of such other series to elect Directors so long as shares of this
Series remain outstanding, except as otherwise expressly provided in the
certificate of designation establishing such other series), voting separately as
a class with any such other series, to elect two Directors of the Company, such
Directors to be in addition to the number of Directors constituting the Board of
Directors of the Company immediately prior to the accrual of such right. Such
right of the holders of shares of this Series to elect two Directors shall, when
vested, continue until all dividends in default on the shares of this Series
shall have been paid in full and, when so paid, such right of the holders of
shares of this Series to elect two Directors separately as a class shall cease,
subject, always, to the same provisions for the vesting of such right of the
holders of the shares of this Series to elect two Directors in the case of
future dividend defaults. At any time when such right to elect such Directors
separately as a class shall have so vested, the Company may, and upon the
written request of the holders of record of not less than 20% of the total
number of shares of this Series and such other series of Preference Shares then
outstanding shall, call a special meeting of the holders of such shares to fill
such newly-created directorships for the election of Directors. In the case of
such a written request, such special meeting shall be held within 90 days after
the delivery of such request and, in either case, at the place and upon the
notice provided by law and in the Bylaws of the Company, provided that the
Company shall not be required to call such a special meeting if such request is
received less than 120 days before the date fixed for the next ensuing annual
meeting of stockholders of the Company, in which case such newly-created
directorships shall be filled by the holders of such shares of this Series and
such other series of Preference Shares at such meeting.
The term of office of each Director elected pursuant to the preceding
paragraph shall terminate on the earlier of (x) the next annual meeting of
stockholders at which a successor shall have been elected and qualified or (y)
the termination of the right of the
7
holders of shares of this Series and such other series of Preference Shares to
vote for Directors pursuant to the preceding paragraph. If, prior to the end of
the term of any Director elected as aforesaid, a vacancy in the office of such
Director shall occur, such vacancy shall be filled for the unexpired term by the
appointment by the remaining Director elected as aforesaid of a new Director for
the unexpired term of such former Director. If both Directors so elected by the
holders of shares of this Series and such other series of Preference Shares
shall cease to serve as Directors before their terms shall expire, the holders
of the shares of this Series, together with the holders of such other series of
Preference Shares may, at a special meeting of the holders called as provided
above, elect successors to hold office for the unexpired terms of such Directors
whose places shall be vacant.
The voting rights provided in this Clause (vii) shall be in addition to
any other right to vote provided to the holders of shares of this Series by law
or the Restated Certificate of Incorporation of the Company.
(viii) No Preemptive Rights. The holders of shares of this Series shall
have no preemptive rights, including preemptive rights with respect to any
shares of capital stock or other securities of the Company convertible into or
carrying rights or options to purchase any such shares.
(ix) Certain Definitions. As used in this Certificate, the following
terms shall have the following respective meanings:
"Common Shares" shall mean any stock of any class of the Company which has
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company
and which is not subject to redemption by the Company.
"Junior Shares" shall mean Preference Shares of any series or class of the
Company which are by their terms expressly made junior to shares of this Series
at the time outstanding as to dividends or as to the distribution of assets on
any voluntary or involuntary liquidation, dissolution or winding-up of the
Company or as to both dividends and distributions.
"Parity Shares" shall mean Preference Shares which are by their terms on a
parity with the shares of this Series at the time outstanding both as to
dividends and as to the distribution of assets on any voluntary or involuntary
liquidation, dissolution or winding-up of the Company.
"Preference Shares" shall mean any class or series of shares of the
Company ranking prior to at lease one other class or series of shares of the
Company as to the payment of dividends or the
8
distribution of assets on any voluntary or involuntary liquidation, dissolution
or winding-up of the Company.
IN WITNESS WHEREOF, the Company has caused this Certificate to be duly
executed on its behalf by its undersigned Chairman of the Board of Directors and
attested to by its Assistant Secretary this 18th day of December, 1990.
/s/Richard A. Manoogian
Richard A. Manoogian
Chairman of the Board
of Directors
ATTEST:
/s/James Tompkins
James Tompkins
Assistant Secretary
MASCO INDUSTRIES, INC.
CERTIFICATE OF THE POWERS DESIGNATIONS,
PREFERENCES AND RIGHTS OF THE
10% EXCHANGEABLE PREFERRED STOCK
PAR VALUE $1.00 PER SHARE
LIQUIDATION VALUE $100 PER SHARE
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned, the Chairman of the Board of Directors of Masco Indus-
tries, Inc., a Delaware corporation (the "Company"), DOES HEREBY CERTIFY that
the following resolutions have been duly adopted by the Board of Directors of
the Company:
RESOLVED, that pursuant to the authority expressly granted to and vested
in the Board of Directors of the Company by the provisions of the Restated
Certificate of Incorporation of the Company, this Board of Directors hereby
authorizes the issuance of a series (this "Series") of the Preferred Stock of
the Company (the "Preferred Stock") which shall consist of 1,000,000 shares, and
this Board of Directors hereby fixes the powers, designations, preferences and
relative, participating, optional or other special rights, and the qualifica-
tions, limitations or restrictions thereof, of the shares of this Series (in
addition to the powers, designations, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations or
restrictions thereof, set forth in the Restated Certificate of Incorporation of
the Company which are applicable to the Preferred Stock) as follows:
(i) Designation. The designation of this Series shall be 10% Exchange-
able Preferred Stock. The number of shares of this Series shall be 1,000,000.
The liquidation value of shares of this Series shall be $100 per share.
(ii) Dividends. (a) The dividend rate on shares of this Series shall be
$10.00 per share per annum. Dividends on shares of this Series shall be fully
cumulative and shall accrue, without interest, from the date of issuance of such
shares, and shall be payable, when and as declared by the Board of Directors out
of funds legally available therefor, in arrears on July 1, 1993 and quarterly in
arrears thereafter on October 1, January 1, April 1
1
and July 1 of each year. The amount of dividends payable for the initial
dividend period or any period shorter than a full dividend period shall be
calculated on the basis of a 360-day year of twelve 30-day months. Holders of
shares of this Series shall be entitled to receive such dividends in preference
to and in priority over dividends upon the Common Shares (hereinafter defined)
and all Junior Shares (hereinafter defined), but subject to the rights of
holders of Preference Shares (hereinafter defined) having a preference and a
priority over the payment of dividends on the shares of this Series. Shares of
this Series shall be on a parity as to dividends with all Parity Shares (herein-
after defined). The holders of shares of this Series shall not be entitled to
any dividends other than the dividends provided in this Clause (ii).
(b) If at any time the Company has failed to pay accrued dividends on any
shares of this Series or any Parity Shares at the time outstanding at the times
such dividends are payable, the Company shall not
(1) declare or pay any dividend on the Common Shares or on any
Junior Shares or make any payment on account of, or set apart money for a
sinking or other analogous fund for, the purchase, redemption or other retire-
ment of, any Common Shares or any Junior Shares or make any distribution in
respect thereof, either directly or indirectly and whether in cash or property
or in obligations or shares of the Company (other than in Common Shares or
Junior Shares),
(2) purchase any shares of this Series or Parity Shares (except for
a consideration payable in Common Shares or Junior Shares) or redeem (or redeem
and exchange for subordinated Debentures as hereinafter provided) fewer than all
of the shares of this Series and all of the Parity Shares then outstanding, or
(3) permit any corporation or other entity directly or indirectly
controlled by the Company to purchase any Common Shares, Junior Shares, shares
of this Series or Parity Shares,
unless, in the case of any such dividend, payment, setting apart, distribution,
purchase, redemption or other retirement, all dividends accrued and payable but
unpaid on shares of this Series and all Parity Shares have been or contemporane-
ously are declared and paid in full or declared and a sum sufficient for the
payment thereof set aside for such payment. Unless and until all dividends
accrued and payable but unpaid on shares of this Series and all Parity Shares at
the time outstanding have been paid in full, all dividends declared by the
Company upon shares of this Series or Parity Shares shall be declared pro rata
with respect to all shares of this Series and all Parity Shares then outstand-
ing, so that the amounts of any dividends declared on shares of this Series and
such Parity Shares shall in all cases bear to each other the same ratio that, at
the time of such declaration, all accrued and payable but
2
unpaid dividends on shares of this Series and such Parity Shares, respectively,
bear to each other.
(iii) Optional Redemptions for Cash. Subject to the restrictions in
Clause (ii) above, shares of this Series shall be redeemable at the option of
the Company in whole or from time to time in part in cash at $100 per share,
plus an amount equal to the dividends accrued and unpaid thereon to the redemp-
tion date.
Not less than 30 nor more than 60 days prior to the date fixed for any
redemption of shares of this Series pursuant to this Clause (iii), a notice
shall be given by first class mail, postage prepaid, to the holders of record of
the shares of this Series to be redeemed at their respective addresses as the
same shall appear on the books of the Company, specifying the certificate
numbers of such shares, the effective date of the redemption and the place where
certificates for shares of this Series are to be surrendered for redemption and
stating that dividends on such shares of this Series will cease to accrue on and
after the redemption date, but neither failure to mail such notice, nor any
defect therein or in the mailing thereof, to any particular holder shall affect
the sufficiency of the notice or the validity of the proceedings for redemption
with respect to the other holders. Any notice which was mailed in the manner
herein provided shall be conclusively presumed to have been duly given whether
or not the holder receives the notice.
If notice of redemption has been given pursuant to this Clause (iii) and
if, on or before the date fixed for redemption, the funds necessary for such
redemption shall have been set aside by the Company, separate and apart from its
other funds, in trust for the pro rata benefit of the holders of the shares so
called for redemption, then on and after the redemption date, notwithstanding
that any certificates for such shares have not been surrendered for cancella-
tion, dividends shall cease to accrue on the shares of this Series to be
redeemed and the holders of such shares shall cease to be stockholders with
respect to such shares and shall have no interest in or claims against the
Company by virtue thereof and shall have no voting or other rights with respect
to such shares, except the right to receive the moneys payable upon such redemp-
tion, without interest thereon, upon surrender (and endorsement, if required by
the Company) of their certificates, and the shares evidenced thereby shall no
longer be outstanding. Subject to applicable escheat laws, any moneys so set
aside by the Company and unclaimed at the end of one year from the redemption
date shall revert to the general funds of the Company after which reversion the
holders of such shares so called for redemption shall look only to the general
funds of the Company for the payment of the redemption price. Any interest
accrued on funds so deposited shall be paid to the Company from time to time.
Any holder of record of the shares of this Series to be redeemed pursuant to
this Clause (iii) may waive its right to notice hereunder.
3
In every case of redemption of less than all of the outstanding shares of
this Series pursuant to this Clause (iii), the shares to be redeemed shall be
selected (a) by lot or by such other manner as may be prescribed by resolution
of the Board of Directors of the Company and (b) to the extent Masco Corpora-
tion, a Delaware corporation ("Masco"), or any subsidiary thereof, holds shares
of this Series, the Company shall allow Masco to select, in its sole discretion,
the specific shares of this Series then owned by Masco to be redeemed, provided
that Masco informs the Company no later than the day prior to the date of such
redemption of the specific shares Masco has selected for redemption.
(iv) Optional Redemption through Debenture Exchange.
(a) Subject to the restrictions in clause (ii) above and subclauses (b)
and (d) of this Clause (iv), shares of this Series shall be redeemable at the
option of the Company, in whole or from time to time in part through the
issuance, in redemption of and in exchange for shares of this Series, of the
Company's Subordinated Debentures due the earlier of ten years from the date of
issuance or March 31, 2008 (hereinafter referred to as the "Subordinated
Debentures"), in the manner provided in this Clause (iv). The Subordinated
Debentures shall be issued in substantially the form on file with the Secretary
of the Company and identified to this Series, subject to any changes that may be
made to such Subordinated Debentures in order to qualify an indenture with
respect to such Subordinated Debentures. The Subordinated Debentures shall be
issued in series with the interest rate on each series being a rate per annum
that is 400 basis points over the Treasury Rate (as hereinafter defined) for the
week preceding the week in which the notice of redemption and exchange is given
to holders of shares of this Series as provided in subclause (c) of this clause
(iv) below. "Treasury Rate" means, the rate for direct obligations of the
United States ("Treasury Notes") having a remaining maturity of 10 years, as
published in the Federal Reserve Statistical Release H.15 (519) (or any succes-
sor publication provided by the Board of Governors of the Federal Reserve
System) under the heading "Treasury Constant Maturities." In the event that a
rate for Treasury Notes having a remaining maturity of 10 years is not published
or reported for the prior week as provided above by 1:00 P.M., New York City
time, on the third business day preceding the day such notice of redemption and
exchange is given to such holders, then the Treasury Rate shall be calculated by
the Company and shall be a yield to maturity (expressed as a bond equivalent, on
the basis of a year of 365 or 366 days, as applicable, and applied on a daily
basis) of the arithmetic mean of the secondary market bid rates, as of approxi-
mately 1:30 P.M., New York City time, on the date of such notice of redemption
and exchange, of three leading primary United States government securities
dealers selected by the Company for the purchase of Treasury Notes with a
remaining maturity of 10 years.
4
(b) The Subordinated Debentures will be issued solely in redemption of
and in exchange for shares of this Series at the rate of $100 principal amount
of Subordinated Debentures for each share of this Series redeemed and exchanged
on the applicable Exchange Date (as defined below). An amount equal to all
accrued but unpaid dividends on such shares to the dividend payment date which
coincides with the date of redemption and exchange shall be paid in cash on the
date of such redemption and exchange. No redemption and exchange shall be for
an aggregate principal amount of Subordinated Debentures less than $5 million,
and no Subordinated Debentures in amounts other than $1,000 (and integral
multiples thereof) shall be issued in any redemption and exchange. Cash will be
paid in lieu of any such fraction of a Subordinated Debenture which would
otherwise have been issued.
(c) Not less than 30 nor more than 60 days prior to the date fixed for
the issue of Subordinated Debentures in redemption of and in exchange for shares
of this Series pursuant to this Clause (iv), a notice shall be given by first
class mail, postage prepaid, to the holders of record of the shares of this
Series to be redeemed and exchanged at their respective addresses as the same
shall appear on the books of the Company, specifying the certificate numbers of
such shares, the effective date of the redemption and exchange (the "Exchange
Date") and the place where certificates for shares of this Series are to be
surrendered for Subordinated Debentures and stating that dividends on such
shares of this Series will cease to accrue on and after the Exchange Date, but
neither failure to mail such notice, nor any defect therein or in the mailing
thereof, to any particular holder shall affect the sufficiency of the notice or
the validity of the proceedings for redemption and exchange with respect to the
other holders. Any notice which was mailed in the manner herein provided shall
be conclusively presumed to have been duly given whether or not the holder
receives the notice. Any holder of record of the shares of this Series to be
redeemed and exchanged pursuant to this Clause (iv) may waive its right to
notice hereunder.
If notice of redemption and exchange has been give pursuant to this Clause
(iv), then on or after the Exchange Date (unless the Company shall default in
issuing Subordinated Debentures in redemption of and in exchange for shares of
this Series to be redeemed and exchanged on such Exchange Date or shall fail to
pay or set aside accrued and unpaid dividends on such shares of this Series and
notwithstanding that any certificates for such shares of this Series have not
been surrendered for exchange), dividends shall cease to accrue on such shares
of this Series and the holders of such shares shall cease to be stockholders
with respect to such shares (provided, that the persons entitled to receive
Subordinated Debentures in exchange for such shares shall be treated for all
purposes as the registered holders of such Subordinated Debentures) and shall
have no interest in or claims against the Company by virtue thereof (except the
right to receive Subordinated Debentures
5
and accrued dividends through the Exchange Date) and shall have no voting or
other rights with respect to such shares and such shares of this Series shall no
longer be outstanding. Upon the surrender (and endorsement, if required by the
Company) in accordance with such notice of the certificates for such shares of
this Series, such certificates shall be redeemed and exchanged for Subordinated
Debentures in accordance with this Clause (iv).
(d) In every case of redemption of less than all of the outstanding
shares of this Series pursuant to this Clause (iv), the shares shall be selected
(a) by lot or by such other manner as may be prescribed by resolution of the
Board of Directors of the Company and (b) to the extent Masco, or any subsidiary
thereof, holds shares of this Series, the Company shall allow Masco to select,
in its sole discretion, the specific shares of this Series then owned by Masco
to be redeemed, provided that Masco informs the Company no later than the day
prior to the date of such redemption of the specific shares Masco has selected
for redemption.
(v) Liquidation.
(a) The liquidation price of shares of this Series, in case of the
voluntary or involuntary liquidation, dissolution or winding-up of the Company,
shall be $100 per share, plus the amount per share of any dividends accrued
thereon and remaining unpaid at the date of such liquidation, dissolution or
winding-up.
(b) In the event of any voluntary or involuntary liquidation, dissolution
or winding-up of the Company, the holders of shares of this Series shall be
entitled to receive the liquidation price of such shares held by them in
preference to and in priority over any distributions upon the Common Shares and
all Junior Shares, but subject to the rights of holders of Preference Shares
having a preference to and priority over the payment of distributions on the
shares of this Series. Upon payment in full of the liquidation price to which
the holders of shares of this Series are entitled, the holders of shares of this
Series will not be entitled to any further participation in any distribution of
assets by the Company. If the assets of the Company are not sufficient to pay
in full the liquidation price payable to the holders of shares of this Series
and the liquidation price payable to the holders of all Parity Shares, the
holders of all such shares shall share ratably in such distribution of assets in
accordance with the amounts which would be payable on such distribution if the
amounts to which the holders of shares of this Series and the holders of Parity
Shares are entitled were paid in full.
(c) Neither a consolidation or merger of the Company with or into any
other corporation, nor a merger of any other corporation with or into the
Company, nor a sale or transfer of all or any part of the Company's assets for
cash, securities or other property
6
shall be considered a liquidation, dissolution or winding-up of the Company
within the meaning of this Clause (v).
(vi) Reacquired Shares. All shares of this Series which are at any time
redeemed pursuant to Clause (iii) above or redeemed and exchanged pursuant to
Clause (iv) above and all shares of this Series which are otherwise reacquired
by the Company and subsequently cancelled by the Board of Directors of the
Company shall have the status of authorized but unissued Preferred Stock,
without designation as to series, subject to reissuance by the Board of Direc-
tors of the Company as shares of this Series or shares of any one or more other
series.
(viii) Voting Rights. Except as otherwise provided in this Clause (vii)
or as otherwise provided by law or the Restated Certificate of Incorporation of
the Company, holders of shares of this Series have not voting rights.
If at any time dividends payable on the shares of this Series are in
arrears and unpaid in an aggregate amount equal to or exceeding the aggregate
amount of dividends payable thereon for six quarterly dividend periods, the
holders of the shares of this Series, together with the holders of any other
series of Preference Shares then having a right to elect Directors as a result
of a dividend arrearage, will have the exclusive right (superseding the separate
right of such other series to elect Directors so long as shares of this Series
remain outstanding, except as otherwise expressly provided in the certificate of
designation establishing such other series), voting separately as a class with
any such other series, to elect two Directors of the Company, such Directors to
be in addition to the number of Directors constituting the Board of Directors of
the Company immediately prior to the accrual of such right. Such right of the
holders of shares of this Series to elect two Directors shall, when vested,
continue until all dividends in default on the shares of this Series shall have
been paid in full and, when so paid, such right of the holders of shares of this
Series to elect two Directors separately as a class shall cease, subject,
always, to the same provisions for the vesting of such right of the holders of
the shares of this Series to elect two Directors in the case of future dividend
defaults. At any time when such right to elect such Directors separately as a
class shall have so vested, the Company may, and upon the written request of the
holders of record of not less than 20% of the total number of shares of this
Series and such other series of Preference Shares then outstanding shall, call a
special meeting of the holders of such shares to fill such newly-created
directorships for the election of Directors. In the case of such a written
request, such special meeting shall be held within 90 days after the delivery of
such request and, in either case, at the place and upon the notice provided by
law and in the Bylaws of the Company, provided that the Company shall not be
required to call such a special meeting if such request is received less than
120 days before the date fixed
7
for the next ensuing annual meeting of stockholders of the Company, in which
case such newly-created directorships shall be filled by the holders of such
shares of this Series and such other series of Preference Shares at such
meeting.
The term of office of each Director elected pursuant to the preceding
paragraph shall terminate on the earlier of (x) the next annual meeting of
stockholders at which a successor shall have been elected and qualified or (y)
the termination of the right of the holders of shares of this Series and such
other series of Preference Shares to vote for Directors pursuant to the preced-
ing paragraph. If, prior to the end of the term of any Director elected as
aforesaid, a vacancy in the office of such Director shall occur, such vacancy
shall be filled for the unexpired term by the appointment by the remaining
Director elected as aforesaid of a new Director for the unexpired term of such
former Director. If both Directors so elected by the holders of shares of this
Series and such other series of Preference Shares shall cease to serve as
Directors before their terms shall expire, the holders of the shares of this
Series, together with the holders of such other series of Preference Shares may,
at a special meeting of the holders called as provided above, elect successors
to hold office for the unexpired terms of such Directors whose places shall be
vacant.
The voting rights provided in this Clause (vii) shall be in addition to
any other right to vote provided to the holders of Shares of this Series by law
or the Restated Certificate of Incorporation of the Company.
(viii) No Preemptive Rights. The holders of shares of this Series shall
have no preemptive rights, including preemptive rights with respect to any
shares of capital stock or other securities of the Company convertible into or
carrying rights or options to purchase any such shares.
(ix) Certain Definitions. As used in this Certificate, the following
terms shall have the following respective meanings:
"Common Shares" shall mean any stock of any class of the Company which has
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company
and which is not subject to redemption by the Company.
"Junior Shares" shall mean Preference Shares of any series or class of the
Company which are by their terms expressly made junior to shares of this Series
at the time outstanding as to dividends or as to the distribution of assets on
any voluntary or involuntary liquidation, dissolution or winding-up of the
Company or as to both dividends and distributions.
8
"Parity Shares" shall mean Preference Shares which are by their terms on a
parity with the shares of this Series at the time outstanding both as to
dividends and as to the distribution of assets on any voluntary or involuntary
liquidation, dissolution or winding-up of the Company.
"Preference Shares" shall mean any class or series of shares of the
Company ranking prior to at least one other class or series of shares of the
Company as to the payment of dividends or the distribution of assets on any
voluntary or involuntary liquidation, dissolution or winding-up of the Company.
IN WITNESS WHEREOF, the Company has caused this Certificate to be duly
executed on its behalf by its undersigned Chairman of the Board of Directors and
attested to by its Assistant Secretary this 23rd day of March, 1993.
/s/Lee M. Gardner
Lee M. Gardner
President
ATTEST:
/s/James Tompkins
James Tompkins
Assistant Secretary
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
Masco Industries, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the "Company"),
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of the Company a
resolution was duly adopted setting forth a proposed amendment to the Restated
Certificate of Incorporation of the Company. The resolution setting forth the
proposed amendment is as follows:
RESOLVED, that Article 1 of the text of the Restated Certificate of
Incorporation, be amended to read as follows:
"The name of the corporation is MascoTech, Inc."
SECOND: That thereafter, at the annual meeting of the stockholders of the
Company, duly called and held on May 18, 1993, upon notice in accordance with
Section 222 of the General Corporation Law of the State of Delaware at which
meeting the necessary number of shares as required by statute were voted in
favor of the amendment.
THIRD: The said amendment was duly adopted in accordance with the
applicable provisions of Sections 242 of the General Corporation law of the
State of Delaware.
1
IN WITNESS WHEREOF, the Company has caused this certificate to be signed
by Lee Gardner, its President and attested to by Eugene A. Gargaro, Jr., its
Secretary, this 17th day of June, 1993.
MASCO INDUSTRIES, INC.
By /s/Lee Gardner
Lee Gardner - President
ATTEST:
By /s/Eugene A. Gargaro, Jr.
Eugene A. Gargaro, Jr. - Secretary
MASCOTECH, INC.
CERTIFICATE OF THE POWERS, DESIGNATIONS,
PREFERENCES AND RIGHTS OF THE
$1.20 CONVERTIBLE PREFERRED STOCK
PAR VALUE $1.00 PER SHARE
LIQUIDATION VALUE $20.00 PER SHARE
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned, the Chairman of the Board of Directors of MascoTech,
Inc., a Delaware corporation (the "Company"), DOES HEREBY CERTIFY that the
following resolutions were duly adopted by the Pricing Committee of the Board of
Directors of the Company (pursuant to the authority conferred upon it by the
Board of Directors) and by the Board of Directors (pursuant to the authority
granted and vested in it by the provisions of the Restated Certificate of
Incorporation of the Company), respectively.
A. On June 30, 1993, the Pricing Committee of the Board of Directors
adopted the following resolution:
RESOLVED, that pursuant to the authority conferred upon the Pricing
Committee of the Board of Directors of the Company, this Pricing Committee
hereby authorizes the issuance of a series (this "Series"), of the Preferred
Stock of the Company ( the "Preferred Stock") which shall consist of 11,500,000
shares, and this Pricing Committee hereby fixes the powers, designations,
preferences and relative, participating, optional or other special rights, and
the qualifications, limitations or restrictions thereof, of the shares of this
Series (in addition to the powers, designations, preferences and relative,
participating, optional or other special rights, and the qualifications, limita-
tions, or restrictions thereof, set forth in the Restated Certificate of
Incorporation of the Company which are applicable to the Preferred Stock and in
addition to the voting rights established by the resolutions of the Board of
Directors of the Company adopted June 26, 1993) as follows:
(1) Designation. The designation of this Series shall be $1.20 Convert-
ible Preferred Stock. The number of shares of this Series shall be 11,500,000.
The liquidation value of shares of this Series shall be $20.00 per share.
(2) Dividends. (a) The holders of shares of this Series shall be
entitled to receive, when, as and if declared by the Board of Directors of the
Company out of funds legally available therefor, cumulative preferential
dividends from the issue date of such shares, at the rate per share of $1.20 per
annum, and no more, payable quarterly for each share of this Series, payable in
arrears on the first day of each January, April, July and October, respectively
(each such date being hereinafter referred to as a "Dividend Payment Date") or,
if any Dividend Payment
1
Date is not a business day, then the Dividend Payment Date shall be the next
succeeding business day; provided, however, that with respect to any dividend
period during which a redemption occurs, the Company may, at its option, declare
accrued dividends to, and pay such dividends on, the redemption date, in which
case such dividends would be payable on the redemption date in cash to the
holders of the shares of this Series as of the record date for such dividend
payment and such accrued dividends would not be included in the calculation of
the related Call Price (as hereinafter defined). Each dividend on the shares of
this Series shall be payable to holders of record as they appear on the stock
books of the Company on such record dates, not less than 10 nor more than 60
days preceding the payment dates thereof, as shall be fixed by the Board of
Directors. The first dividend payment shall be for the period from the issue
date of the shares of this Series to and including September 30, 1993 and shall
be payable on October 1, 1993. Dividends (or amounts equal to accrued and
unpaid dividends) payable on shares of this Series for any period shorter than a
quarterly dividend period shall be computed on the basis of a 360-day year of
twelve 30-day months.
Dividends on the shares of this Series shall accrue (whether or not the
Company has earnings, whether or not there are funds legally available for the
payment of such dividends and whether or not such dividends are declared) on a
daily basis from the previous Dividend Payment Date, except that the first
dividend shall accrue from the date of issuance of the shares of this Series.
Dividends accumulate to the extent they are not paid on the Dividend Payment
Date for the quarter for which they accrue. Accumulated unpaid dividends shall
not bear interest.
(b) Unless full cumulative dividends, if any, accrued on the shares of
this Series which are payable in cash have been paid or contemporaneously are
declared and paid and a sum set aside sufficient for such payment through the
most recent Dividend Payment Date, then, whether or not the Mandatory Conversion
Date (as hereinafter defined) has occurred:
(i) No full cash dividend shall be declared by the Board of Directors
or paid or set aside for payment by the Company or other distri-
bution declared or made on any shares of the Company ranking on a
parity with the shares of this Series as to dividends;
(ii) No dividend (other than a dividend or distribution paid in shares
of, or warrants, rights or options exercisable for or convertible
into shares of, Common Stock or in any other shares of the Compa-
ny ranking junior to the shares of this Series as to dividends
and upon liquidation) shall be declared or paid or set aside for
payment or other distribution declared or made upon the Common
Stock or upon any other shares of the Company ranking junior to
the shares of this Series as to dividends; and
(iii) No Common Stock or any other shares of the Company ranking junior
to or on a parity with the shares of this Series as to dividends
or upon liquidation
2
shall be redeemed, purchased or otherwise acquired for any con-
sideration (or any moneys be paid to or made available for a
sinking fund for the redemption
of any shares of any such series or class) by the Company, except
by conversion into or exchange for shares of the Company ranking
junior to the shares of this Series as to dividends and upon
liquidation.
When dividends which are payable in cash have not been paid or set aside in full
with respect to the shares of this Series and any other shares of the Company
ranking on a parity with the shares of this Series as to dividends, all divi-
dends declared with respect to the shares of this Series and any other shares of
the Company ranking on a parity with the shares of this Series as to dividends
shall be declared pro rata so that the amount of dividends declared per share on
this Series and such other shares shall in all cases bear to each other the same
ratio that, at the time of declaration, accrued and payable but unpaid dividends
per share on the shares of this Series and such other shares bear to each other.
Holders of the shares of this Series shall not be entitled to any dividends,
whether payable in cash, property or stock, in excess of full cumulative
dividends, as herein described.
(c) Subject to the foregoing provisions of this paragraph (2) and
paragraph (3)(d), the Board of Directors may declare and the Company may pay or
set aside for payment dividends and other distributions on any shares of the
Company ranking on a parity with or junior to the shares of this Series as to
dividends or upon liquidation, and may redeem, purchase or otherwise acquire any
shares of the Company ranking on a parity with or junior to the shares of this
Series as to dividends or upon liquidation, and the holders of the shares of
this Series shall not be entitled to share therein.
(d) Any dividend payment made on the shares of this Series shall
first be credited against the earliest accrued but unpaid dividend due with
respect to the shares of this Series.
(e) All dividends paid with respect to the shares of this Series
shall be paid pro rata to the holders entitled thereto.
(f) Holders of the shares of this Series shall be entitled to receive
dividends in preference to and in priority over any dividends upon any shares of
the Company ranking junior to the shares of this Series as to dividends, but
subject to the rights of holders of shares of the Company having a preference
and a priority over the payment of dividends on the shares of this Series.
(3) Redemptions and Conversions.
(a) Mandatory Conversion. On July 1, 1997 (the "Mandatory Conversion
Date"), each outstanding share of this Series shall convert automatically (the
"Mandatory Conversion") into shares of Common Stock at the Common Equivalent
Rate (as hereinafter defined) in effect on the Mandatory Conversion Date and the
right to receive an amount in cash equal to all accrued and unpaid dividends on
such share of this Series (other than dividends payable to a holder of
3
record on a prior date) to the Mandatory Conversion Date, whether or not
declared, out of funds legally available for the payment of dividends, subject
to the right of the Company to redeem the shares of this Series on or after the
Initial Redemption Date (as hereinafter defined) and prior to the Mandatory
Conversion Date, as described below, and subject to the conversion of the shares
of this Series at the option of the holder at any time prior to the Mandatory
Conversion Date. The Common Equivalent Rate is initially one share of Common
Stock for each share of this Series and is subject to adjustment as set forth
below. Dividends on the shares of this Series shall cease to accrue and such
shares shall cease to be outstanding on the Mandatory Conversion Date. The
Company shall make such arrangements as it deems appropriate for the issuance of
certificates representing shares of Common Stock and for the payment of cash in
respect of such accrued and unpaid dividends, if any, or cash in lieu of
fractional shares, if any, in exchange for and contingent upon surrender of
certificates representing the shares of this Series, and the Company may defer
the payment of dividends on such shares of Common Stock and the voting thereof
until, and make such payment and voting contingent upon, the surrender of such
certificates representing the shares of this Series, provided that the Company
shall give the holders of the shares of this Series such notice of any such
actions as the Company deems appropriate and upon such surrender such holders
shall be entitled to receive such dividends declared and paid on such shares of
Common Stock subsequent to the Mandatory Conversion Date. Amounts payable in
cash in respect of the shares of this series or in respect of such shares of
Common Stock shall not bear interest.
(b) Redemption by the Company.
(i) Right to Redeem. Shares of this Series are not redeemable by the
Company prior to July 1, 1996 (the "Initial Redemption Date"). At any time and
from time to time on or after the Initial Redemption Date and prior to the
Mandatory Conversion Date, the Company shall have the right to redeem, in whole
or in part, the outstanding shares of this Series. Upon any such redemption,
the Company shall deliver to the holders of shares of this Series, in accordance
with the provisions of this Certificate, in exchange for each share so redeemed,
a number of shares of Common Stock equal to (A) the Call Price (as hereinafter
defined) in effect on the redemption date, divided by (B) the Current Market
Price (as hereinafter defined) of the Common Stock determined as of the date
which is one trading day prior to the public announcement of the redemption.
The Call Price of each share of this Series is the sum of (X) $20.30 on and
after the Initial Redemption Date through September 30, 1996, $20.225 on and
after October 1, 1996 through December 31, 1996, $20.15 on and after January 1,
1997 through March 31, 1997, $20.075 on and after April 1, 1997 through May 31,
1997 and $20.00 on and after June 1, 1997 until the Mandatory Conversion Date
and (Y) all accrued and unpaid dividends thereon to the redemption date (other
than dividends payable to a holder of record as of a prior date), subject to the
right of the Company pursuant to paragraph (2) to pay such accrued and unpaid
dividends in cash. The public announcement of any call for redemption shall be
made prior to the mailing of the notice of such call to holders of shares of
this Series as described below. If fewer than all the outstanding shares of this
Series are to be redeemed, shares to be redeemed shall be selected by the
Company from outstanding shares of this Series not previously redeemed by lot or
pro rata (as nearly as may be practicable) or by any other
4
method determined by the Board of Directors of the Company in its sole discre-
tion to be equitable.
(ii) Current Market Price. As used in this subparagraph (b), the term
"Current Market Price" per share of the Common Stock on any date of determina-
tion means the lesser of (X) the average of the Closing Prices (as hereinafter
defined) of the Common Stock for the fifteen consecutive Trading Dates (as
hereinafter defined) ending on and including such date of determination, and (Y)
the Closing Price of the Common Stock for such date of determination; provided,
however, that, with respect to any redemption of shares of this Series, if any
event that results in an adjustment of the Common Equivalent Rate occurs during
the period beginning on the first day of such fifteen-day period and ending on
the applicable redemption date, the Current Market Price as determined pursuant
to the foregoing shall be appropriately adjusted to reflect the occurrence of
such event.
(iii) Notice of Redemption. The Company shall provide notice of any
redemption of the shares of this Series to holders of record of this Series to
be called for redemption not less than 15 nor more than 60 days prior to the
date fixed for such redemption. Such notice shall be provided by mailing notice
of such redemption first class postage prepaid, to each holder of record of
shares of this Series to be redeemed, at such holder's address as it appears on
the stock register of the Company; provided, however, that neither failure to
give such notice nor any defect therein shall affect the validity of the
proceeding for the redemption of any shares of this Series to be redeemed.
Each such notice shall state, as appropriate, the following and may
contain such other information as the Company deems advisable:
(A) the redemption date;
(B) that all outstanding shares of this Series are to be redeemed or,
in the case of a call for redemption of fewer than all outstand-
ing shares of this Series, the number of such shares held by such
holder to be redeemed;
(C) the Call Price, the number of shares of Common Stock deliverable
upon redemption of each share of this Series to be redeemed and
the Current Market Price used to calculate such number of shares
of Common Stock;
(D) the place or places where certificates for such shares are to be
surrendered for redemption; and
(E) that dividends on the shares of this Series to be redeemed shall
cease to accrue on such redemption date (except as otherwise
provided herein).
(iv) Deposit of Shares and Funds. The Company's obligation to deliver
shares of Common Stock and provide funds upon redemption in accordance with this
paragraph (3) shall
5
be deemed fulfilled if, on or before a redemption date, the Company shall
irrevocably deposit, with a bank or trust company, or an affiliate of a bank or
trust company, having an office or agency in New York City and having a capital
and surplus of at least $50,000,000, or shall set aside or make other reasonable
provision for the issuance of such number of shares of Common Stock as are
required to be delivered by the Company pursuant to this paragraph (3) upon the
occurrence of the related redemption (and for the payment of cash in lieu of the
issuance of fractional share amounts and accrued and unpaid dividends payable in
cash on the shares to be redeemed as and to the extent provided by this para-
graph (3)). Any interest accrued on such funds shall be paid to the Company
from time to time. Any shares of Common Stock or funds so deposited and
unclaimed at the end of two years from such redemption date shall be repaid and
released to the Company, after which the holder or holders of such shares of
this Series so called for redemption shall look only to the Company for delivery
of such shares of Common Stock or funds.
(v) Surrender of Certificates; Status. Each holder of shares of this
Series to be redeemed shall surrender the certificates evidencing such shares
(properly endorsed or assigned for transfer, if the Board of Directors of the
Company shall so require and the notice shall so state) to the Company at the
place designated in the notice of such redemption and shall thereupon be
entitled to receive certificates evidencing shares of Common Stock and to
receive any funds payable pursuant to this paragraph (3) following such surren-
der and following the date of such redemption. In case fewer than all the
shares represented by any such surrendered certificate are called for redemp-
tion, a new certificate shall be issued at the expense of the Company represent-
ing the unredeemed shares. If such notice of redemption shall have been given,
and if on the date fixed for redemption shares of Common Stock and funds
necessary for the redemption shall have been irrevocably either set aside by the
Company separate and apart from its other funds or assets in trust for the
account of the holders of the shares to be redeemed or converted (and so as to
be and continue to be available therefor) or deposited with a bank or a trust
company or an affiliate thereof as provided herein or the Company shall have
made other reasonable provision therefor, then, notwithstanding that the
certificates evidencing any shares of this Series so called for redemption or
subject to conversion shall not have been surrendered, the shares represented
thereby so called for redemption shall be deemed no longer outstanding, divi-
dends with respect to the shares so called for redemption shall cease to accrue
on the date fixed for redemption (except that holders of shares of this Series
at the close of business on a record date for any payment of dividends shall be
entitled to receive the dividend payable on such shares on the corresponding
Dividend Payment Date notwithstanding the redemption of such shares following
such record date and prior to such Dividend Payment Date) and all rights with
respect to the shares so called for redemption shall forthwith after such date
cease and terminate, except for the rights of the holders to receive the shares
of Common Stock and funds, if any, payable pursuant to this paragraph (3)
without interest upon surrender of their certificates therefor. Holders of
shares of this Series that are redeemed shall not be entitled to receive
dividends declared and paid on such shares of Common Stock, and such shares of
Common Stock shall not be entitled to vote, until such shares of Common Stock
are issued upon the surrender of the certificates representing such shares of
this Series and upon such surrender
6
such holders shall be entitled to receive such dividends declared and paid on
such shares of Common Stock subsequent to such redemption date.
(c) Conversion at Option of Holder. Shares of this Series are convert-
ible, in whole or in part, at the option of the holders thereof, at any time
prior to the Mandatory Conversion Date, unless previously redeemed, into shares
of Common Stock at a rate of .806 of a share of Common Stock for each share of
this Series (the "Optional Conversion Rate") (equivalent to a conversion price
of $24.81 per share of Common Stock), subject to adjustment as set forth below.
The right to convert shares of this Series called for redemption shall terminate
at the close of business on the redemption date.
Conversion of shares of this Series may be effected by delivering certifi-
cates evidencing such shares, together with written notice of conversion and a
proper assignment of such certificates to the Company or in blank, to the office
or agency to be maintained by the Company for that purpose (and, if applicable,
payment of an amount equal to the dividend payable on such shares), and other-
wise in accordance with conversion procedures established by the Company. Each
conversion shall be deemed to have been effected immediately prior to the close
of business on the date on which the foregoing requirements shall have been
satisfied. The conversion shall be at the Optional Conversion Rate in effect at
such time and on such date.
Holders of shares of this Series at the close of business on a record date
for any payment of dividends shall be entitled to receive the dividend payable
on such shares on the corresponding Dividend Payment Date notwithstanding the
conversion of such shares following such record date and prior to such Dividend
Payment Date. However, shares of this Series surrendered for conversion after
the close of business on a record date for any payment of dividends and before
the opening of business on the next succeeding Dividend Payment Date must be
accompanied by payment in cash of an amount equal to the dividend thereon which
is to be paid on such Dividend Payment Date (unless such shares are subject to
redemption on a redemption date in that period). Except as provided above, the
Company shall make no payment or allowance for unpaid dividends whether or not
in arrears, on converted shares of this Series or for dividends or distributions
on the shares of Common Stock issued upon such conversion.
(d) Common Equivalent Rate and Optional Conversion Rate Adjustments. The
Common Equivalent Rate and the Optional Conversion Rate shall be subject to
adjustment from time to time as provided below in this paragraph.
(i) If the Company shall:
(A) pay a dividend or make a distribution with respect to its
Common Stock in shares of such stock,
(B) subdivide or split its outstanding Common Stock into a
greater number of shares,
7
(C) combine its outstanding shares of Common Stock into a
smaller number of shares, or
(D) issue by reclassification of its shares of Common Stock
any shares of common stock of the Company,
then, in any such event, the Common Equivalent Rate and the
Optional Conversion Rate in effect immediately prior to such
event shall each be adjusted so that the holder of any shares of
this Series shall thereafter be entitled to receive, upon Manda-
tory Conversion or upon conversion at the option of the holder,
the number of shares of Common Stock of the Company which such
holder would have owned or been entitled to receive immediately
following any event described above had such shares of this
Series been converted immediately prior to such event or any
record date with respect thereto. Such adjustment shall become
effective at the opening of business on the business day next
following the record date for determination of stockholders
entitled to receive such dividend or distribution in the case of
a dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, split,
combination or reclassification. Such adjustment shall be made
successively.
(ii) If the Company shall, after the date hereof, issue rights or
warrants to all holders of its Common Stock entitling them (for a
period not exceeding forty-five days from the date of such issu-
ance) to subscribe for or purchase shares of Common Stock at a
price per share less than the current market price of the Common
Stock, then in each case the Common Equivalent Rate and Optional
Conversion Rate shall each be adjusted by multiplying the Common
Equivalent Rate and the Optional Conversion Rate, in effect
immediately prior to the date of issuance of such rights or
warrants, by a fraction, of which the numerator shall be the
number of shares of Common Stock outstanding on the date of
issuance of such rights or warrants, immediately prior to such
issuance, plus the number of additional shares of Common Stock
offered for subscription or purchase pursuant to such rights or
warrants, and of which the denominator shall be the number of
shares of Common Stock outstanding on the date of issuance of
such rights or warrants, immediately prior to such issuance, plus
the number of additional shares of Common Stock which the aggre-
gate offering price of the total number of shares of Common Stock
so offered for subscription or purchase pursuant to such rights
or warrants would purchase at such current market price (deter-
mined by multiplying such total number of shares by the exercise
price of such rights or warrants and dividing the product so
obtained by such current market price). Such adjustment shall
become effective at the opening of business on the business day
next following the record date for the determination of stock-
holders entitled to receive such rights or warrants. To the
extent that shares of Common Stock are not delivered
8
after the expiration of such rights or warrants, the Common
Equivalent Rate shall be readjusted to the Common Equivalent Rate
which would then be in effect had the adjustments been made upon
the issuance of such rights or warrants been made upon the basis
of delivery of only the number of shares of Common Stock actually
delivered. Such adjustment shall be made successively.
(iii) If the Company shall pay a dividend or make a distribution to all
holders of its Common Stock of evidences of its indebtedness or
other assets (excluding any dividends or distributions referred
to in subparagraph (i) above or any cash dividends) or shall
issue to all holders of its Common Stock rights or warrants to
subscribe for or purchase any of its securities (other than those
referred to in subparagraph (ii) above), then in each such case,
the Common Equivalent Rate and the Optional Conversion Rate shall
each be adjusted by multiplying the Common Equivalent Rate and
the Optional Conversation Rate in effect on the record date
mentioned below, by a fraction of which the numerator shall be
the current market price per share of the Common Stock on the
record date for the determination of stockholders entitled to
receive such dividend or distribution, and of which the denomina-
tor shall be such current market price per share of Common Stock
less the fair market value (as determined by the Board of Direc-
tors of the Company, whose determination shall be conclusive, and
described in a resolution adopted with respect thereto) as of
such record date of the portion of the assets or evidences of
indebtedness so distributed or of such subscription rights or
warrants applicable to one share of Common Stock. Such adjust-
ment shall become effective on the opening of business on the
business day next following the record date for the determination
of stockholders entitled to receive such dividend or distribu-
tion. Such adjustment shall be made successively.
(iv) Any shares of Common Stock issuable in payment of a dividend
shall be deemed to have been issued immediately prior to the
close of business on the record date for such dividend for pur-
poses of calculating the number of outstanding shares of Common
Stock under subparagraph (ii) above. For purposes of any compu-
tation under subparagraphs (ii) and (iii) above, the current
market price per share of Common Stock at any date shall be
deemed to be the average of the daily Closing Prices for the
thirty consecutive Trading Dates preceding the date in question;
provided, however, if any event that results in an adjustment of
the Common Equivalent Rate occurs during such thirty-day period,
the current market price as determined pursuant to the foregoing
shall be appropriately adjusted to reflect the occurrence of such
event.
(v) The Company shall also be entitled to make upward adjustments in
the Common Equivalent Rate, the Optional Conversion Rate and the
Call Price,
9
as it in its discretion shall determine to be advisable, in order
that any stock dividends, subdivisions of shares, distribution of
rights to purchase stock or securities, or distribution of secu-
rities convertible into or exchangeable for stock (or any trans-
action which could be treated as any of the foregoing transac-
tions pursuant to Section 305 of the Internal Revenue Code of
1986, as amended) hereafter made by the Company to its stockhold-
ers shall not be taxable.
(vi) In any case in which subparagraph (3)(d) shall require that an
adjustment as a result of any event become effective at the
opening of business on the business day next following a record
date and the date fixed for conversion pursuant to subparagraph
(3)(a) or redemption pursuant to subparagraph (3)(b) occurs after
such record date, but before the occurrence of such event, the
Company may in its sole discretion, elect to defer the following
until after the occurrence of such event: (A) issuing to the
holder of any converted or redeemed shares of this Series the
additional shares of Common Stock issuable upon such conversion
or redemption over the shares of Common Stock issuable before
giving effect to such adjustment and (B) paying to such holder
any amount in cash in lieu of a fractional share of Common Stock
pursuant to subparagraph (3)(g).
(vii) All adjustments to the Common Equivalent Rate and the Optional
Conversion Rate shall be calculated to the nearest 1/1000th of a
share of Common Stock (or if there is not a nearest 1/1000th of a
share to the next lower 1/1000th of a share). No adjustment in
the Common Equivalent Rate and the Optional Conversion Rate shall
be required unless such adjustment would require an increase or
decrease of at least one percent therein; provided, however, that
any adjustments which by reason of this subparagraph are not
required to be made shall be carried forward and taken into
account in any subsequent adjustment.
(e) Adjustment for Consolidation or Merger. In case of any consolidation
or merger to which the Company is a party (other than a merger or consolidation
in which the Company is the continuing corporation and in which the Common Stock
outstanding immediately prior to the merger or consolidation remains unchanged),
or in case of any sale or transfer to another corporation of the property of the
Company as an entirety or substantially as an entirety, or in case of any
statutory exchange of securities with another corporation (other than in
connection with a merger or acquisition), proper provision shall be made so that
each share of this Series shall, after consummation of such transaction, be
subject to (i) conversion at the option of the holder into the kind and amount
of securities, cash or other property receivable upon consummation of such
transaction by a holder of the number of shares of Common Stock into which such
share of this Series might have been converted immediately prior to consummation
of such transaction, (ii) conversion on the Mandatory Conversion Date into the
kind and amount of securities, cash or other property receivable upon consumma-
tion of such transaction by a
10
holder of the number of shares of Common Stock into which such share of this
Series would have converted if the conversion on the Mandatory Conversion Date
had occurred immediately prior to the date of consummation of such transaction,
and (iii) redemption on any redemption date in exchange for the kind and amount
of securities, cash or other property receivable upon consummation of such
transaction by a holder of the number of shares of Common Stock that would have
been issuable at the Call Price in effect on such redemption date upon a
redemption of such share immediately prior to consummation of such transaction,
assuming that the public announcement of such redemption had been made on the
last possible date permitted by the terms of this Series and applicable law;
assuming in each case that such holder of Common Stock failed to exercise rights
of election, if any, as to the kind or amount of securities, cash or other
property receivable upon consummation of such transaction (provided that if the
kind or amount of securities, cash or other property receivable upon consumma-
tion of such transaction is not the same for each non-electing share, then the
kind and amount of securities, cash or other property receivable upon consumma-
tion of such transaction for each non-electing share shall be deemed to be the
kind and amount so receivable per share by a plurality of the non-electing
shares). The kind and amount of securities into which the shares of this Series
shall be convertible after consummation of such transaction shall be subject to
adjustment as described in the immediately preceding paragraph following the
date of consummation of such transaction. The Company may not become a party to
any such transaction unless the terms thereof are consistent with the foregoing.
(f) Notice of Adjustments. Whenever the Common Equivalent Rate and
Optional Conversion Rate are adjusted as herein provided, the Company shall:
(i) forthwith compute the adjusted Common Equivalent Rate and Option-
al Conversion Rate in accordance herewith and prepare a certifi-
cate signed by an officer of the Company setting forth the ad-
justed Common Equivalent Rate and the Optional Conversion Rate,
the method of calculation thereof in reasonable detail and the
facts requiring such adjustment and upon which such adjustment is
based, which certificate shall be conclusive, final and binding
evidence of the correctness of the adjustment, and file such
certificate forthwith with the transfer agent for the shares of
this Series and the Common Stock; and
(ii) mail a notice to the holders of the outstanding shares of this
Series stating that the Common Equivalent Rate and the Optional
Conversion Rate have been adjusted, the facts requiring such
adjustment and upon which such adjustment is based and setting
forth the adjusted Common Equivalent Rate and Optional Conversion
Rate, such notice to be mailed at or prior to the time the Compa-
ny mails an interim statement to its stockholders covering the
fiscal quarter during which the facts requiring such adjustment
occurred, but in any event within 45 days of the end of such
fiscal quarter.
(g) Notices. In case, at any time while any of the shares of this
Series are outstanding,
11
(i) the Company shall declare a dividend (or any other distribution)
on its Common Stock, excluding any cash dividends; or
(ii) the Company shall authorize the issuance to all holders of its
Common Stock of rights or warrants to subscribe for or purchase
shares of its Common Stock or of any other subscription rights or
warrants; or
(iii) of any reclassification of Common Stock of the Company (other
than a subdivision or combination thereof) or of any consolida-
tion or merger to which the Company is a party and for which
approval of any stockholders of the Company is required (except
for a merger of the Company into one of its subsidiaries solely
for the purpose of changing the corporate domicile of the Company
to another state of the United States and in connection with
which there is no substantive change in the rights or privileges
of any securities of the Company other than changes resulting
from differences in the corporate statutes of the then existing
and the new state of domicile), or of the sale or transfer of all
or substantially all of the assets of the Company; or
(iv) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of the shares of this Series, and shall cause to be
mailed to the holders of shares of this Series at their last addresses as they
shall appear on the stock register, at least 10 days before the date hereinafter
specified (or the earlier of the dates hereinafter specified, in the event that
more than one date is specified), a notice stating (A) the date on which a
record is to be taken for the purpose of such dividend, distribution, rights or
warrants, or, if a record is not to be taken, the date as of which the holders
of Common Stock of record to be entitled to such dividend, distribution, rights
or warrants are to be determined, or (B) the date on which any such reclassifi-
cation, consolidation, merger, sale, transfer, dissolution, liquidation or
winding up is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their Common Stock for securities or other property (including cash), if any,
deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up. The failure to give or receive the
notice required by this paragraph (g) or any defect therein shall not affect the
legality or validity of any such dividend, distribution, right or warrant or
other action.
(h) Effect of Conversions and Redemptions. The person or persons in
whose name or names any certificate or certificates for shares of Common Stock
shall be issuable upon any conversion or redemption shall be deemed to have
become on the date of any such conversion or redemption the holder or holders of
record of the shares represented thereby; provided, however, that any such
surrender on any date when the stock transfer books of the Company shall be
closed shall constitute the person or persons in whose name or names the
certificate or certificates for such shares are to be issued as the record
holder or holders thereof for all
12
purposes at the opening of business on the next succeeding day on which such
stock transfer books are open.
(i) No Fractional Shares. No fractional shares or script representing
fractional shares of Common Stock shall be issued upon the redemption or
conversion of any shares of this Series. In lieu of any fractional share
otherwise issuable in respect of all the shares of this Series of any holder
which are redeemed or converted on any redemption date or upon Mandatory
Conversion or any optional conversion, such holder shall be entitled to receive
an amount in cash (computed to the nearest cent) equal to the same fraction of
the (i) Current Market Price in the case of redemption, or (ii) Closing Price of
the Common Stock determined (A) as of the fifth Trading Date immediately
preceding the Mandatory Conversion Date, in the case of Mandatory Conversion,
(B) as of the second Trading Date immediately preceding the effective date of
conversion, in the case of an optional conversion by a holder. If more than one
share shall be surrendered for conversion or redemption at one time by or for
the same holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares of this Series so surrendered or redeemed.
(j) Reissuance. Shares of this Series that have been issued and reac-
quired in any manner, including shares purchased, exchanged, redeemed or
converted, shall not be reissued as part of this Series and shall (upon compli-
ance with any applicable provisions of the laws of the State of Delaware) have
the status of authorized and unissued shares of the Preferred Stock undesignated
as to series and may be redesignated and reissued as part of any series of
Preferred Stock.
(k) Definitions. As used in this Certificate:
(i) the term "business day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions
in the State of New York or the State of Michigan are
authorized or obligated by law or executive order to close
or are closed because of a banking moratorium or other-
wise;
(ii) the term "Closing Price" on any day shall mean the closing
sale price regular way on such day or, in case no such
sale takes place on such day, the average of the reported
closing bid and asked prices regular way, in each case on
the New York Stock Exchange or, if the Common Stock is not
listed or admitted to trading on such Exchange, then on
the principal national securities exchange on which the
Common Stock is listed or admitted to trading (which shall
be the national securities exchange on which the greatest
number of shares of Common Stock has been traded during
the five consecutive Trading Dates ending on and including
the date of determination), or, if not quoted or listed or
admitted to trading on any national securities exchange or
quotation system, the average of the closing bid and
13
asked prices of the Common Stock on the over-the-counter
market on the day in question as reported by the National
Quotation Bureau Incorporated, or a similar generally
accepted reporting service, or if not so available as
determined in good faith by the Board of Directors, on the
basis of such relevant factors as it in good faith consid-
ers appropriate;
(iii) the term "Trading Date" shall mean a date on which the New
York Stock Exchange (or any successor thereto) is open for
the transaction of business.
(l) Payment of Taxes. The Company shall pay any and all documentary,
stamp or similar issue or transfer taxes payable in respect of the issue or
deliver of shares of Common Stock on the redemption or conversion of shares of
this Series pursuant to this paragraph (3); provided, however, that the Company
shall not be required to pay any tax which may be payable in respect of any
registration of transfer involved in the issue or delivery of shares of Common
Stock in a name other than that of the registered holder of shares of this
Series redeemed or converted or to be redeemed or converted, and no such issue
or delivery shall be made unless and until the person requesting such issue has
paid to the Company the amount of any such tax or has established, to the
satisfaction of the Company, that such tax has been paid.
(m) Reservation of Common Stock. The Company shall at all times reserve
and keep available, free from preemptive rights, out of the aggregate of its
authorized but unissued Common Stock and/or its issued Common Stock held in its
treasury, for the purpose of effecting any Mandatory Conversion of the shares of
this Series or any conversion of the shares of this Series at the option of the
holder, the full number of shares of Common Stock then deliverable upon any such
conversion of all outstanding shares of this Series.
(4) Liquidation Rights. (a) In the event of the liquidation, dissolu-
tion, or winding up of the business of the Company, whether voluntary or
involuntary, the holders of shares of this Series then outstanding, after
payment or provision for payment of the debts and other liabilities of the
Company and the payment or provision for payment of any distribution on any
shares of the Company having a preference and a priority over the shares of this
Series on liquidation, and before any distribution to the holders of the Common
Stock or any other stock ranking junior to the shares of this Series with
respect to distribution upon liquidation, dissolution or winding up, shall be
entitled to be paid out of the assets of the Company available for distribution
to its stockholders, an amount per share of this Series in cash equal to the sum
of (i) the liquidation value set forth in paragraph (1) above plus (ii) all
accrued and unpaid dividends thereon to the date of liquidation, dissolution or
winding up, before any payment shall be made or any assets distributed to the
holders of any of shares of the Company ranking junior to the shares of this
Series upon liquidation. In the event the assets of the Company available for
distribution to the holders of the shares of this Series upon any dissolution,
liquidation or winding up of the Company shall be insufficient to pay in full
the liquidation payments payable to the holders of outstanding shares of this
Series and any shares of the Company ranking on a
14
parity with the shares of this Series upon liquidation, then the holders of all
such shares shall share ratably in such distribution of assets in accordance
with the amount which would be payable on such distribution if the amounts to
which the holders of outstanding shares of this Series and the holders of
outstanding shares of such shares of the Company ranking on a parity with the
shares of this Series upon liquidation are entitled were paid in full. Except
as provided in this paragraph (4), holders of this Series shall not be entitled
to any distribution in the event of liquidation, dissolution or winding up of
the affairs of the Company.
(b) For the purposes of this paragraph (4), none of the following shall
be deemed to be a voluntary or involuntary liquidation, dissolution or winding
up of the Company:
(i) the voluntary sale, conveyance, lease, exchange or trans-
fer (for cash, shares of stock, securities or other con-
sideration) of all or substantially all of the property or
assets of the Company;
(ii) the consolidation or merger of the Company with or into
one or more other corporations, or other associations;
(iii) the consolidation or merger of one or more corporations or
other associations with or into the Company; or
(iv) the participation by the Company in a share exchange.
(5) Definition. As used in this Certificate, the term "Common Stock"
shall mean any stock of any class of the Company which has no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company and which is
not subject to redemption by the Company. However, shares of Common Stock
issuable upon conversion of shares of this Series shall include only shares of
the class designated as Common Stock as of the original date of issuance of
shares of this Series, or shares of the Company of any class or classes result-
ing from any reclassification or reclassification thereof and which have no
preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company
and which are not subject to redemption by the Company; provided that if at any
time there shall be more than one such resulting class, the shares of each such
class then so issuable shall be substantially in the proportion which the total
number of shares of such class resulting from such reclassification bears to the
total number of shares of all classes resulting from all such reclassification.
(6) No Preemptive Rights. The holders of shares of this Series shall
have no preemptive rights, including preemptive rights with respect to any
shares of capital stock or other securities of the Company convertible into or
carrying rights or options to purchase any such shares.
15
B. On June 26, 1993, the Board of Directors adopted certain resolu-
tions with respect to the authority of the Pricing Committee of the Board of
Directors and fixing the voting rights of the $1.20 Convertible Preferred Stock
as follows:
RESOLVED, that pursuant to the authority granted and vested in the Board
of Directors, this Board of Directors empowers the Pricing Committee of the
Board of Directors to authorize the issuance of a series (this "Series"), of the
Preferred Stock of the Company (the "Preferred Stock"), which shall consist of
11,500,000 shares, and to fix the powers, designations, preferences and rela-
tive, participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, other than voting rights, of the shares of
this Series.
RESOLVED, that this Board of Directors fixes the voting rights of the
shares of this Series as follows:
(1) Voting Rights. (a) The holders of shares of this Series shall have
the right with the holders of Common Stock to vote in the election of directors
and upon each other matter coming before any meeting of the stockholders on the
basis of 4/5 of a vote for each share held. The holders of shares of this Series
and the holders of Common Stock shall vote together as one class except as
otherwise set forth herein or as otherwise provided by law or by the Restated
Certificate of Incorporation of the Company.
(b) If at any time dividends payable on the shares of this Series are in
arrears and unpaid in an aggregate amount equal to or exceeding the aggregate
amount of dividends payable thereon for six quarterly dividend periods, the
holders of the shares of this Series, together with the holders of any other
series of Preferred Stock then having a right to elect Directors as a result of
a dividend arrearage, shall have the exclusive right (superseding the separate
right of such other series to elect Directors so long as shares of this Series
remain outstanding, except as otherwise expressly provided in the certificate of
designation establishing such other series), voting separately as a class with
any such other series, to elect two Directors of the Company, such Directors to
be in addition to the number of Directors constituting the Board of Directors of
the Company immediately prior to the accrual of such right. Such right of the
holders of shares of this Series to elect two Directors shall, when vested,
continue until all dividends in default on the shares of this Series shall have
been paid in full and, when so paid, such right of the holders of shares of this
Series to elect two Directors separately as a class shall cease, subject,
always, to the same provisions for the vesting of such right of the holders of
the shares of this Series to elect two Directors in the case of future dividend
defaults. At any time when such right to elect such Directors separately as a
class shall have so vested, the Company may, and upon the written request of the
holders of record of not less than 20 percent of the total number of shares of
this Series and such other series of Preferred Stock then outstanding shall,
call a special meeting of the holders of such shares for the election of
Directors to fill such newly-created directorships. In the case of such a
written request, such special meeting shall be held within 90 days after the
delivery of such request and, in either case, at the place and upon the notice
provided by law and in the Bylaws of the Company, provided that the Company
shall not be required to call such a special meeting if such request is received
less than 120 days
16
before the date fixed for the next ensuing annual meeting of stockholders of the
Company, in which case such newly-created directorships shall be filled by the
holders of such shares of this Series and such other series of Preferred Stock
at such meeting.
The term of office of each Director elected pursuant to the preceding
paragraph shall terminate on the earlier of (i) the next annual meeting of
stockholders at which a successor shall have been elected and qualified or (ii)
the termination of the right of the holders of shares of this Series and such
other series of Preferred Stock to vote for Directors pursuant to the preceding
paragraph. If, prior to the end of the term of any Director elected as afore-
said, a vacancy in the office of such Director shall occur, such vacancy shall
be filled for the unexpired term by the appointment by the remaining Director
elected as aforesaid of a new Director for the unexpired term of such former
Director. If both Directors so elected by the holders of shares of this Series
and such other series of Preferred Stock shall cease to serve as Directors
before their terms shall expire, the holders of the shares of this Series,
together with the holders of such other series of Preferred Stock may, at a
special meeting of the holders called as provided above, elect successors to
hold office for the unexpired terms of such Directors whose places shall be
vacant.
(c) So long as any shares of this Series remain outstanding, the consent
of the holders of at least two-thirds thereof (voting separately as a class)
given in person or by proxy, at any annual meeting or special meeting called for
such purpose, shall be necessary to amend, alter or repeal any of the provisions
of the Restated Certificate of Incorporation of the Company which would materi-
ally and adversely affect any right, preference, privilege or voting power of
the shares of this Series; provided, however, that any such amendment, alter-
ation or repeal, that would authorize, create or issue any additional shares of
Preferred Stock or any other shares of stock (whether or not already authorized)
ranking senior to, on a parity with or junior to the shares of this Series as to
dividends or on the distribution of assets upon liquidation, dissolution or
winding up of the affairs of the Company, shall be deemed not to materially and
adversely affect such right, preference, privilege or voting power and shall not
be subject to approval by the holders of shares of this Series.
MascoTech, Inc.
By:/s/ Richard A. Manoogian
Richard A. Manoogian
Chairman of the Board and
Chief Executive Officer
ATTEST:
/s/ James Tompkins
James Tompkins
Assistant Secretary
17
CERTIFICATE OF ELIMINATION OF THE
DESIGNATION OF THE 12% EXCHANGEABLE PREFERRED STOCK
OF MASCOTECH, INC.
_____________________________________
Pursuant to Section 151(g)
of the General Corporation Law
of the State of Delaware
_____________________________________
MascoTech, Inc., a corporation organized and existing under the laws of
the State of Delaware (the "Corporation"), in accordance with the provisions of
Section 151(g) of the General Corporation Law of the State of Delaware, hereby
certifies as follows:
1. That, pursuant to Section 151 of the General Corporation Law of
the State of Delaware and authority granted in the Restated
Certificate of Incorporation of the Corporation, the Board of
Directors of the Corporation, by resolution duly adopted on
December 12, 1990, authorized the issuance of a series of 775,000
shares of 12% Exchangeable Preferred Stock, par value $1.00 per
share (this "Series"), and established the voting powers, desig-
nations, preferences and relative, participating and other
rights, and the qualifications, limitations or restrictions
thereof, and, on December 19, 1990, filed a Certificate of Desig-
nations with respect to this Series in the office of the Secre-
tary of State of Delaware.
2. That no shares of such Series are outstanding and no shares
thereof will be issued.
3. That, at a duly called meeting of the Board of Directors of the
Corporation, the following resolution was adopted:
"WHEREAS, by resolution of the Board
of Directors of the Corporation,
dated December 12, 1990, and by a
Certificate of Designations with
respect to the 12% Exchangeable Pre-
ferred Stock filed in the office of
the Secretary of State of Delaware
on December 19, 1990, this Corpora-
tion authorized the issuance of a
series of 775,000 shares of 12% Ex-
changeable Preferred Stock of the
Corporation (this "Series") and es-
tablished the voting pow-
ers, designations, preferences and
relative, participating and other
rights, and the qualifications, lim-
itations or restrictions thereof;
and
WHEREAS, as of the date hereof no
shares of this Series are outstand-
ing and no shares of this Series
will be issued; and
WHEREAS, it is desirable that all
reference to this Series be elimi-
nated from the Corporation's Restat-
ed Certificate of Incorporation, as
amended;
IT IS HEREBY RESOLVED, that the
Chairman of the Board, the President
or any Vice President and the Secre-
tary or any Assistant Secretary of
the Corporation are authorized and
directed in the name and on behalf
of the Corporation to execute and
file a Certificate with the Secre-
tary of State of the State of Dela-
ware setting forth a copy of this
resolution whereupon all reference
to such Series shall be eliminated
from the Corporation's Restated Cer-
tificate of Incorporation, as amend-
ed."
4. That, accordingly, all reference to the 12% Exchangeable Pre-
ferred Stock, par value $1.00 per share, of the Corporation is
eliminated from the Corporation's Restated Certificate of Incor-
poration, as amended.
IN WITNESS WHEREOF, MascoTech, Inc. has caused this Certificate to be
signed by a Vice President and attested by an Assistant Secretary, as of this
1st day of October, 1993.
MASCOTECH, INC.
[Corporate Seal] By:/s/Timothy Wadhams
Attest:
By:/s/Barry J. Silverman
Assistant Secretary
2
CERTIFICATE OF DECREASE OF THE NUMBER OF SHARES
OF $1.20 CONVERTIBLE PREFERRED STOCK OF MASCOTECH, INC.
DESIGNATED AS $1.20 CONVERTIBLE PREFERRED STOCK
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
The Restated Certificate of Incorporation, as amended to date, of
MascoTech, Inc., a Delaware corporation (the "Corporation"), authorizes
275,000,000 shares of capital stock, which consists of 250,000,000 shares of
Common Stock and 25,000,000 shares of Preferred Stock.
The Corporation, pursuant to authority conferred on the Board of Directors
of the Corporation by its Restated Certificate of Incorporation and in accor-
dance with the provisions of Section 151 of the General Corporation Law of the
State of Delaware, certifies that the Board of Directors of the Corporation, at
a meeting thereof duly called and held on September 14, 1993, at which a quorum
was present and acting throughout, duly adopted the following resolution:
"RESOLVED: That pursuant to the authority
expressly granted and vested in the Board of Direc-
tors of the Corporation in accordance with the
provisions of its Restated Certificate of Incorpo-
ration, the number of shares of the series of the
$1.20 Convertible Preferred Stock of the Corpora-
tion designated as "$1.20 Convertible Preferred
Stock" is reduced from 11,500,000 shares to
10,800,000 shares and that the Chairman of the
Board, the President or any Vice President and the
Secretary or any Assistant Secretary of the Corpo-
ration are authorized and directed in the name and
on behalf of the Corporation to execute and file a
Certificate of Decrease with the Secretary of State
of the State of Delaware and to take any other
actions deemed necessary or appropriate to effectu-
ate this resolution."
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to be
affixed hereto and this Certificate of Decrease to be signed by a Vice President
and attested by an Assistant Secretary this 1st day of October, 1993.
MascoTech, Inc.
ATTEST:
By: /s/ Timothy Wadhams
/s/ Barry J. Silverman
Assistant Secretary
[Corporate Seal]
CERTIFICATE OF OWNERSHIP AND MERGER
OF
MASCOTECH BRAUN CO.
INTO
MASCOTECH, INC.
MascoTech, Inc., a corporation organized and existing under the laws of
the State of Delaware, certifies that:
FIRST: That this corporation was incorporated on the 15th day of March,
1984, pursuant to the General Corporation Law of the State of Delaware (the
"GCL").
SECOND: That this company owns all of the outstanding shares of stock
MascoTech Braun Co., a corporation incorporated on the 8th day of January, 1947,
pursuant to the Business Corporation Law of the State of Michigan.
THIRD: That this corporation, by the following resolutions of its Board
of Directors, duly adopted at a meeting held on the 22nd day of November, 1993,
determined to and approve the did merger into itself of said MascoTech Braun Co.
RESOLVED, that the company is authorized to execute a Certificate
of Ownership and Merger, Certificate of Merger and Agreement of Merger in
substantially the form attached hereto as Attachment A (collectively the
"Merger Agreement"), pursuant to which MascoTech Braun Co., a Michigan
corporation and wholly-owned subsidiary of the company, will be merged
with and into the company, and that the transactions contemplated in the
Merger Agreement are approved in all respects;
FURTHER RESOLVED, that the merger shall become effective on
January 1, 1994;
FURTHER RESOLVED, that the officers of the company are authorized
to take any and all actions and to execute, deliver and file any and all
instruments, agreements, certificates, and other documents as such officer
may deem necessary or appropriate to effectuate the foregoing resolutions
or to carry out the purpose of intent thereof, the taking of any such
action and the execution, delivery or filing of any such instrument,
agreement, certificate or documents, as the case may be, conclusively to
evidence the due authorization thereof by the company.
FOURTH: This Certificate of Ownership and Merger shall be effective on
January 1, 1994.
FIFTH: Anything herein or elsewhere to the contrary notwithstanding, this
merger may be amended or terminated and abandoned by the Board of Directors of
MascoTech, Inc. at any time prior to the date of filing the merger with the
Secretary of State.
MASCOTECH, INC.
By /s/ Timothy Wadhams
Timothy Wadhams
Vice President
ATTEST:
By /s/ Eugene A. Gargaro, Jr.
Eugene A. Gargaro, Jr.
Secretary
CERTIFICATE OF ELIMINATION OF THE
DESIGNATION OF THE 10% EXCHANGEABLE PREFERRED STOCK
OF MASCOTECH, INC.
______________________________________________
Pursuant to Section 151(g)
of the General Corporation Law
of the State of Delaware
______________________________________________
MascoTech, Inc., a corporation organized and existing under the laws of
the State of Delaware (the "Corporation"), in accordance with the provisions of
Section 151(g) of the General Corporation Law of the State of Delaware, hereby
certifies as follows:
1. That, pursuant to Section 151 of the General Corporation Law of
the State of Delaware and authority granted in the Restated
Certificate of Incorporation of the Corporation, the Board of
Directors of the Corporation, by resolution duly adopted on
January 27, 1993, authorized the issuance of a series of
1,000,000 shares of 10% Exchangeable Preferred Stock, par value
$1.00 per share (this "Series"), and established the voting
powers, designations, preferences and relative, participating and
other rights, and the qualifications, limitations or restrictions
thereof, and, on March 26, 1993, filed a Certificate of Designa-
tions with respect to this Series in the office of the Secretary
of State of Delaware.
2. That no shares of such Series are outstanding and no shares
thereof will be issued.
3. That, at a duly called meeting of the Board of Directors of
Directors of the Corporation, the following resolution was adopt-
ed:
"WHEREAS, by resolution of the Board of
Directors of the Corporation, dated January
27, 1993, and by a Certificate of Designa-
tions with respect to the 10% Exchangeable
Preferred Stock filed in the office of the
Secretary of State of Delaware on March 26,
1993, this Corporation authorized the issu-
ance of a series of 1,000,000 shares of 10%
Exchangeable Preferred Stock of the Corpora-
tion (this "Series") and established the
voting powers, designations, preferences and
relative, participating and other rights,
and the qualifications, limitations or re-
strictions thereof; and
WHEREAS, as of the date hereof no shares of
this Series are outstanding and no shares of
this Series will be issued; and
WHEREAS, it is desirable that all reference
to this Series be eliminated from the
Corporation's Restated Certificate of Incor-
poration, as amended;
IT IS HEREBY RESOLVED, that the Chairman of
the Board, the President or any Vice Presi-
dent and the Secretary or any Assistant
Secretary of the Corporation are authorized
and directed in the name and on behalf of
the Corporation to execute and file a Cer-
tificate with the Secretary of State of the
State of Delaware setting forth a copy of
this resolution whereupon all reference to
such Series shall be eliminated from the
Corporation's Restated Certificate of Incor-
poration, as amended."
4. That, accordingly, all reference to the 10% Exchangeable Pre-
ferred Stock, par value $1.00 per share, of the Corporation is
eliminated from the Corporation's Restated Certificate of Incor-
poration, as amended.
IN WITNESS WHEREOF, MascoTech, Inc. has caused this Certificate to be
signed by a Vice President and attested by the Secretary, as of this 15th day of
December, 1993.
MascoTech, Inc.
[Corporate Seal] By: /s/Timothy Wadhams
Vice President
Attest:
By: /s/Eugene A. Gargaro
Secretary
2
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
MASCOTECH PRECISION HEADED PRODUCTS, INC.
INTO
MASCOTECH, INC.
MascoTech, Inc., a corporation organized and existing under the laws of
Delaware, (the "company"),
DOES HEREBY CERTIFY:
FIRST: That this corporation was incorporated on the 15th day of March,
1984, pursuant to the General Corporation Law of the State of Delaware.
SECOND: That this corporation owns all of the outstanding shares of
each class of the stock of MascoTech Precision Headed Products, Inc., a corpora-
tion incorporated on the 8th day of December, 1958, pursuant to the Business
Corporation Act of the State of Michigan.
THIRD: That this corporation, by the following resolutions of its Board
of Directors, duly adopted at a meeting held on the 7th day of December, 1994,
determined to and did merge into itself said MascoTech Precision Headed Prod-
ucts, Inc.;
FOURTH: This Certificate of Ownership and Merger shall be effective on
January 1, 1995.
FIFTH: That this corporation by the following resolutions of its Board
of Directors, determined to and did approve the merger of MascoTech Precision
Headed Products, Inc. into itself.
RESOLVED, that the company is authorized to execute a
Certificate of Ownership and Merger, Certificate of Merger and
Agreement of Merger in substantially the form attached hereto as
Attachment A (collectively the "Merger Agreement"), pursuant to
which MascoTech Precision Headed Products, Inc., a Michigan corpora-
tion and wholly-owned subsidiary of the company, will be merged with
and into the company, and that the transactions contemplated in the
Merger Agreement are approved in all respects;
1
FURTHER RESOLVED, that the merger shall become effective on
January 1, 1995;
FURTHER RESOLVED, that the officers of the company are
authorized to take any and all actions and to execute, deliver and
file any and all instruments, agreements, certificates, and other
documents as such officer may deem necessary or appropriate to
effectuate the foregoing resolutions or to carry out the purpose of
intent thereof, the taking of any such action and the execution,
delivery or filing of any such instrument, agreement, certificate or
documents, as the case may be, conclusively or documents, as the
case may be, conclusively to evidence the due authorization thereof
by the company.
IN WITNESS WHEREOF, said MascoTech, Inc. has caused this Certificate to be
signed by Timothy Wadhams, its Vice-President and attested by Eugene A. Gargaro,
Jr. its Secretary, this 1st day of December, 1994.
MASCOTECH, INC.
BY /s/ Timothy Wadhams
Timothy Wadhams
Vice President
ATTEST:
BY /s/ Eugene A. Gargaro, Jr.
Eugene A. Gargaro, Jr.
Secretary
2
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
TIEX METALS, INC.
INTO
MASCOTECH, INC.
MascoTech, Inc., a corporation organized and existing under the laws of
Delaware (the "company"),
DOES HEREBY CERTIFY:
FIRST: That this corporation was incorporated on the 15th day of
March, 1984, pursuant to the General Corporation Law of the State of Delaware.
SECOND: That this corporation owns all of the outstanding
shares of the stock of Tiex Metals, Inc., a corporation incorporated on the 7th
day of December, 1989, pursuant to the General Corporation Law of the State of
Delaware.
THIRD: That this corporation, by the following resolutions of
its Board of Directors, duly adopted at a meeting held on the 7th day of
December, 1994, determined to and did merge into itself said Tiex Metals, Inc.
FOURTH: This Certificate of Ownership and Merger shall be
effective on January 1, 1995;
FIFTH: That this corporation, by the following resolutions of its
Board of Directors, determined to and did approve the merger of Tiex Metals,
Inc. into itself.
RESOLVED, that the company is authorized to execute a
Certificate of Ownership and Merger, Certificate of Merger and
Agreement of Merger in substantially the form attached hereto as
Attachment A (collectively the "Merger Agreement"), pursuant to
which Tiex Metals, Inc., a Delaware corporation and wholly-owned
subsidiary of the company, will be merged with and into the company,
and that the transactions contemplated in the Merger Agreement are
approved in all respects;
1
FURTHER RESOLVED, that the merger shall become effective on
January 1, 1995;
FURTHER RESOLVED, that the officers of the company are
authorized to take any and all actions and to execute, deliver and
file any and all instruments, agreements, certificates, and other
documents as such officer may deem necessary or appropriate to
effectuate the foregoing resolutions or to carry out the purpose of
intent thereof, the taking of any such action and the execution,
delivery or filing of any such instrument, agreement, certificate or
documents, as the case may be, conclusively or documents, as the
case may be, conclusively to evidence the due authorization thereof
by the company.
IN WITNESS WHEREOF, said MascoTech, Inc., has caused this
Certificate to be signed by Timothy Wadhams, its Vice President, this 1st day of
December, 1994.
MASCOTECH, INC.
By /s/ Timothy Wadhams
Timothy Wadhams
Vice President
ATTEST:
BY /s/ Eugene A. Gargaro, Jr.
Eugene A. Gargaro, Jr.
2
EX-4.B
3
SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT, dated as of December 21, 1994
(this "Amendment") is by and among MASCOTECH, INC., a Delaware corporation, the
Banks, NBD BANK, N.A., a national banking association, as Agent for the Banks,
and COMERICA BANK, a Michigan banking association, THE BANK OF NEW YORK, a New
York banking corporation, THE FIRST NATIONAL BANK OF CHICAGO, a national banking
association, MORGAN GUARANTY TRUST COMPANY OF NEW YORK, a New York banking
association, and NATIONSBANK OF NORTH CAROLINA, N.A., a national banking
association, as Co-Agents.
RECITALS
A. The Company, the Banks, the Agent and the Co-Agents are parties to a
Credit Agreement dated as of September 2, 1993, as amended by a First Amendment
to Credit Agreement dated as of June 29, 1994. Capitalized terms used but not
defined in this Amendment shall have the respective meanings ascribed thereto in
such Agreement.
B. The Company, the Banks, the Agent and the Co-Agents are willing to
amend the Agreement as set forth herein.
TERMS
In consideration of the premises and of the mutual agreements herein
contained, the parties hereby agree as follows:
ARTICLE I. AMENDMENTS. Upon fulfillment of the conditions set forth in
Article III hereof, the Agreement shall be amended as follows:
The definition of "EBIT" contained in Section 1.1 is restated in its
entirety to read as follows:
"EBIT" means, for any period, Net Income, exclusive of any
Non-Cash Special Items, for such period plus, to the extent
deducted in determining such Net Income: (a) Interest Charges
for such period, (b) income and other taxes and (c) for all
purposes other than calculating the Interest Coverage Ratio in
determining the Applicable Margin, the portion of the special
charges not included in Non-Cash Special Items, recorded
through December 31, 1995, relating to the
sale and/or restructuring of certain of the business units of the
Company and its Subsidiaries, the general components of such sale
and/or restructuring to be announced no later than February 28,
1995, provided that for purposes of this definition such portion not
included in Non-Cash Special Items shall not exceed $30,000,000.
1.2 Section 7.5 is restated in its entirety as follows:
Total Leverage Ratio. The Company will not permit or
suffer the Total Leverage Ratio to be greater than
(a) 1.75 to 1.0 as of the last day of any fiscal quarter
of the Company occurring during the period from January
1, 1994 through December 30, 1994, (b) 1.75 to 1.0 as of
the last day of any fiscal quarter of the Company during
the period from December 31, 1994 through March 31,
1995, (c) 1.65 to 1.0 as of the last day of any fiscal
quarter of the Company occurring during the period from
April 1, 1995 through December 30, 1995, (d) 1.40 to 1.0
as of December 31, 1995, (e) 1.65 to 1.0 as of the last
day of any fiscal quarter of the Company occurring
during the period from January 1, 1996 through December
30, 1996, (f) 1.25 to 1.0 as of December 31, 1996, (g)
1.50 to 1.0 as of the last day of any fiscal quarter of
the Company occurring during the period from January 1,
1997 through December 30, 1997, (h) 1.0 to 1.0 as of
December 31, 1997, (i) 1.25 to 1.0 as of the last day of
any fiscal quarter of the Company occurring during the
period from January 1, 1998 through December 30, 1998,
(j) 1.0 to 1.0 as of December 31, 1998, and (k) 1.25 to
1.0 as of the last day of any fiscal quarter of the
Company thereafter.
1.3 Clause (a) of Section 7.8 is restated in its entirety as follows:
(a) The Company will not permit or suffer the Senior
Debt Coverage Ratio to be greater than (i) 5.50 to 1.00
at any time during the period from the Closing Date
through September 29, 1995, and (ii) 5.00 to 1.00 at any
time thereafter.
1.4 Clause (c) of Section 7.8 is restated in its entirety as follows:
(c) As used in this Section 7.8, the term "Maximum
Allowed Senior Debt Coverage Ratio" means (i) 4.25 to
1.00 on the Relevant Day immediately following the last
day of any fiscal quarter of the Company ending during
the period from the Closing Date through December 30,
1993, (ii) 4.00 to 1.00 on the Relevant Day immediately
following December 31, 1993, (iii) 4.25 to 1.00 on the
Relevant Day immediately following the last day of any
fiscal quarter of the
2
Company ending during the period from January 1, 1994 through
December 30, 1994, (iv) 3.50 to 1.00 on the Relevant Day immediately
following December 31, 1994, (v) 5.50 to 1.00 on the Relevant Day
immediately following the last day of any fiscal quarter of the
Company ending during the period from January 1, 1995 through
September 29, 1995, (vi) 3.75 to 1.00 on the Relevant Day
immediately following September 30, 1995, (vii) 3.50 to 1.00 on the
Relevant Day immediately following December 31, 1995, (viii) 3.75 to
1.00 on the Relevant Day immediately following the last day of any
fiscal quarter of the Company ending during the period from
January 1, 1996 through December 30, 1996, (ix) 3.25 to 1.00 on the
Relevant Day immediately following each of December 31, 1996 and
December 31, 1997, and (ix) 3.50 to 1.00 on the Relevant Day
immediately following the last day of any fiscal quarter of the
Company ending after January 1, 1997, other than the fiscal quarter
ending December 31, 1997. For purposes of this Section 7.8, all
Senior Debt which is repaid with cash received by the Company from
Masco Corporation for the purchase of preferred stock or
subordinated debt securities pursuant to the Securities Purchase
Agreement within forty-five days after the last day of any fiscal
quarter of the Company shall be deemed repaid as of the last day of
such fiscal quarter, and during such forty-five day period no
Default shall be deemed to have occurred due to noncompliance with
this Section 7.8.
ARTICLE II. REPRESENTATIONS. The Company represents and warrants that:
2.1 The execution, delivery and performance by the Company of this
Amendment have been duly authorized by all necessary corporate action and do
not and will not violate the provisions of any applicable law or regulation or
of the certificate of incorporation or bylaws of the Company or any Subsidiary
or any order of any court, regulatory body or arbitral tribunal and do not and
will not result in the breach of, or constitute a default or require any consent
under, or create any lien, charge or encumbrance upon any property or assets of
the Company or any Subsidiary pursuant to, any indenture or other agreement or
instrument to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary or its property may be bound or affected. The
execution, delivery and performance of this Amendment do not require, for the
validity thereof, nor does the enforceability of this Amendment require, any
filing with, or consent, authorization or approval of, any state or federal
agency or regulatory authority, other than filings, consents or approvals which
have been made or obtained.
2.2 This Amendment constitutes the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms.
3
2.3 After giving effect to the amendments herein contained, the
representations and warranties contained in Article VI of the Agreement are true
on and as of the date hereof with the same force and effect as if made on and as
of the date hereof.
2.4 As of the date hereof, there is no Default.
ARTICLE III. CONDITIONS OF EFFECTIVENESS. This Amendment shall not become
effective until the following shall have been delivered to the Agent:
3.1 This Amendment duly executed on behalf of the Company and the
Required Banks.
3.2 A copy of the resolutions adopted by the Board of Directors of the
Company, certified by an officer of the Company as being true and correct and in
full force and effect without amendment as of the date hereof, authorizing the
Company to enter into this Amendment.
3.3 An opinion of counsel for the Company in the form of Schedule 3.3
hereto.
ARTICLE IV. MISCELLANEOUS.
4.1 The Company shall pay to the Agent, for the benefit of each
Consenting Bank, on or within two Business Days after the date of this
Amendment an amendment fee in the amount of five basis points of the Commitment
of such Consenting Bank. As used herein, a "Consenting Bank" shall be a Bank
which both (a) commits in writing to the Agent on or before December 19, 1994 to
execute this Amendment and (b) executes this Amendment.
4.2 For purposes of the representation contained in the last sentence of
Section 6.6, the Banks acknowledge that, after giving effect to the special
charges recorded by the Company and its Subsidiaries through December 31, 1995
relating to the sale and/or restructuring of certain of the business units of
the Company and its Subsidiaries, the general components of such sale and/or
restructuring to be announced no later than February 28, 1995, there has been no
material adverse change in the consolidated operations or condition, financial
or otherwise, of the Company and its Consolidated Subsidiaries considered as a
whole since December 31, 1992, to the extent of $375,000,000 aggregate after-tax
amount of such charges; provided, however, that the foregoing does not
constitute an acknowledgement as to the effect of any special charge or event
other than the special charge referred to above for purposes of the
representation contained in the last sentence of Section 6.6.
4
4.3 References in the Agreement or in any note, certificate, instrument
or other document to the Agreement shall be deemed to be references to the
Agreement as amended from time to time.
4.4 The Company agrees to pay and to save the Agent harmless for the
payment of all costs and expenses arising in connection with this Amendment,
including the reasonable fees of counsel to the Agent in connection with
preparing this Amendment and the related documents.
4.5 The Company agrees that the Agreement and other documents and
agreements executed by the Company in connection with the Agreement in favor of
the Agent, the Co-Agents and/or the Banks are ratified and confirmed and shall
remain in full force and effect, except as expressly amended hereby.
4.6 This Amendment may be signed upon any number of counterparts with
the same effect as if the signatures thereto and hereto were upon the same
instrument, and telecopied signatures shall be effective.
4.7 This Amendment is a contract made under, and shall be governed by
and construed in accordance with, the law of the State of Michigan applicable to
contracts made and to be performed entirely within such State and without giving
effect to choice of law principles of such State.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
and delivered as of the day and year first above written.
NBD BANK, N.A. MASCOTECH, INC.
By: /s/ Richard H. Huttenlocher By: /s/ Timothy Wadhams
Richard H. Huttenlocher Timothy Wadhams
Its: Vice President Its Vice President-
Controller and Treasurer
THE BANK OF NEW YORK COMERICA BANK
By: /s/ Douglas A. Ober By: /s/ James R. Grossett
Its: Vice President Its: Vice President
5
THE FIRST NATIONAL BANK MORGAN GUARANTY TRUST
OF CHICAGO COMPANY OF NEW YORK
By: /s/ The First National Bank By: /s/ Timothy S. Broadbent
of Chicago
Its: __________________________ Its: Vice President
NATIONSBANK OF NORTH BANK OF AMERICA ILLINOIS
CAROLINA, N.A.
By: /s/ William A. Bowen, Jr. By: /s/ Bank of America Illinois
Its: Vice President Its: ___________________________
PNC BANK, NATIONAL ASSOCIATION BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By: /s/ Jack Broeren By: /s/ Bank of America National
Trust and Savings Association
Its: Assistant Vice President
Its: _________________________
MICHIGAN NATIONAL BANK ROYAL BANK OF CANADA
By: /s/ Joseph M. Redoutey By: /s/ Holly Spencer Kaczmarczyk
Its: Second Vice President Its: Manager
NATIONAL CITY BANK THE FUJI BANK, LTD.
By: /s/ National City Bank By: /s/ Peter L. Chinnici
Its: _________________________ Its: Joint General Manager
FIRST BANK NATIONAL CITIBANK, N.A.
ASSOCIATION
6
By: /s/ First Bank National By: /s/ Barbara A. Cohen
Association
Its: Vice President
Its: _________________________
CIBC INC. WACHOVIA BANK OF GEORGIA, N.A.
By: /s/ Kent Davis By: /s/ Wachovia Bank of Georgia, N.A.
Its: Vice President Its: _________________________
CORESTATES PHILADELPHIA SHAWMUT BANK
NATIONAL BANK CONNECTICUT, N.A.
By: /s/ Corestates Philadelphia By: /s/ Manfred O. Eigenbrod
Its: ________________________ Its: Managing Director
FIRST NATIONAL BANK THE SANWA BANK, LIMITED,
OF BOSTON CHICAGO BRANCH
By: /s/ First National Bank By: /s/ Richard H. Ault
of Boston
Its: Vice President
Its: _______________________
EX-4.C
4
TRIMAS CORPORATION
AND
CONTINENTAL BANK,
NATIONAL ASSOCIATION
Trustee
INDENTURE
Dated as of August 1, 1993
TABLE OF CONTENTS*
Page
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Authorization of Indenture . . . . . . . . . . . . . . . . . . . 1
Compliance with Legal Requirements . . . . . . . . . . . . . . . 1
Purpose of and Consideration for Indenture . . . . . . . . . . . 1
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . 1
Authenticating Agent . . . . . . . . . . . . . . . 2
Board of Directors. . . . . . . . . . . . . . . . . 2
Cash Transaction . . . . . . . . . . . . . . . . . 2
Commission . . . . . . . . . . . . . . . . . . . . 2
Common Stock . . . . . . . . . . . . . . . . . . . 2
Company . . . . . . . . . . . . . . . . . . . . . . 2
Convertible Security or
Convertible Securities . . . . . . . . . . . . . 2
Depositary . . . . . . . . . . . . . . . . . . . . 3
Event of Default. . . . . . . . . . . . . . . . . . 3
Global Security . . . . . . . . . . . . . . . . . . 3
Indenture . . . . . . . . . . . . . . . . . . . . . 3
Interest . . . . . . . . . . . . . . . . . . . . . 3
Officers' Certificate . . . . . . . . . . . . . . . 4
Opinion of Counsel . . . . . . . . . . . . . . . . 4
Original Issue Date . . . . . . . . . . . . . . . . 4
Original Issue Discount
Security . . . . . . . . . . . . . . . . . . . . 4
Person. . . . . . . . . . . . . . . . . . . . . . . 4
Principal Office of the Trustee . . . . . . . . . . 4
Responsible Officer . . . . . . . . . . . . . . . . 5
Security or Securities;
Outstanding . . . . . . . . . . . . . . . . . . . 5
Securityholder . . . . . . . . . . . . . . . . . . 6
Self-liquidating Paper . . . . . . . . . . . . . . 7
Senior Indebtedness . . . . . . . . . . . . . . . . 7
Trustee . . . . . . . . . . . . . . . . . . . . . . 8
Trust Indenture Act of 1939 . . . . . . . . . . . . 8
Yield to Maturity . . . . . . . . . . . . . . . . . 8
_______________________
*This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
i
Page
ARTICLE II
SECURITIES
SECTION 2.01. Forms Generally . . . . . . . . . . . . . . . . . . 9
SECTION 2.02. Form of Trustee's Certificate of
Authentication . . . . . . . . . . . . . . . . . 9
SECTION 2.03. Amount Unlimited; Issuable in Series . . . . . . . 9
SECTION 2.04. Authentication and Delivery . . . . . . . . . . . . 12
SECTION 2.05. Date and Denomination of Securities . . . . . . . . 15
SECTION 2.06. Execution of Securities . . . . . . . . . . . . . . 16
SECTION 2.07. Exchange and Registration of Transfer
of Securities . . . . . . . . . . . . . . . . . . 16
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen
Securities . . . . . . . . . . . . . . . . . . . 19
SECTION 2.09. Temporary Securities . . . . . . . . . . . . . . . 20
SECTION 2.10. Cancellation of Securities Paid, etc. . . . . . . . 20
ARTICLE III
CONVERSION OF SECURITIES
SECTION 3.01. Conversion Privilege . . . . . . . . . . . . . . . 21
SECTION 3.02. Manner of Exercise of Conversion
Privilege . . . . . . . . . . . . . . . . . . . . 21
SECTION 3.03. Fractional Shares . . . . . . . . . . . . . . . . . 23
SECTION 3.04. Conversion Price . . . . . . . . . . . . . . . . . 23
SECTION 3.05. Adjustment of Conversion Price . . . . . . . . . . 23
SECTION 3.06. Merger, Consolidation, etc. . . . . . . . . . . . . 27
SECTION 3.07. Notices . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 3.08. Taxes on Conversion . . . . . . . . . . . . . . . . 29
SECTION 3.09. Company to Provide Stock . . . . . . . . . . . . . 29
SECTION 3.10. Disclaimer of Responsibility for
Certain Matters . . . . . . . . . . . . . . . . . 30
SECTION 3.11. Return of Funds Deposited for
Redemption of Converted Securities . . . . . . . 30
SECTION 3.12. Disposition of Converted Securities . . . . . . . . 30
ii
Page
ARTICLE IV
SUBORDINATION OF SECURITIES
SECTION 4.01. Agreement to Subordinate . . . . . . . . . . . . . 31
SECTION 4.02. No Payment on Securities if Senior
Indebtedness in Default . . . . . . . . . . . . . 31
SECTION 4.03. Priority of Senior Indebtedness . . . . . . . . . . 32
SECTION 4.04. Company to Give Notice of Certain
Events; Reliance by Trustee . . . . . . . . . . . 33
SECTION 4.05. Subrogation of Securities . . . . . . . . . . . . . 34
SECTION 4.06. Company Obligation to Pay
Unconditional . . . . . . . . . . . . . . . . . . 34
SECTION 4.07. Authorization of Holders of
Securities to Trustee to Effect
Subordination . . . . . . . . . . . . . . . . . . 35
SECTION 4.08. Notice to Trustee of Facts
Prohibiting Payments . . . . . . . . . . . . . . 35
SECTION 4.09. Trustee May Hold Senior Indebtedness . . . . . . . 35
SECTION 4.10. All Indenture Provisions Subject
to this Article . . . . . . . . . . . . . . . . . 36
ARTICLE V
PARTICULAR COVENANTS OF THE COMPANY AND THE TRUSTEE
SECTION 5.01. Payment of Principal, Premium and
Interest . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.02. Offices for Notices and Payments,
etc. . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.03. Appointments to Fill Vacancies
in Trustee's Office . . . . . . . . . . . . . . . 37
SECTION 5.04. Provision as to Paying Agent
and Conversion Agent . . . . . . . . . . . . . . 37
SECTION 5.05. Certificate of the Company . . . . . . . . . . . . 38
SECTION 5.06 Securityholders' Lists . . . . . . . . . . . . . . 38
SECTION 5.07 Reports by the Company . . . . . . . . . . . . . . 39
SECTION 5.08 Reports by the Trustee . . . . . . . . . . . . . . 39
iii
Page
ARTICLE VI
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . 39
SECTION 6.02. Payment of Securities on Default;
Suit Therefor . . . . . . . . . . . . . . . . . . 42
SECTION 6.03. Application of Moneys Collected
by Trustee . . . . . . . . . . . . . . . . . . . 44
SECTION 6.04. Proceedings by Securityholders . . . . . . . . . . 45
SECTION 6.05. Proceedings by Trustee . . . . . . . . . . . . . . 46
SECTION 6.06. Remedies Cumulative and Continuing . . . . . . . . 46
SECTION 6.07. Direction of Proceedings and Waiver
of Defaults by Majority of
Securityholders . . . . . . . . . . . . . . . . . 47
SECTION 6.08. Notice of Defaults . . . . . . . . . . . . . . . . 48
SECTION 6.09. Undertaking to Pay Costs . . . . . . . . . . . . . 48
ARTICLE VII
CONCERNING THE TRUSTEE
SECTION 7.01. Duties and Responsibilities of
Trustee . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.02. Reliance on Documents, Opinions, etc. . . . . . . . 50
SECTION 7.03. No Responsibility for Recitals, etc. . . . . . . . 52
SECTION 7.04. Trustee, Authenticating Agent,
Paying Agents, Transfer Agents,
Conversion Agents or Registrar
May Own Securities . . . . . . . . . . . . . . . 52
SECTION 7.05. Moneys to Be Held in Trust . . . . . . . . . . . . 52
SECTION 7.06. Compensation and Expenses of Trustee . . . . . . . 52
SECTION 7.07. Officers' Certificate as Evidence . . . . . . . . . 53
SECTION 7.08. Eligibility of Trustee . . . . . . . . . . . . . . 53
SECTION 7.09. Resignation or Removal of Trustee . . . . . . . . . 54
SECTION 7.10. Acceptance by Successor Trustee . . . . . . . . . 55
SECTION 7.11. Succession by Merger, etc. . . . . . . . . . . . . 57
SECTION 7.12. Authenticating Agents . . . . . . . . . . . . . . . 57
ARTICLE VIII
CONCERNING THE SECURITYHOLDERS
SECTION 8.01. Action by Securityholders . . . . . . . . . . . . . 59
iv
Page
SECTION 8.02. Proof of Execution by Securityholders . . . . . . 59
SECTION 8.03. Who are Deemed Absolute Owners . . . . . . . . . . 60
SECTION 8.04. Securities Owned by Company Deemed
Not Outstanding . . . . . . . . . . . . . . . . . 60
SECTION 8.05. Revocation of Consents; Future
Holders Bound . . . . . . . . . . . . . . . . . . 61
ARTICLE IX
SECURITYHOLDERS' MEETINGS
SECTION 9.01. Purposes of Meetings . . . . . . . . . . . . . . . 62
SECTION 9.02. Call of Meetings by Trustee . . . . . . . . . . . . 62
SECTION 9.03. Call of Meetings by Company or
Securityholders . . . . . . . . . . . . . . . . . 62
SECTION 9.04. Qualifications for Voting . . . . . . . . . . . . . 63
SECTION 9.05. Regulations . . . . . . . . . . . . . . . . . . . . 63
SECTION 9.06. Voting. . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE X
SUPPLEMENTAL INDENTURES
SECTION 10.01. Supplemental Indentures without
Consent of Securityholders . . . . . . . . . . . 65
SECTION 10.02. Supplemental Indentures with Consent
of Securityholders . . . . . . . . . . . . . . . 66
SECTION 10.03. Compliance with Trustee Indenture
Act; Effect of Supplemental
Indentures . . . . . . . . . . . . . . . . . . . 68
SECTION 10.04. Notation on Securities . . . . . . . . . . . . . . 68
SECTION 10.05. Evidence of Compliance of
Supplemental Indenture to Be
Furnished Trustee . . . . . . . . . . . . . . . . 68
SECTION 10.06. Effect on Senior Indebtedness . . . . . . . . . . . 68
ARTICLE XI
CONSOLIDATION, MERGER AND SALE BY THE COMPANY
SECTION 11.01. Consolidation, Merger or Sale of
Assets Permitted . . . . . . . . . . . . . . . . 69
SECTION 11.02. Successor Corporation to Be
Substituted for Company . . . . . . . . . . . . . 69
v
Page
SECTION 11.03. Evidence to Be Furnished Trustee . . . . . . . . . 70
ARTICLE XII
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 12.01. Satisfaction and Discharge
of Indenture . . . . . . . . . . . . . . . . . . 70
SECTION 12.02. Application by Trustee of Funds
Deposited for Payment of
Securities . . . . . . . . . . . . . . . . . . . 76
SECTION 12.03. Repayment of Moneys Held by
Paying Agent . . . . . . . . . . . . . . . . . . 77
SECTION 12.04. Return of Moneys Held by
Trustee and Paying Agent
Unclaimed for Two Years . . . . . . . . . . . . . 77
ARTICLE XIII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 13.01. Indenture and Securities Solely
Corporate Obligations . . . . . . . . . . . . . . 77
ARTICLE XIV
MISCELLANEOUS PROVISIONS
SECTION 14.01. Successors . . . . . . . . . . . . . . . . . . . . 79
SECTION 14.02. Official Acts by Successor
Corporation . . . . . . . . . . . . . . . . . . . 79
SECTION 14.03. Addresses for Notices, etc. . . . . . . . . . . . . 79
SECTION 14.04. New York Contract . . . . . . . . . . . . . . . . . 79
SECTION 14.05. Evidence of Compliance with
Conditions Precedent . . . . . . . . . . . . . . 79
SECTION 14.06. Legal Holiday . . . . . . . . . . . . . . . . . . . 80
SECTION 14.07. Trust Indenture Act to Control . . . . . . . . . . 80
SECTION 14.08. Table of Contents, Headings, etc. . . . . . . . . . 80
SECTION 14.09. Execution in Counterparts . . . . . . . . . . . . . 80
SECTION 14.10. No Security Interest Created . . . . . . . . . . . 80
vi
Page
ARTICLE XV
REDEMPTION OF SECURITIES--MANDATORY AND
OPTIONAL SINKING FUND
SECTION 15.01. Applicability of Article . . . . . . . . . . . . . 81
SECTION 15.02. Notice of Redemption; Selection
of Securities . . . . . . . . . . . . . . . . . . 81
SECTION 15.03. Payment of Securities Called for
Redemption . . . . . . . . . . . . . . . . . . . 82
SECTION 15.04. Mandatory and Optional Sinking Fund . . . . . . . . 83
TESTIMONIUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
ACKNOWLEDGMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
vii
THIS INDENTURE, dated as of August 1, 1993, between TRIMAS CORPORATION,
a Delaware corporation (hereinafter sometimes called the "Company"), and
Continental Bank, National Association, trustee (hereinafter sometimes called
the "Trustee").
WITNESSETH:
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issue from time to time of its convertible and non-convertible
subordinated debentures, notes or other evidence of indebtedness to be issued in
one or more series (the "Securities") up to such principal amount or amounts as
may from time to time be authorized in accordance with the terms of this
Indenture and, to provide the terms and conditions upon which the Securities are
to be authenticated, issued and delivered, the Company has duly authorized the
execution of this Indenture; and
WHEREAS, all acts and things necessary to make this Indenture a valid
agreement according to its terms, have been done and performed:
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
In consideration of the premises, and the purchase of the Securities by
the holders thereof, the Company covenants and agrees with the Trustee for the
equal and proportionate benefit of the respective holders from time to time of
the Securities or of a series thereof, as follows:
ARTICLE ONE.
DEFINITIONS.
SECTION 1.01. Definitions. The terms defined in this Section 1.01
(except as herein otherwise expressly provided or unless the context otherwise
requires) for all purposes of this Indenture and of any indenture supplemental
hereto shall have the respective meanings specified in this Section 1.01. All
other terms used in this Indenture which are defined in the Trust Indenture Act
of 1939, as amended, or which are by reference therein defined in the Securities
Act of 1933, as amended, shall (except as herein otherwise expressly provided or
unless the context otherwise requires) have the meanings assigned to such terms
in said Trust Indenture Act and in said Securities Act as in force at the date
of this Indenture as originally executed. All accounting terms used herein and
not expressly defined shall have the meanings assigned to such terms in
accordance with generally accepted accounting principles and the term
1
"generally accepted accounting principles" means such accounting principles as
are generally accepted at the time of any computation. The words "herein",
"hereof" and "hereunder" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision.
Authenticating Agent:
The term "Authenticating Agent" shall mean any agent or agents of the
Trustee which at the time shall be appointed and acting pursuant to Section
7.12.
Board of Directors:
The term "Board of Directors" shall mean the Board of Directors of the
Company or any committee of such Board duly authorized to act for it hereunder.
Cash Transaction:
The term "Cash Transaction" shall, for the purposes of Section 311 of
the Trust Indenture Act of 1939 (as such Section shall apply to this Indenture),
mean any transaction in which full payment for goods or securities sold is to be
made within seven days after delivery of the goods or securities in currency or
in checks or other orders drawn upon banks or bankers and payable upon demand.
Commission:
The term "Commission" shall mean the Securities and Exchange
Commission.
Common Stock:
The term "Common Stock" shall mean the Common Stock of the Company, $.01 par
value, at the date of this Indenture, as such Common Stock may be changed or
reclassified from time to time.
Company:
The term "Company" shall mean TriMas Corporation, a Delaware
corporation, and, subject to the provisions of Article Eleven, shall include its
successors and assigns.
Convertible Security or Convertible Securities:
The terms "Convertible Security" or "Convertible Securities" shall mean
any series of Securities designated convertible by the resolutions or
supplemental indentures referred to in Section 2.03.
2
Depositary
The term "Depositary" shall mean, with respect to the Securities of any
series issuable or issued in whole or in part in the form of one or more Global
Securities, the Person designated as Depositary by the Company pursuant to
Section 2.03.
Event of Default:
The term "Event of Default" shall mean any event specified in Section
6.01, continued for the period of time, if any, and after the giving of the
notice, if any, therein designated.
Global Security:
The term "Global Security" shall mean a Security evidencing all or part
of a series of Securities, issued to the Depositary for such series or its
nominee, and registered in the name of such Depositary.
Indenture:
The term "Indenture" shall mean this instrument as originally executed
or, if amended or supplemented as herein provided, as so amended or
supplemented, or both, and shall include the form and terms of particular series
of Securities established as contemplated hereunder; provided, however, that if
at any time more than one Person is acting as Trustee under this instrument,
"Indenture" shall mean with respect to any one or more series of Securities for
which such Person is Trustee, this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
and shall include the terms of particular series of Securities for which such
Person is Trustee established as contemplated by Section 2.03, exclusive,
however, of any provisions or terms which relate solely to other series of
Securities for which such Person is not Trustee, regardless of when such terms
or provisions were adopted, and exclusive of any provisions or terms adopted by
means of one or more indentures supplemental hereto executed and delivered after
such Person had become such Trustee but to which such Person, as such Trustee,
was not a party.
interest:
The term "interest" shall mean, when used with respect to non-interest
bearing Securities, interest payable after maturity.
3
Officers' Certificate:
The term "Officers' Certificate" shall mean a certificate signed by the
Chairman of the Board, the President or any Vice President, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
the Company and delivered to the Trustee. Each such certificate shall comply
with Section 314 of the Trust Indenture Act of 1939 and include the statements
provided for in Section 14.05 if and to the extent required by the provisions of
such Section.
Opinion of Counsel:
The term "Opinion of Counsel" shall mean an opinion in writing signed
by legal counsel, who may be an employee of or counsel to the Company, or may be
other counsel acceptable to the Trustee. Each such opinion shall comply with
Section 314 of the Trust Indenture Act of 1939 and include the statements
provided for in Section 14.05 if and to the extent required by the provisions of
such Section.
Original Issue Date:
The term "Original Issue Date" or "original issue date" of any Security
(or any portion thereof) shall mean the earlier of (a) the date of such Security
or (b) the date of any Security (or portion thereof) for which such Security was
issued (directly or indirectly) on registration of transfer, exchange or
substitution.
Original Issue Discount Security:
The term "Original Issue Discount Security" shall mean any Security
which provides for an amount less than the principal amount thereof to be due
and payable upon a declaration of acceleration of the maturity thereof pursuant
to Section 6.01.
Person:
The term "Person" shall mean any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
Principal Office of the Trustee:
The term "principal office of the Trustee" or other similar term, shall
mean the principal office of the Trustee at which at any particular time its
corporate trust
4
business shall principally be administered, which office may be in more than one
location within the same city.
Responsible Officer:
The term "Responsible Officer", when used with respect to the Trustee,
means any officer of the Trustee authorized to administer its corporate trust
matters.
Security or Securities; Outstanding:
The terms "Security" or "Securities" shall have the meaning stated in
the first recital of this Indenture and more particularly means any security or
securities, as the case may be, authenticated and delivered under this
Indenture, whether convertible or non-convertible into shares of Common Stock;
provided, however, that if at any time there is more than one Person acting as
Trustee under this instrument, "Security" or "Securities" with respect to the
Indenture as to which such Person is Trustee shall have the meaning stated in
the first recital of this instrument and shall more particularly mean any
securities, as the case may be, authenticated and delivered under this
instrument, whether convertible or non-convertible into shares of Common Stock,
exclusive, however, of securities of any series as to which such Person is not
Trustee.
The term "outstanding", when used with reference to Securities, shall,
subject to the provisions of Section 8.04, mean, as of any particular time, all
Securities authenticated and delivered by the Trustee or the Authenticating
Agent under this Indenture, except
(a) Securities theretofore cancelled by the Trustee or the
Authenticating Agent or delivered to the Trustee for cancellation;
(b) Securities, or portions thereof, for the payment or
redemption of which moneys in the necessary amount shall have been
deposited in trust with the Trustee or with any paying agent (other
than the Company) or shall have been set aside and segregated in trust
by the Company (if the Company shall act as its own paying agent);
provided that, if such Securities, or portions thereof, are to be
redeemed prior to maturity thereof, notice of such redemption shall
have been given as in Article Fifteen provided or provisions
satisfactory to the Trustee shall have been made for giving such
notice; and
(c) Securities paid or in lieu of or in substitution for which
other Securities shall have
5
been authenticated and delivered pursuant to the terms of Section 2.08
unless proof satisfactory to the Company and the Trustee is presented
that any such Securities are held by bona fide holders in due course.
In determining whether the holders of the requisite principal amount of
outstanding Securities have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, the principal amount of an Original Issue
Discount Security that shall be deemed to be outstanding for such purposes shall
be the amount of the principal thereof that would be due and payable as of the
date of such determination upon a declaration of acceleration of the maturity
thereof pursuant to Section 6.01.
Securityholder:
The terms "Securityholder", "holder of Securities" or "holder", or
other similar terms, shall mean any person in whose name at the time a
particular Security is registered on the register kept by the Company or the
Trustee for that purpose in accordance with the terms hereof.
6
Self-liquidating Paper:
The term "Self-liquidating Paper" shall, for the purposes of Section
311 of the Trust Indenture Act of 1939 (as such Section shall apply to this
Indenture), mean any draft, bill of exchange, acceptance or obligation which is
made, drawn, negotiated or incurred by the Company for the purpose of financing
the purchase, processing, manufacture, shipment, storage or sale of goods, wares
or merchandise and which is secured by documents evidencing title to, possession
of, or a lien upon the goods, wares or merchandise or the receivables or
proceeds arising from the sale of the goods, wares or merchandise previously
constituting the security, provided the security is received by the Trustee
simultaneously with the creation of the creditor relationship with the Company
arising from the making, drawing, negotiating or incurring of the draft, bill or
exchange, acceptance or obligation.
Senior Indebtedness:
The term "Senior Indebtedness" means (a) all indebtedness and
obligations of the Company whether or not contingent or outstanding on the date
of the Indenture or thereafter created, incurred or assumed, and which (i) are
for money borrowed; (ii) are evidenced by any bond, note, debenture or similar
instrument; (iii) represent the unpaid balance on the purchase price of any
property, business or asset of any kind; (iv) are obligations as lessee under
any and all leases of property, equipment or other assets required to be
capitalized on the balance sheet of the lessee under generally accepted
accounting principles; (v) are reimbursement obligations with respect to letters
of credit; (vi) are obligations under interest rate, currency or other indexed
exchange agreements, agreements for caps or floors on interest rates, foreign
exchange agreements or any other similar agreements; (vii) are obligations under
any guaranty, endorsement or other contingent obligations in respect of, or to
purchase or otherwise acquire, indebtedness or obligations of other Persons of
the types referred to in clauses (i) through (vi) above; or (viii) are
obligations of others secured by a lien to which any of the properties or assets
of the Company are subject, whether or not the obligations secured thereby shall
have been issued by the Company or shall otherwise be the legal liability of the
Company, and (b) any deferrals, renewals, amendments, modifications, refundings
or extensions of any such indebtedness or obligations of the types referred to
above; except that senior indebtedness shall not include (1) any indebtedness or
obligation of the Company which by its express terms is stated to be not
superior in right of payment to the Securities or to rank pari passu with the
Securities, or (2) any indebtedness or obligation incurred
7
by the Company in connection with the purchase of assets, materials or services
in the ordinary course of business and which constitutes a trade payable or
account payable.
Trustee:
The term "Trustee" shall mean the Person identified as "Trustee" in the
first paragraph of this instrument until a successor Trustee shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder,
provided, however, that if at any time there is more than one such Person,
"Trustee" as used with respect to the Securities of any series shall mean only
the Trustee with respect to Securities of that series.
Trust Indenture Act of 1939:
The term "Trust Indenture Act of 1939" shall mean the Trust Indenture
Act of 1939 as in force at the date of execution of this Indenture, except as
provided in Sections 2.03 and 10.03.
Yield to Maturity:
The term "Yield to Maturity" shall mean the yield to maturity on a
series of Securities, calculated at the time of issuance of such series of
Securities, or if applicable, at the most recent redetermination of interest on
such series and calculated in accordance with accepted financial practice.
8
ARTICLE TWO.
SECURITIES.
SECTION 2.01. Forms Generally. The Securities of each series shall be
in substantially the form as shall be established by or pursuant to a resolution
of the Board of Directors or in one or more indentures supplemental hereto, in
each case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with any law or with
any rules made pursuant thereto or with any rules of any securities exchange or
all as may, consistently herewith, be determined by the officers executing such
Securities, as evidenced by their execution of the Securities.
The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their execution of
such Securities.
SECTION 2.02. Form of Trustee's Certificate of Authentication. The
Trustee's certificate of authentication on all Securities shall be in
substantially the following form:
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
as Trustee
By
Authorized Officer
SECTION 2.03. Amount Unlimited; Issuable in Series. The aggregate
principal amount of Securities which may be authenticated and delivered under
this Indenture is unlimited.
The Securities shall rank equally and pari passu and may be issued in
one or more series. There shall be established in or pursuant to a resolution
of the Board of Directors or established in one or more indentures supplemental
hereto, prior to the issuance of Securities of any series:
9
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from all other Securities);
(2) any limit upon the aggregate principal amount of the Securities
of the series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 2.07, 2.08, 2.09, 10.04 or 15.03);
(3) the date or dates on which the principal of and premium, if any,
on the Securities of the series are payable;
(4) the rate or rates at which the Securities of the series shall
bear interest, if any, or the method by which such interest may be
determined, the date or dates from which such interest shall accrue, the
interest payment dates on which such interest shall be payable and the record
dates for the determination of holders to whom interest is payable;
(5) the place or places where the principal of, and premium, if any,
and any interest on Securities of the series shall be payable;
(6) the price or prices at which, the period or periods within which
and the terms and conditions upon which Securities of the series may be
redeemed, in whole or in part, at the option of the Company, pursuant to any
sinking fund or otherwise;
(7) the obligation, if any, of the Company to redeem, purchase or
repay Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Securityholder thereof and the price or
prices at which and the period or periods within which and the terms and
conditions upon which Securities of the series shall be redeemed, purchased
or repaid, in whole or in part, pursuant to such obligation;
(8) the right, if any, of the Company to limit or discharge the
Indenture as to the Securities of the series pursuant to Section 12.01;
10
(9) if other than denominations of $1,000 and any multiple thereof,
the denominations in which Securities of the series shall be issuable;
(10) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the maturity thereof pursuant to Section 6.01
or provable in bankruptcy pursuant to Section 6.02;
(11) any Events of Default with respect to the Securities of a
particular series, in addition to or in lieu of those set forth herein;
(12) any trustees, authenticating or paying agents, warrant agents,
transfer agents, conversion agents (if such Securities are Convertible
Securities) or registrars with respect to the Securities of such series;
(13) the applicable initial conversion price if such Securities are
Convertible Securities, the dates on or subsequent to which such Securities
are convertible and the date such Securities cease to be convertible;
(14) if other than the coin or currency in which the Securities of
that series are denominated, the coin or currency, including composite
currencies, in which payment of the principal of or interest on the
Securities of such series shall be payable;
(15) if the principal of or interest on the Securities of such series
are to be payable, at the election of the Company or a holder thereof, in a
coin or currency other than that in which the Securities are denominated, the
period or periods within which, and the terms and conditions upon which, such
election may be made;
(16) if the amount of payments of principal of and interest on the
Securities of the series may be determined with reference to an index, the
manner in which such amounts shall be determined;
(17) whether and under what circumstances the Company will pay
additional amounts on the Securities of the series held by a person who is
not a U.S. person in respect of any tax, assessment or governmental charge
withheld or deducted and, if so, whether the Company will have the option to
redeem such Securities rather than pay such additional amounts;
11
(18) whether the Securities of the series shall be issued in whole or
part in the form of one or more Global Securities and, in such case, the
Depositary for such Global Security or Securities, which Depositary shall be,
if then required by applicable law or regulation, a clearing agency
registered under the Securities Exchange Act of 1934, as amended;
(19) if the Securities of such series are to be issuable in definitive
form (whether upon original issue or upon exchange of a temporary Security of
such series) only upon receipt of certain certificates or other documents or
satisfaction of other conditions, the form and terms of such certificates,
documents or conditions; and
(20) any other terms of the series (which terms shall conform to the
requirements of the Trust Indenture Act of 1939 as then in effect, shall not
adversely affect the rights of the Securityholders of any other Securities
then outstanding and shall not be inconsistent with the provisions of this
Indenture).
Securities of any particular series may be issued at various times.
All Securities of any one series shall be substantially identical except as to
denomination, the terms of redemption, the date on which principal or any
installment of principal is payable, the rate or method of determining the rate
of interest, and the date from which interest shall accrue, which, as set forth
above, may be determined by the Company from time to time as to Securities of a
series if so provided in or established pursuant to the authority granted in a
resolution of the Board of Directors or in any such indenture supplemental
hereto, and except as may otherwise be provided in or pursuant to such
resolution of the Board of Directors and (subject to Section 2.04) set forth in
such Officers' Certificate, or in any such indenture supplemental hereto. All
Securities of any one series need not be issued at the same time, and unless
otherwise provided, a series may be reopened for issuance of additional
Securities of such series. If all of the Securities of any series established
by action taken pursuant to a resolution of the Board of Directors are not
issued at one time, it shall not be necessary to deliver a record of such action
at the time of issuance of each Security of such series, but an appropriate
record of such action shall be delivered at or prior to the time of issuance of
the first Securities of such series.
SECTION 2.04. Authentication and Delivery. At any time and from
time to time after the execution and delivery of this Indenture, the Company may
deliver Securities of any series executed by the Company to the
12
Trustee for authentication, and the Trustee shall thereupon authenticate and
deliver said Securities to or upon the written order of the Company, signed by
its Chairman of the Board of Directors, President, any Vice President, its
Treasurer or Assistant Treasurer or its Secretary or an Assistant Secretary
without any further action by the Company hereunder. To the extent authorized
in a resolution of the Board of Directors and set forth in an Officers'
Certificate or established in one or more supplemental indentures, such written
order of the Company may be electronically transmitted and may provide
instructions as to registration of holders, principal amounts, rates of
interest, maturity dates and other matters contemplated by such resolution of
the Board of Directors and Officers' Certificate or supplemental indenture. In
authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive (in the case of subparagraphs 2, 3 and 4 below only at or
before the time of the first request of the Company to the Trustee to
authenticate Securities of such series) and (subject to Sections 7.01 and 7.02)
shall be fully protected in relying upon:
(1) a copy of any resolution or resolutions of the Board of Directors
relating thereto and, if applicable, an appropriate record of any action
taken pursuant to such resolution, in each case certified by the Secretary or
an Assistant Secretary of the Company;
(2) an executed supplemental indenture, if any;
(3) an Officers' Certificate prepared in accordance with Section
14.05 setting forth the form and terms of the Securities as required pursuant
to Sections 2.01 and 2.03, respectively; and
(4) an Opinion of Counsel prepared in accordance with Section 14.05
which shall also state
(a) that the form of such Securities has been established by or
pursuant to a resolution of the Board of Directors or by a supplemental
indenture as permitted by Section 2.01 in conformity with the
provisions of this Indenture;
(b) that the terms of such Securities have been established by
or pursuant to a resolution of the Board of Directors or by a
supplemental indenture as permitted by Section 2.03 in conformity with
the provisions of this Indenture;
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(c) that such Securities, when authenticated and delivered by
the Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid
and legally binding obligations of the Company;
(d) that all laws and requirements in respect of the execution
and delivery by the Company of the Securities have been complied with
and that authentication and delivery of the Securities by the Trustee
will not violate the terms of this Indenture; and
(e) such other matters as the Trustee may reasonably request.
The Trustee shall have the right to decline to authenticate and deliver
any Securities under this Section if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken or if the Trustee in good
faith by its board of directors or trustees, executive committee, or a trust
committee of directors or trustees and/or vice presidents shall determine that
such action would expose the Trustee to personal liability to existing holders.
If the Company shall establish pursuant to Section 2.03 that the
Securities of a series are to be issued in the form of one or more Global
Securities, then the Company shall execute and the Trustee shall, in accordance
with this Section and the written order of the Company with respect to such
series, authenticate and deliver one or more Global Securities that (i) shall
represent and shall be denominated in an amount equal to the aggregate principal
amount of all of the Securities of such series issued and not yet cancelled,
(ii) shall be registered in the name of the Depositary for such Global Security
or Securities or the nominee of such Depositary, (iii) shall be delivered by the
Trustee to such Depositary or pursuant to such Depositary's instructions and
(iv) shall bear a legend substantially to the following effect (or such other
legend as such Depositary may require): "Unless this certificate is presented by
an authorized representative of The Depository Trust Company, a New York
corporation ("DTC"), to Issuer or its agent for registration of transfer,
exchange, or payment, and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE
14
BY OR TO ANY PERSON IS WRONGFUL, inasmuch as the registered owner hereof, Cede &
Co., has an interest herein."
Each Depositary designated pursuant to Section 2.03 must, at the time
of its designation and at all times while it serves as Depositary, be a clearing
agency registered under the Securities Exchange Act of 1934 and any other
applicable statute or regulation.
SECTION 2.05. Date and Denomination of Securities. The Securities
shall be issuable as registered Securities without coupons and in such
denominations as shall be specified as contemplated by Section 2.03. In the
absence of any such specification with respect to the Securities of any series,
the Securities of such series shall be issuable in the denominations of $1,000
and any multiple thereof. The Securities shall be numbered, lettered, or
otherwise distinguished in such manner or in accordance with such plans as the
officers of the Company executing the same may determine with the approval of
the Trustee as evidenced by the execution and authentication thereof.
Every Security shall be dated the date of its authentication, shall
bear interest, if any, from such date and shall be payable on such dates, in
each case, as contemplated by Section 2.03.
The person in whose name any Security of any series is registered at
the close of business on any record date (as hereinafter defined) with respect
to any interest payment date shall be entitled to receive the interest, if any,
payable on such interest payment date notwithstanding the cancellation of such
Security upon any transfer, exchange or conversion subsequent to the record
date and prior to such interest payment date, except that interest shall not be
payable to such person with respect to a Security called for redemption on a
redemption date between a record date and the interest payment date for such
interest; provided, however, that if and to the extent the Company shall default
in the payment of the interest due on such interest payment date, such defaulted
interest shall be paid to the persons in whose names outstanding Securities are
registered on a subsequent record date established by notice given by mail by or
on behalf of the Company to the holders of Securities and the Trustee not less
than 15 days preceding such subsequent record date, such subsequent record date
to be not less than ten days preceding the date of payment of such defaulted
interest. The term "record date" as used in this Section with respect to any
interest payment date shall mean if such interest payment date is the first day
of a calendar month, the fifteenth day of the next preceding calendar month and
shall mean, if such interest
15
payment date is the fifteenth day of a calendar month, the first day of such
calendar month, whether or not such record date is a business day.
SECTION 2.06. Execution of Securities. The Securities shall be
signed in the name and on behalf of the Company by the manual or facsimile
signature of its Chairman of the Board, its President or any Vice President and
imprinted with a manual or facsimile of its corporate seal, and attested by the
manual or facsimile signature of its Secretary or an Assistant Secretary. Each
such signature upon the Securities may be in the form of a facsimile signature
of any such officer and may be imprinted or otherwise reproduced on the
Securities and for that purpose the Company may adopt and use the facsimile
signature of any person who has been or is such officer, and in case any such
officer of the Company signing any of the Securities shall cease to be such
officer before the Securities so signed shall have been authenticated and
delivered by the Trustee, or disposed of by the Company, such Securities
nevertheless may be authenticated and delivered or disposed of as though such
person had not ceased to be such officer of the Company. Only such Securities
as shall bear thereon a certificate of authentication substantially in the form
hereinbefore recited, executed by the Trustee or the Authenticating Agent, shall
be entitled to the benefits of this Indenture or be valid or obligatory for any
purpose. Such certificate by the Trustee or the Authenticating Agent upon any
Security executed by the Company shall be conclusive evidence that the Security
so authenticated has been duly authenticated and delivered hereunder and that
the holder is entitled to the benefits of this Indenture.
SECTION 2.07. Exchange and Registration of Transfer of Securities.
Securities of any series (except Global Securities, other than as set forth in
this Section 2.07) may be exchanged for a like aggregate principal amount of
Securities of the same series of other authorized denominations. Securities to
be exchanged may be surrendered at the principal office of the Trustee or at any
office or agency to be maintained by the Company for such purpose as provided in
Section 5.02, and the Company or the Trustee shall execute and register and the
Trustee or the Authenticating Agent shall authenticate and deliver in exchange
therefor the Security or Securities which the Securityholder making the exchange
shall be entitled to receive. Upon due presentment for registration of transfer
of any Security of any series at the principal office of the Trustee or at any
office or agency of the Company maintained for such purpose as provided in
Section 5.02, the Company or the Trustee shall execute and register and the
Trustee or the Authenticating Agent shall authenticate and deliver in the name
of the transferee or transferees a new Security or
16
Securities of the same series for a like aggregate principal amount.
Registration or registration of transfer of any Security by the Trustee or by
any agent of the Company appointed pursuant to Section 5.02, and delivery of
such Security, shall be deemed to complete the registration or registration of
transfer of such Security.
The Company or the Trustee shall keep, at the principal office of the
Trustee, a register for each series of Securities issued hereunder in which,
subject to such reasonable regulations as it may prescribe, the Company or the
Trustee shall register all Securities and shall register the transfer of all
Securities as in this Article Two provided. Such register shall be in written
form or in any other form capable of being converted into written form within a
reasonable time.
All Securities presented for registration of transfer or for exchange
or payment shall (if so required by the Company or the Trustee or the
Authenticating Agent) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company and
the Trustee or the Authenticating Agent duly executed by, the holder or his
attorney duly authorized in writing.
No service charge shall be made for any exchange or registration of
transfer of Securities, but the Company or the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection therewith.
The Company or the Trustee shall not be required (i) to issue, register
the transfer of or exchange Securities of any particular series and tenor during
a period beginning at the opening of business 15 days before the day of the
mailing of a notice of redemption of Securities of like tenor and of the series
of which such Security is a part, selected for redemption under Section 15.02
and ending at the close of business on the day of such mailing, or (ii) to
register the transfer of or exchange any Security so selected for redemption in
whole or in part, except the unredeemed portion of any Security being redeemed
in part.
Notwithstanding any other provisions of this Section 2.07, unless and
until it is exchanged in whole or in part for Securities in definitive
registered form, a Global Security representing all or a portion of the
Securities of a series may not be transferred except as a whole by the
Depositary for such series to a nominee of such Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or by
such
17
Depositary or by any such nominee to a successor Depositary for such series or a
nominee of such successor Depositary.
If at any time the Depositary for any Securities of a series
represented by one or more Global Securities notifies the Company that it is
unwilling or unable to continue as Depositary for such Securities or if at any
time the Depositary for such Securities shall no longer be eligible under
Section 2.03, the Company shall appoint a successor Depositary with respect to
such Securities. If a successor Depositary for such Securities is not appointed
by the Company within 90 days after the Company receives such notice or becomes
aware of such ineligibility, the Company's election pursuant to Section 2.03
that such Securities be represented by one or more Global Securities shall no
longer be effective and the Company will execute, and the Trustee, upon receipt
of a written order of the Company for the authentication and delivery of
definitive Securities of such series, will authenticate and deliver, Securities
of such series in definitive registered form without coupons, in any authorized
denominations, in an aggregate principal amount equal to the principal amount of
the Global Security or Securities representing such Securities in exchange for
such Global Security or Securities.
The Company may at any time and in its sole discretion determine that
the Securities of any series issued in the form of one or more Global Securities
shall no longer be represented by a Global Security or Securities. In such
event the Company will execute, and the Trustee, upon receipt of a written order
of the Company for the authentication and delivery of the definitive Securities
of such series, will authenticate and deliver, Securities of such series in
definitive registered form without coupons, in any authorized denominations, in
an aggregate principal amount equal to the principal amount of the Global
Security or Securities representing such Securities, in exchange for such Global
Security or Securities.
If specified by the Company pursuant to Section 2.03 with respect to
Securities represented by a Global Security, the Depositary for such Global
Security may surrender such Global Security in exchange in whole or in part for
Securities of the same series in definitive registered form on such terms as are
acceptable to the Company and such Depositary. Thereupon, the Company shall
execute, and the Trustee shall authenticate and deliver, without service charge,
(i) to the Person specified by such Depositary a new Security or
Securities of the same series, of any authorized denominations as requested
by such Person, in an aggregate principal amount equal to and in
18
exchange for such Person's beneficial interest in the Global Security; and
(ii) to such Depositary a new Global Security in a denomination equal
to the difference, if any, between the principal amount of the surrendered
Global Security and the aggregate principal amount of Securities
authenticated and delivered pursuant to clause (i) above.
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Securities. In
case any temporary or definitive Security shall become mutilated or be
destroyed, lost or stolen, the Company in the case of a mutilated Security
shall, and in the case of a lost, stolen or destroyed Security may in its
discretion, execute, and upon its request the Trustee shall authenticate and
deliver, a new Security of the same series bearing a number not
contemporaneously outstanding, in exchange and substitution for the mutilated
Security, or in lieu of and in substitution for the Security so destroyed, lost
or stolen. In every case the applicant for a substituted Security shall furnish
to the Company and the Trustee such security or indemnity as may be required by
them to save each of them harmless, and, in every case of destruction, loss or
theft, the applicant shall also furnish to the Company and the Trustee evidence
to their satisfaction of the destruction, loss or theft of such Security and of
the ownership thereof.
The Trustee may authenticate any such substituted Security and deliver
the same upon the written request or authorization of any officer of the
Company. Upon the issuance of any substituted Security, the Company may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses connected
therewith. In case any Security which has matured or is about to mature or has
been called for redemption in full shall become mutilated or be destroyed, lost
or stolen, the Company may, instead of issuing a substitute Security, pay or
authorize the payment of the same (without surrender thereof except in the case
of a mutilated Security) if the applicant for such payment shall furnish to the
Company and the Trustee such security or indemnity as may be required by them to
save each of them harmless and, in case of destruction, loss or theft, evidence
satisfactory to the Company and to the Trustee of the destruction, loss or theft
of such Security and of the ownership thereof.
Every substituted Security of any series issued pursuant to the
provisions of this Section 2.08 by virtue of the fact that any such Security is
destroyed, lost or stolen shall constitute an additional contractual obligation
of the
19
Company, whether or not the destroyed, lost or stolen Security shall be found at
any time, and shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Securities of the same series duly
issued hereunder. All Securities shall be held and owned upon the express
condition that, to the extent permitted by applicable law, the foregoing
provisions are exclusive with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities and shall preclude any and all
other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement or payment of
negotiable instruments or other securities without their surrender.
SECTION 2.09. Temporary Securities. Pending the preparation of
definitive Securities of any series the Company may execute and the Trustee
shall authenticate and deliver temporary Securities (printed or lithographed).
Temporary Securities shall be issuable in any authorized denomination, and
substantially in the form of the definitive Securities but with such omissions,
insertions and variations as may be appropriate for temporary Securities, all as
may be determined by the Company. Every such temporary Security shall be
executed by the Company and be authenticated by the Trustee upon the same
conditions and in substantially the same manner, and with the same effect, as
the definitive Securities. Without unreasonable delay the Company will execute
and deliver to the Trustee or the Authenticating Agent definitive Securities and
thereupon any or all temporary Securities of such series may be surrendered in
exchange therefor, at the principal office of the Trustee or at any office or
agency maintained by the Company for such purpose as provided in Section 5.02,
and the Trustee or the Authenticating Agent shall authenticate and deliver in
exchange for such temporary Securities a like aggregate principal amount of such
definitive Securities. Such exchange shall be made by the Company at its own
expense and without any charge therefor except that in case of any such exchange
involving a registration of transfer the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto. Until so exchanged, the temporary Securities of any series
shall in all respects be entitled to the same benefits under this Indenture as
definitive Securities of the same series authenticated and delivered hereunder.
SECTION 2.10. Cancellation of Securities Paid, etc. All Securities
surrendered for the purpose of payment, redemption, exchange or registration of
transfer shall, if surrendered to the Company or any paying agent, be
surrendered to the Trustee and promptly cancelled by it, or,
20
if surrendered to the Trustee or any Authenticating Agent, shall be promptly
cancelled by it, and no Securities shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Indenture. All Securities
cancelled by any Authenticating Agent shall be delivered to the Trustee. The
Trustee shall destroy cancelled Securities and shall deliver a certificate of
such destruction to the Company. If the Company shall acquire any of the
Securities, however, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness represented by such Securities unless and until
the same are surrendered to the Trustee for cancellation.
ARTICLE THREE.
CONVERSION OF SECURITIES.
SECTION 3.01. Conversion Privilege. Subject to and upon compliance
with the provisions of this Article Three, the holder of any Convertible
Security shall have the right, at his option, at any date on or subsequent to
which such Convertible Security is convertible up to the date on which such
Convertible Security ceases to be convertible (or if such Convertible Security
is called for redemption prior to such date such Convertible Security ceases to
be convertible then, in respect of such Convertible Security, to and including
but not after the close of business on the last business day preceding the date
fixed for such redemption, unless the Company shall default in the payment due
upon redemption thereof) as set forth in the resolutions or supplemental
indenture relating to such series of Convertible Securities referred to in
Section 2.03 to convert the principal amount of such Convertible Security into
the whole number of fully paid and non-assessable shares of Common Stock
obtained by dividing the principal amount of the Convertible Security to be
converted by the Conversion Price for such series; provided, however, that the
foregoing provision shall not apply in the case of Original Issue Discount
Securities if such Securities shall so specify.
SECTION 3.02. Manner of Exercise of Conversion Privilege. In order
to exercise the conversion privilege, the holder of any Convertible Security to
be converted shall surrender such Convertible Security at the office or agency
to be maintained by the Company pursuant to Section 5.02 for the conversion of
Convertible Securities, and shall give written notice to the Company in the form
provided on the Security at such office or agency that the holder elects to
convert such Convertible Security and, if so required by the Company,
accompanied by instruments of transfer, in form satisfactory to the Company and
to the Trustee, duly
21
executed by the holder or his duly authorized attorney in writing. Convertible
Securities, of any series, surrendered for conversion during the period from the
close of business on any record date (as defined in Section 2.05) for the
payment of interest on such series of Convertible Securities to the opening of
business on the interest payment date (as defined in Section 2.05) of such
series for such interest shall (except in the case of Convertible Securities
which have been called for redemption on a redemption date within such period)
be accompanied by payment in New York Clearing House funds or other funds
acceptable to the Company of an amount equal to the interest payable on such
interest payment date on the principal amount of Convertible Securities being
surrendered for conversion. Said notice shall state the name or names (with
addresses) in which the certificate or certificates for shares of Common Stock
which shall be issuable on such conversion shall be issued. As promptly as
practicable after the surrender of such Convertible Security and the receipt of
such notice, as aforesaid, the Company shall, subject to the provisions of
Section 3.08, issue and deliver at such office or agency to such holder, or on
his written order, a certificate or certificates for the number of full shares
of Common Stock issuable on such conversion of Convertible Securities in
accordance with the provisions of this Article and cash, as provided in Section
3.03, in respect of any fraction of a share of Common Stock otherwise issuable
upon such conversion. Such conversion shall be deemed to have been effected
immediately prior to the close of business on the date (herein called the "Date
of Conversion") on which such notice shall have been received by the Company and
such Convertible Security shall have been surrendered as aforesaid, and the
person or persons in whose name or names any certificate or certificates for
shares of Common Stock shall be issuable upon such conversion shall be deemed to
have become on the Date of Conversion the holder or holders of record of the
shares represented thereby; provided, however, that any such surrender on any
date when the stock transfer books of the Company shall be closed shall
constitute the person or persons in whose name or names the certificate or
certificates for such shares are to be issued as the record holder or holders
thereof for all purposes at the opening of business on the next succeeding day
on which such stock transfer books are open but such conversion shall
nevertheless be at the conversion price in effect at the close of business on
the date when such Convertible Security shall have been so surrendered with the
conversion notice, and such Convertible Security shall cease to bear interest on
such date. Subject to the foregoing, no payment or adjustment shall be made
upon conversion on account of any interest accrued on any Convertible Security
converted or for dividends or distributions on any shares of Common Stock issued
upon conversion of any Convertible Security;
22
provided, however, that the foregoing provision shall not apply in the case of
Original Issue Discount Securities if such Securities shall so specify.
SECURITY 3.03. Fractional Shares. No fractional shares of Common
Stock shall be issued upon conversions of Convertible Securities. If more than
one Convertible Security shall be surrendered for conversion at one time by the
same holder, the number of full shares which shall be issuable upon conversion
shall be computed on the basis of the aggregate principal amount of the
Convertible Securities so surrendered. Instead of any fractional interest in a
share of Common Stock which would otherwise be issuable upon conversion of any
Convertible Security or Convertible Securities, the Company shall pay a cash
adjustment in respect of such fractional interest to the nearest one-hundredth
of a share in an amount equal to the market value of such fractional interest on
the Date of Conversion. In such event, the market value of a share of Common
Stock shall be (i) if the Common Stock is listed or admitted to trading on a
national securities exchange, the closing price on the NYSE-Consolidated Tape
(or any successor composite tape reporting transactions on national securities
exchanges) or, if such a composite tape shall not be in use or shall not report
transactions in the Common Stock, the last reported sales price regular way on
the principal national securities exchange on which the Common Stock is listed
or admitted to trading (which shall be the national securities exchange on which
the greatest number of shares of the Common Stock has been traded during the
preceding 30 consecutive trading days), or, if there is no transaction on any
such day in any such situation, the mean of the bid and asked prices on such
day, or (ii) if the Common Stock is not listed or admitted to trading on any
such exchange, the last reported sale price, if reported, or, if no sale occurs
on such date or the last reported sale price is not available, the average of
the closing bid and asked prices as reported by the National Association of
Securities Dealers Automated Quotation System (NASDAQ) or a similar source
selected from time to time by the Company for the purpose.
SECTION 3.04. Conversion Price. The Conversion Price for each
series of Convertible Securities shall be as specified in the resolution or
supplemental indenture or indentures pursuant to which such series is created
referred to in Section 2.03, subject to adjustment as provided in this Article
Three.
SECTION 3.05. Adjustment of Conversion Price. The Conversion Price
for each series shall be adjusted from time to time as follows:
23
(a) In case the Company shall, while any of the Convertible Securities
are outstanding, (i) pay a dividend or make a distribution with respect to
its Common Stock in shares of its capital stock (whether shares of Common
Stock or of capital stock of any other class), (ii) subdivide its outstanding
shares of Common Stock, (iii) combine its outstanding shares of Common Stock
into a smaller number of shares, or (iv) issue by reclassification of its
shares of Common Stock any shares of capital stock of the Company, the
conversion privilege and the Conversion Price for each series of Convertible
Securities in effect immediately prior to such action shall be adjusted so
that the holder of any Convertible Security thereafter surrendered for
conversion shall be entitled to receive the number of shares of capital stock
of the Company which he would have owned immediately following such action
had such Convertible Security been converted immediately prior thereto. An
adjustment made pursuant to this subsection (a) shall become effective
immediately after the record date in the case of a dividend and shall become
effective immediately after the effective date in the case of a subdivision,
combination or reclassification. If, as a result of an adjustment made
pursuant to this subsection (a), the holder of any Convertible Security
thereafter surrendered for conversion shall become entitled to receive shares
of two or more classes of capital stock of the Company, the Board of
Directors (whose determination shall be conclusive and shall be described in
a resolution filed with the Trustee) shall determine the allocation of the
adjusted Conversion Price for each series of Convertible Securities between
or among shares of such classes of capital stock.
(b) In case the Company shall, while any of the Convertible Securities
are outstanding, issue rights or warrants to all holders of its Common Stock
entitling them (for a period expiring within forty-five days after the record
date mentioned below) to subscribe for or purchase shares of Common Stock at
a price per share less than the current market price per share (as determined
pursuant to subsection (d) below) on the record date mentioned below, the
Conversion Price for each series of Convertible Securities of the Common
Stock shall be adjusted so that the same shall equal the price determined by
multiplying the Conversion Price for such series in effect immediately prior
to the date of issuance of such rights or warrants by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding on the
date of issuance of such rights or warrants plus the number of shares which
the aggregate offering price of the total
24
number of shares so offered would purchase at such current market price, and
of which the denominator shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights or warrants plus the
number of additional shares of Common Stock offered for subscription or
purchase. Such adjustment shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
rights or warrants.
(c) In case the Company shall, while any of the Convertible Securities
are outstanding, distribute to all holders of its Common Stock evidences of
its indebtedness or assets (excluding any cash dividends) or rights to
subscribe or warrants (excluding those referred to in subsection (b) above),
then in each such case the Conversion Price for each series of Convertible
Securities of the Common Stock shall be adjusted so that the same shall equal
the price determined by multiplying the Conversion Price for such series in
effect immediately prior to the date of such distribution by a fraction of
which the numerator shall be the current market price per share (determined
as provided in subsection (d) below) of the Common Stock on the record date
mentioned below less the then fair market value (as determined by the Board
of Directors of the Company, whose determination shall be conclusive, and
described in a resolution filed with the Trustee) of the portion of the
assets or evidences of indebtedness so distributed or of such subscription
rights or warrants applicable to one share of Common Stock, and the
denominator shall be such current market price per share of the Common
Stock. Such adjustment shall become effective immediately after the record
date for the determination of stockholders entitled to receive such
distribution.
(d) For the purpose of any computation under Subdivisions (b) and (c)
above, the current market price per share of Common Stock at any date shall
be deemed to be the average of the daily closing prices for the 30
consecutive trading days commencing 45 trading days before the date in
question. The closing price for each day shall be (i) if the Common Stock is
listed or admitted to trading on a national securities exchange, the closing
price on the NYSE-Consolidated Tape (or any successor composite tape
reporting transactions on national securities exchanges) or, if such a
composite tape shall not be in use or shall not report transactions in the
Common Stock, the last reported sales price regular way on the principal
national securities exchange on which the Common Stock is listed or admitted
to trading (which shall be the
25
national securities exchange on which the greatest number of shares of the
Common Stock has been traded during such 30 consecutive trading days), or, if
there is no transaction on any such day in any such situation, the mean of
the bid and asked prices on such day or (ii) if the Common Stock is not
listed or admitted to trading on any such exchange, the last reported sale
price, if reported, or, if no sale occurs on such date or the last reported
sale price is not available, the average of the closing bid and asked prices
as reported by the National Association of Securities Dealers Automated
Quotation System (NASDAQ) or a similar source selected from time to time by
the Company for the purpose.
(e) In any case in which this Section 3.05 shall require that an
adjustment be made immediately following a record date, the Company may elect
to defer (but only until five business days following the filing by the
Company with the Trustee of the Officers' Certificate described in subsection
(g) below) issuing to the holder of any Convertible Security converted after
such record date the shares of Common Stock and other capital stock of the
Company issuable upon such conversion over and above the shares of Common
Stock and other capital stock of the Company issuable upon such conversion
only on the basis of the Conversion Price for the series of Convertible
Securities which such Convertible Security is a part prior to such
adjustment; and, in lieu of the shares the issuance of which is so deferred,
the Company shall issue or cause its transfer agents to issue due bills or
other appropriate evidence of the right to receive such shares.
(f) No adjustment in the Conversion Price for any series of
Convertible Securities shall be required unless such adjustment would require
an increase or decrease of at least 1% in such price; provided, however, that
any adjustments which by reason of this subsection (f) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 3.05 shall be made to the
nearest cent or to the nearest one-hundredth of a share, as the case may be.
(g) Whenever the Conversion Price for any series of Convertible
Securities is adjusted as herein provided, the Company shall promptly file
with the Trustee and each conversion agent an Officers' Certificate setting
forth the Conversion Price for such series after such adjustment and setting
forth a brief
26
statement of the facts and calculation requiring such adjustment, which
certificate shall be conclusive evidence of the correctness of such
adjustment and cause a notice stating that such adjustment has been effected
and the adjusted Conversion Price to be mailed to the holders of Convertible
Securities of such series at their last addresses as they shall appear on the
Securities register.
(h) The Company may make such reductions in the Conversion Price, in
addition to those required by this Section 3.05, as it considers to be
advisable in order to avoid or diminish any income tax to any holder of its
Common Stock resulting from any dividend or distribution of stock or issuance
of rights or warrants to purchase or subscribe for stock or from any event
treated as such for income tax purposes or for any other reasons.
(i) In the event that at any time as a result of an adjustment made
pursuant to subsection (a) above, the holder of any Convertible Security
thereafter surrendered for conversion shall become entitled to receive any
shares of capital stock of the Company other than shares of its Common Stock,
thereafter the Conversion Price for such series of such other shares so
receivable upon conversion of any Convertible Securities shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to Common Stock contained in
subsections (a) through (h) above, and the provisions of Sections 3.01
through 3.04 and of Sections 3.06 through 3.10 with respect to the Common
Stock shall apply on like terms to any such other shares.
SECTION 3.06. Merger, Consolidation, etc. If either of the
following shall occur, namely: (a) any consolidation or merger to which the
Company is a party, other than a consolidation or a merger in which the Company
is the continuing corporation and which does not result in any reclassification
of, or change (other than a change in par value or from par value to no par
value or from no par value to par value, or as a result of a subdivision or
combination) in, outstanding shares of the Common Stock, or (b) any sale or
conveyance to another corporation of the assets of the Company as an entirety or
substantially as an entirety, then the Company, or such successor or purchasing
corporation, as the case may be, shall execute and deliver to the Trustee a
supplemental indenture providing that the holder of each Convertible Security
then outstanding shall have the right to convert such Convertible Security into
the kind and amount of shares of stock and other securities and
27
property (including cash) receivable upon such reclassification, change,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock issuable upon conversion of such Convertible Security immediately
prior to such reclassification, change, consolidation, merger, sale or
conveyance. Such supplemental indenture shall provide for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Article. The provisions of this Section 3.06 shall similarly apply
to successive consolidations, mergers, sales or conveyances.
SECTION 3.07. Notices. In case, at any time while any of the
Convertible Securities are outstanding,
(a) the Company shall declare a dividend (or any other distribution)
on its Common Stock, excluding any cash dividends; or
(b) the Company shall authorize the issuance to all holders of its
Common Stock of rights or warrants to subscribe for or purchase shares of its
Common Stock or of any other subscription rights or warrants; or
(c) the Company shall authorize any reclassification of its Common
Stock (other than a subdivision or combination thereof) or any consolidation
or merger to which the Company is a party and for which approval of any
stockholders of the Company is required (except for a merger of the Company
into one of its subsidiaries solely for the purpose of changing the corporate
domicile of the Company to another state of the United States and in
connection with which there is no substantive change in the rights or
privileges of any securities of the Company other than changes resulting from
differences in the corporate statutes of the then existing and the new state
of domicile), or the sale or transfer of all or substantially all of the
assets of the Company; or
(d) the voluntary or involuntary dissolution, liquidation or winding
up of the Company shall occur or be authorized;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of the Convertible Securities pursuant to Section
5.02, and shall cause to be mailed to the holders of Convertible Securities at
their last addresses as they shall appear on the Securities register, at least
10 days before the date hereinafter specified (or the earlier of the dates
hereinafter specified, in the event that more than one date is specified), a
notice stating (i) the date on which a
28
record is to be taken for the purpose of such dividend, distribution, rights or
warrants, or, if a record is not to be taken, the date as of which the holders
of Common Stock of record to be entitled to such dividend, distribution, rights
or warrants are to be determined, or (ii) the date on which any such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as of
which it is expected that holders of Common Stock of record shall be entitled to
exchange their Common Stock for securities or other property (including cash),
if any, deliverable upon such reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up. The failure to give or
receive the notice required by this Section 3.07 or any defect therein shall not
affect the legality or validity of any such dividend, distribution, right or
warrant or other action.
SECTION 3.08. Taxes on Conversion. The Company will pay any and
all documentary, stamp or similar taxes payable to the United States of America
or any political subdivision or taxing authority thereof or therein in respect
of the issue or delivery of shares of Common Stock on conversion of Convertible
Securities pursuant hereto; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issue or delivery of shares of Common Stock in a name other than that of
the holder of the Convertible Securities to be converted and no such issue or
delivery shall be made unless and until the person requesting such issue or
delivery has paid to the Company the amount of any such tax or has established,
to the satisfaction of the Company, that such tax has been paid.
SECTION 3.09. Company to Provide Stock. The Company covenants that
there shall be reserved, free from pre-emptive rights, out of authorized but
unissued shares of Common Stock, sufficient shares to provide for the conversion
of the Convertible Securities from time to time as such Convertible Securities
are presented for conversion.
If any shares of Common Stock to be reserved for the purpose of
conversion of Convertible Securities hereunder require registration with or
approval of any governmental authority under any Federal or state law before
such shares may be validly issued or delivered upon conversion, then the Company
covenants that it will in good faith and as expeditiously as possible endeavor
to secure such registration or approval, as the case may be.
Before any action which would cause an adjustment reducing the
Conversion Price for any series of Convertible Securities below the then par
value, if any, of the Common
29
Stock, the Company covenants that there will be taken all corporate action which
may, in the opinion of its counsel, be necessary in order that there may be
validly and legally issued fully paid and non-assessable shares of such Common
Stock at such adjusted Conversion Price.
The Company covenants that all shares of Common Stock which may be
issued upon conversion of Convertible Securities will upon issue be validly
issued, fully paid and non-assessable and free from all liens and charges with
respect to the issue or delivery thereof.
SECTION 3.10. Disclaimer of Responsibility for Certain Matters.
Neither the Trustee nor any conversion agent shall at any time be under any duty
or responsibility to any holder of Convertible Securities to determine whether
any facts exist which may require any adjustment of the Conversion Price for any
series of Convertible Securities, or with respect to the Officers' Certificate
referred to in Section 3.05(g), or with respect to the nature or extent of any
such adjustment when made, or with respect to the method employed, or herein or
in any supplemental indenture provided to be employed, in making the same.
Neither the Trustee nor any conversion agent shall be accountable with respect
to the registration, validity or value (or the kind or amount) of any shares of
Common Stock, or of any securities or property, which may at any time be issued
or delivered upon the conversion of any Convertible Security; and neither the
Trustee nor any conversion agent makes any representation with respect thereto.
Neither the Trustee nor any conversion agent shall be responsible for any
failure of the Company to issue or deliver any shares of Common Stock or stock
certificates or other securities, cash or property upon the surrender of any
Convertible Security for the purpose of conversion, or, subject to Section 8.01,
to comply with any of the covenants of the Company contained in this Article
Three.
SECTION 3.11. Return of Funds Deposited for Redemption of Converted
Securities. Any funds which at any time shall have been deposited by the
Company or on its behalf with the Trustee or any other paying agent for the
purpose of paying the principal of, premium, if any, and interest, if any, on
any of the Convertible Securities and which shall not be required for such
purposes because of the conversion of such Convertible Securities, as provided
in this Article Three, shall forthwith after such conversion be repaid to the
Company by the Trustee or such other paying agent.
SECTION 3.12. Disposition of Converted Securities. All Convertible
Securities delivered to the Company or any conversion agent upon conversion
pursuant to
30
this Article Three shall be delivered to the Trustee for cancellation.
ARTICLE FOUR.
SUBORDINATION OF SECURITIES.
SECTION 4.01. Agreement to Subordinate. The Company covenants and
agrees, and each holder of Securities issued hereunder by his acceptance thereof
likewise covenants and agrees, that all Securities issued hereunder shall be
issued subject to the provisions of this Article; and each person holding any
Security, whether upon original issue or upon transfer or assignment thereof,
accepts and agrees to be bound by such provisions. The provisions of this
Article are made for the benefit of the holders of Senior Indebtedness, and such
holders shall, at any time, be entitled to enforce such provisions against the
Company or any Securityholders.
All Securities issued hereunder shall, to the extent and in the manner
hereinafter in this Article set forth, be subordinate and junior in right of
payment to the prior payment in full of all Senior Indebtedness.
SECTION 4.02. No Payment on Securities if Senior Indebtedness in
Default. No payment on account of principal, premium, if any, sinking funds or
interest, if any, on the Securities or payment to acquire any of the Securities
for cash or property shall be made unless full payment of amounts then due for
principal, premium, if any, sinking funds and interest, if any, on all Senior
Indebtedness has been made or duly provided for. No payment (including the
making of any deposit in trust with the Trustee in accordance with Section
12.01) on account of principal, premium, if any, sinking funds or interest on
the Securities or payment to acquire any of the Securities for cash or property
shall be made if, at the time of such payment or immediately after giving effect
thereto, (i) there shall exist a default in the payment of principal, premium,
if any, sinking funds or interest with respect to any Senior Indebtedness, or
(ii) there shall have occurred an event of default (other than a default in the
payment of principal, premium, if any, sinking funds or interest) with respect
to any Senior Indebtedness, as defined therein or in the instrument under which
the same is outstanding, permitting the holders thereof to accelerate the
maturity thereof, and such event of default shall not have been cured or waived
or shall not have ceased to exist. The foregoing provision shall not prevent
the Trustee from making payments on the Securities from monies or securities
deposited with the Trustee pursuant to the terms of Section 12.01 if at the
31
time such deposit was made or immediately after giving effect thereto the
conditions in (i) or (ii) of this Section did not exist.
SECTION 4.03. Priority of Senior Indebtedness. In the event of any
insolvency or bankruptcy proceedings, and any receivership, liquidation,
reorganization under the Federal Bankruptcy Code or any other similar applicable
Federal or state law, or other similar proceedings in connection therewith,
relative to the Company or to its creditors, as such, or to its property, and in
the event of any proceedings for voluntary liquidation, dissolution or other
winding up of the Company or assignment for the benefit of creditors or any
other marshalling of assets of the Company, whether or not involving insolvency
or bankruptcy, then the holders of Senior Indebtedness shall be entitled to
receive payment in full of all principal of and premium, if any, and interest on
all Senior Indebtedness including interest on such Senior Indebtedness after the
date of filing of a petition or other action commencing such proceeding before
the holders of the Securities are entitled to receive any payment on account of
the principal of or premium, if any, or interest on the Securities (except that
holders of Securities shall be entitled to receive such payments from monies or
securities deposited with the Trustee pursuant to the terms of Section 12.01 if
at the time such deposit was made or immediately after giving effect thereto the
conditions in (i) or (ii) of Section 4.02 did not exist), and any payment or
distribution of any kind or character which may be payable or deliverable in any
such proceedings in respect of the Securities, except securities which are
subordinate and junior in right of payment to the payment of all Senior
Indebtedness then outstanding, shall be paid by the person making such payment
or distribution directly to the holders of Senior Indebtedness to the extent
necessary to make payment in full of all Senior Indebtedness, after giving
effect to any concurrent payment or distribution to the holders of Senior
Indebtedness. In the event that any payment or distribution of cash, property
or securities shall be received by the Trustee or the holders of the Securities
in contravention of this Section before all Senior Indebtedness is paid in full,
or provision made for the payment thereof, such payment or distribution shall be
held in trust for the benefit of and shall be paid over to the holders of such
Senior Indebtedness or their representative or representatives or to the trustee
or trustees under any indenture under which any instrument evidencing any of
such Senior Indebtedness may have been issued, as their respective interests may
appear, to the extent necessary to pay in full all Senior Indebtedness remaining
unpaid, after giving effect to any concurrent payment or distribution to the
holders of such Senior Indebtedness.
32
In the event that any Security is declared due and payable before its
expressed maturity because of the occurrence of an Event of Default (under
circumstances when the provisions of the first paragraph of this Section shall
not be applicable), the holders of the Senior Indebtedness outstanding at the
time the Securities of such series so become due and payable because of such
occurrence of such an Event of Default shall be entitled to receive payment in
full of all principal of and premium, if any, and interest, if any, on all
Senior Indebtedness before the holders of the Securities of such series are
entitled to receive any payment on account of the principal of or premium, if
any, or interest on the Securities of such series except that holders of
Securities of such series shall be entitled to receive payments from monies or
securities deposited with the Trustee pursuant to the terms of Section 12.01, if
at the time of such deposit no Security of such series had been declared due and
payable before its expressed maturity because of the occurrence of an Event of
Default.
SECTION 4.04. Company to Give Notice of Certain Events; Reliance by
Trustee. The Company shall give prompt written notice to the Trustee of any
insolvency or bankruptcy proceedings, any receivership, liquidation,
reorganization under the Federal Bankruptcy Code or any other similar applicable
Federal or state law, or similar proceedings and any proceedings for voluntary
liquidation, dissolution or winding up of the Company within the meaning of this
Article. The Trustee shall be entitled to assume that no such event has
occurred unless the Company or any one or more holders of Senior Indebtedness or
any trustee therefor has given such notice together with proof satisfactory to
the Trustee of such holding of Senior Indebtedness or the authority of such
Trustee. Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, in the absence of its negligence or bad faith and
any holder of a Security shall be entitled to rely upon a certificate of the
receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution, delivered to the Trustee or to the holders
or Securities, for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of the Senior Indebtedness and
other indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article. In the event that the Trustee determines, in good
faith, that further evidence is required with respect to the right of any person
as a holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Article, the Trustee may request such person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Indebtedness held by such person, as to
33
the extent to which such person is entitled to participate in such payment or
distribution and as to other facts pertinent to the rights of such person under
this Article, and if such evidence is not furnished, the Trustee may defer any
payment to such person pending judicial determination as to the right of such
person to receive such payment.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such covenants and obligations as are
specifically set forth in this Indenture and no implied covenants or obligations
with respect to holders of Senior Indebtedness shall be read into this Indenture
against the Trustee.
SECTION 4.05. Subrogation of Securities. Subject to the payment in
full of all Senior Indebtedness, the holders of the Securities shall be
subrogated to the rights of the holders of Senior Indebtedness to receive
payments or distributions of assets of the Company made on the Senior
Indebtedness until the principal of and premium, if any, and interest on the
Securities shall be paid in full; and, for the purposes of such subrogation, no
payments or distributions to the holders of Senior Indebtedness of any cash,
property, or securities to which the holders of the Securities or the Trustee
would be entitled except for the provisions of this Article, and no payment over
pursuant to the provisions of this Article to the holders of Senior Indebtedness
by holders of the Securities or by the Trustee, shall, as between the Company,
its creditors other than the holders of Senior Indebtedness, and the holders of
Securities, be deemed to be a payment by the Company to or on account of Senior
Indebtedness, and no payments or distributions to the Trustee or the holders of
the Securities of cash, property or securities payable or distributable to the
holders of the Senior Indebtedness to which the Trustee or the holders of the
Securities shall become entitled pursuant to the provisions of this Section,
shall, as between the Company, its creditors other than the holders of Senior
Indebtedness, and the holders of the Securities, be deemed to be a payment by
the Company to the holders of or on account of the Securities.
SECTION 4.06. Company Obligation to Pay Unconditional. The provisions
of this Article are solely for the purpose of defining the relative rights of
the holders of Senior Indebtedness on the one hand, and the holders of the
Securities on the other hand, and nothing herein shall impair, as between the
Company and the holders of the Securities, the obligation of the Company which
is unconditional and absolute, to pay to the holders thereof the principal
thereof and premium, if any, and interest thereon in accordance with the terms
of the Securities and
34
this Indenture nor shall anything herein prevent the holders of the Securities
or the Trustee from exercising all remedies otherwise permitted by applicable
law or under the Securities and this Indenture upon default under the Securities
and this Indenture, subject to the rights of holders of Senior Indebtedness
under the provisions of this Article to receive cash, property or securities
otherwise payable or deliverable to the holders of the Securities.
SECTION 4.07. Authorization of Holders of Securities to Trustee to
Effect Subordination. Each holder of Securities by his acceptance thereof
authorizes the Trustee in his behalf to take such action as may be necessary or
appropriate to effectuate the subordination as provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes.
SECTION 4.08. Notice to Trustee of Facts Prohibiting Payments.
Notwithstanding any of the provisions of this Article or any other provision of
this Indenture, the Trustee shall not at any time be charged with knowledge of
the existence of any facts which would prohibit the making of any payment of
moneys to or by the Trustee, unless and until the principal office of the
Trustee shall have received written notice thereof from the Company or from one
or more holders of Senior Indebtedness or from any trustee therefor, together
with proof satisfactory to the Trustee of such holding of Senior Indebtedness or
the authority of such Trustee, and, prior to the receipt of any such written
notice, the Trustee, subject to the provisions of Sections 7.01 and 7.02, shall
be entitled in all respects to assume that no such facts exist; provided, that,
if prior to the second business day preceding the date upon which by the terms
hereof any such moneys may become payable for any purpose (including, without
limitation, the payment of the principal of or premium, if any, or interest on
any Security), the Trustee shall not have received with respect to such moneys
the notice provided for in this Section, then, anything herein contained to the
contrary notwithstanding, the Trustee and any paying agent shall have full power
and authority to receive such moneys and to apply the same to the purpose for
which they were received, and shall not be affected by any notice to the
contrary which may be received by it on or after such day, and provided,
further, that nothing contained herein shall prevent conversions of the
Securities in accordance with the provisions of this Indenture.
SECTION 4.09. Trustee May Hold Senior Indebtedness. The Trustee shall
be entitled to all the rights set forth in this Article with respect to any
Senior Indebtedness at the time held by it, to the same extent as any other
holder of Senior Indebtedness, and nothing in this
35
Indenture shall deprive the trustee of any of its rights as such holder.
SECTION 4.10. All Indenture Provisions Subject to this Article.
Notwithstanding anything herein contained to the contrary, all the provisions of
this Indenture shall be subject to the provisions of this Article, so far as the
same may be applicable thereto; provided, however, that nothing in this Article
shall apply to claims of, or payments to, the Trustee under or pursuant to
Section 7.06.
ARTICLE FIVE.
PARTICULAR COVENANTS OF THE COMPANY AND THE TRUSTEE.
Section 5.01. Payment of Principal, Premium and Interest. The
Company covenants and agrees for the benefit of each series of Securities that
it will duly and punctually pay or cause to be paid the principal of and
premium, if any, and any interest on each of the Securities of that series at
the place, at the respective times and in the manner provided in such
Securities. Each installment of interest, if any, on the Securities of any
series may be paid by mailing checks for such interest payable to the order of
the holders of Securities entitled thereto as they appear on the registry books
of the Company.
SECTION 5.02. Offices for Notices and Payments, etc. So long as
any of the Securities remains outstanding, the Company will maintain in the
Borough of Manhattan, The City of New York, an office or agency where the
Securities of each series may be presented for payment, an office or agency
where the Securities of that series may be presented for registration of
transfer and for exchange as in this Indenture provided, an office or agency
where the Securities of that series, if convertible, may be presented for
conversion and an office or agency where notices and demands to or upon the
Company in respect of the Securities of that series or of this Indenture may be
served. The Company will give to the Trustee written notice of the location of
any such office or agency and of any change of location thereof. The Company
hereby initially appoints the corporate trust office or the agency of the
Trustee in the Borough of Manhattan, The City of New York as the Company's
conversion agent. Until otherwise designated from time to time by the Company
in a notice to the Trustee, or specified as contemplated by Section 2.03, such
office or agency for all of the above purposes shall be the principal office of
the Trustee. In case the Company shall fail to maintain any such office or
agency in the Borough of Manhattan, The City of New York, or shall fail to give
such notice of the location or of any change in the location thereof,
36
presentations and demands may be made and notices may be served at the principal
office of the Trustee.
In addition to such office or agency, the Company may from time to time
designate one or more offices or agencies outside the Borough of Manhattan, The
City of New York, where the Securities may be presented for registration of
transfer and for exchange in the manner provided in this Indenture, and the
Company may from time to time rescind such designation, as the Company may deem
desirable or expedient; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
such office or agency in the Borough of Manhattan, The City of New York, for the
purposes above mentioned. The Company will give to the Trustee prompt written
notice of any such designation or rescission thereof.
SECTION 5.03. Appointments to Fill Vacancies in Trustee's Office.
The Company, whenever necessary to avoid or fill a vacancy in the office of
Trustee, will appoint, in the manner provided in Section 7.09, a Trustee, so
that there shall at all times be a Trustee hereunder.
SECTION 5.04. Provision as to Paying Agent and Conversion Agent.
(a) If the Company shall appoint a paying agent or conversion agent other than
the Trustee with respect to the Securities of any series, it will cause such
paying agent or conversion agent to execute and deliver to the Trustee an
instrument in which such agent shall agree with the Trustee, subject to the
provisions of this Section 5.04:
(1) that it will hold all sums held by it as such agent for the
payment of the principal of and premium, if any, or interest, if any,
on the Securities of such series (whether such sums have been paid to
it by the Company or by any other obligor on the Securities of such
series) in trust for the benefit of the holders of the Securities of
such series;
(2) that it will give the Trustee notice of any failure by the
Company (or by any other obligor on the Securities of such series) to
make any payment of the principal of and premium, if any, or interest,
if any, on the Securities of such series when the same shall be due and
payable; and
(3) pay any such sums so held in trust by it to the Trustee
upon the Trustee's written request
37
at any time during the continuance of the failure referred to in clause
(2) above.
(b) If the Company shall act as its own paying agent, it will, on or
prior to each due date of the principal of and premium, if any, or interest, if
any, on the Securities of any series, set aside, segregate and hold in trust for
the benefit of the holders of the Securities of such series a sum sufficient to
pay such principal, premium or interest so becoming due and will notify the
Trustee of any failure to take such action and of any failure by the Company (or
by any other obligor under the Securities of such series) to make any payment of
the principal of and premium, if any, or interest, if any, on the Securities of
such series when the same shall become due and payable.
(c) Anything in this Section 5.04 to the contrary notwithstanding,
the Company may, at any time, for the purpose of obtaining a satisfaction and
discharge with respect to one or more or all series of Securities hereunder, or
for any other reason, pay or cause to be paid to the Trustee all sums held in
trust for any such series by the Trustee or any paying agent hereunder, as
required by this Section 5.04, such sums to be held by the Trustee upon the
trusts herein contained.
(d) Anything in this Section 5.04 to the contrary notwithstanding,
the agreement to hold sums in trust as provided in this Section 5.04 is subject
to Section 12.03 and 12.04.
SECTION 5.05. Certificate of the Company. The Company will furnish to
the Trustee on or before April 1 in each year (beginning with April 1, 1994), so
long as Securities of any series are outstanding hereunder, a brief certificate
(which need not comply with Section 14.05) from the principal executive,
financial or accounting officer of the Company as to his or her knowledge of the
Company's compliance with all conditions and covenants under the Indenture (such
compliance to be determined without regard to any period of grace or requirement
of notice provided under the Indenture).
SECTION 5.06. Securityholders' Lists. If and so long as the
Trustee shall not be the Security registrar for the Securities of any series,
the Company will furnish or cause to be furnished to the Trustee pursuant to
Section 312 of the Trust Indenture Act of 1939:
(a) semi-annually, not more than 15 days after each record date for
each series of Securities, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Securityholders of such
38
series of Securities as of such record date (and on dates to be determined
pursuant to Section 2.03 for non-interest bearing Securities in each year);
and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the time
such list is furnished.
SECTION 5.07. Reports by the Company. The Company covenants to
file with the Trustee, within 15 days after the Company is required to file the
same with the Commission, copies of the annual reports and of the information,
documents, and other reports which the Company may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934.
SECTION 5.08. Reports by the Trustee. Any Trustee's report
required under Section 313(a) of the Trust Indenture Act of 1939 shall be
transmitted on or before July 15 in each year following the date hereof, so long
as any Securities are outstanding hereunder, and shall be dated as of a date
convenient to the Trustee no more than 60 nor less than 45 days prior thereto.
ARTICLE SIX
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT.
SECTION 6.01. Events of Default. "Event of Default", wherever used
herein with respect to Securities of any series, means any one of the following
events and such other events as may be established with respect to the
Securities of that series as contemplated by Section 2.03 hereof:
(a) default in the payment of any interest upon any Securities of that
series when it becomes due and payable, and continuance of such default for a
period of 30 days; or
(b) default in the payment of all or any part of the principal of (or
premium, if any, on) any Securities of that series as and when the same shall
become due and payable either at maturity, upon redemption (including
redemption for the sinking fund), by declaration or otherwise; or
39
(c) default in the performance, or breach, of any covenant of the
Company in this Indenture (other than a covenant a default in whose
performance or whose breach is elsewhere in this Section specifically dealt
with and other than those set forth exclusively in terms of any particular
series of Securities established as contemplated in this Indenture), and
continuance of such default or breach for a period of 90 days after there has
been given, by registered or certified mail, to the Company by the Trustee or
to the Company and the Trustee by the holders of at least 33% in principal
amount of the outstanding Securities a written notice specifying such default
or breach and requiring it to be remedied and stating that such notice is a
"Notice of Default" hereunder; or
(d) a court having jurisdiction in the premises shall enter a decree
or order for relief in respect of the Company in an involuntary case under
any applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of the Company or for any
substantial part of its property, or ordering the winding-up or liquidation
of its affairs and such decree or order shall remain unstayed and in effect
for a period of 90 consecutive days; or
(e) the Company shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, shall
consent to the entry of an order for relief in an involuntary case under any
such law, or shall consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of the Company or of any substantial part of its property,
or shall make any general assignment for the benefit of creditors, or shall
fail generally to pay its debts as they become due.
If an Event of Default described in clause (a) or (b) or established
pursuant to Section 2.03 occurs and is continuing, then, and in each and every
such case, unless the principal of all of the Securities of such series shall
have already become due and payable, either the Trustee or the holders of not
less than 33% in aggregate principal amount of the Securities of such series
then outstanding hereunder, by notice in writing to the Company (and to the
Trustee if given by Securityholders), may declare the entire principal (or, if
the Securities of that series are Original Issue Discount Securities, such
portion of the principal amount as may be specified in the terms of that series)
of
40
all the Securities of such series and the interest accrued thereon, if any, to
be due and payable immediately, and upon any such declaration the same shall
become immediately due and payable. If an Event of Default described in clause
(c), (d) or (e) occurs and is continuing, then and in each and every such case,
unless the principal of all the Securities shall have already become due and
payable, either the Trustee or the holders of not less than 33% in aggregate
principal amount of all the Securities then outstanding hereunder (treated as
one class), by notice in writing to the Company (and to the Trustee if given by
Securityholders), may declare the entire principal (or, if any Securities are
Original Issue Discount Securities, such portion of the principal as may be
specified in the terms thereof) of all the Securities then outstanding and
interest accrued thereon, if any, to be due and payable immediately, and upon
any such declaration the same shall become immediately due and payable.
The foregoing provisions, however, are subject to the condition that
if, at any time after the principal (or, if any Securities are Original Issue
Discount Securities, such portion of the principal as may be specified in the
terms thereof) of the Securities of any series (or of all the Securities, as the
case may be) shall have been so declared due and payable, and before any
judgment or decree for the payment of the moneys due shall have been obtained or
entered as hereinafter provided, the Company shall pay or shall deposit with the
Trustee a sum sufficient to pay all matured installments of interest, if any,
upon all the Securities of any series (or all the Securities, as the case may
be) and the principal of and premium, if any, on any and all Securities of such
series (or of all the Securities, as the case may be) which shall have become
due otherwise than by acceleration, with interest upon such principal and
premium, if any, and (to the extent that payment of such interest is enforceable
under applicable law) on overdue installments of interest at the same rate as
the rate of interest or Yield to Maturity (in the case of Original Issue
Discount Securities) specified in the Securities of such series, or at the
respective rates of interest or Yields to Maturity of all the Securities, as the
case may be, to the date of such payment or deposit and such amount as shall be
sufficient to cover reasonable compensation to the Trustee and each predecessor
Trustee, their respective agents, attorneys and counsel, as provided in Section
7.06, and if any and all Events of Default under this Indenture, other than the
non-payment of the principal of or premium, if any, on Securities which shall
have become due by acceleration, shall have been cured, waived or otherwise
remedied as provided herein--then and in every such case the holders of a
majority in aggregate principal amount of the Securities of such series (or of
all the Securities, as the case may
41
be) then outstanding, by written notice to the Company and to the Trustee, may
waive all defaults with respect to that series (or with respect to all
Securities, as the case may be, in such case, treated as a single class), and
rescind and annul such declaration and its consequences, but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent default
or shall impair any right consequent thereon.
In case the Trustee shall have proceeded to enforce any right under
this Indenture and such proceedings shall have been discontinued or abandoned
because of such rescission or annulment or for any other reason or shall have
been determined adversely to the Trustee, then and in every such case the
Company, the Trustee and the holders of the Securities shall be restored
respectively to their several positions and rights hereunder, and all rights,
remedies and powers of the Company, the Trustee and the holders of the
Securities shall continue as though no such proceeding had been taken.
SECTION 6.02. Payment of Securities on Default; Suit Therefor. The
Company covenants that (a) in case default shall be made in the payment of any
installment of interest upon any of the Securities of any series as and when the
same shall become due and payable, and such default shall have continued for a
period of 30 days, or (b) in case default shall be made in the payment of the
principal of or premium, if any, on any of the Securities of any series as and
when the same shall have become due and payable, whether at maturity of the
Securities of that series or upon redemption or by declaration or otherwise--
then, upon demand of the Trustee, the Company will pay to the Trustee, for the
benefit of the holders of the Securities of that series, the whole amount that
then shall have become due and payable on all such Securities of that series for
principal and premium, if any, or interest, if any, or both, as the case may be,
with interest upon the overdue principal and premium, if any, and (to the extent
that payment of such interest is enforceable under applicable law) upon the
overdue installments of interest at the rate of interest or Yield to Maturity
(in the case of Original Issue Discount Securities) borne by the Securities of
that series, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including a reasonable
compensation to the Trustee, its agents, attorneys and counsel, as provided in
Section 7.06.
In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name as trustee of an express trust, shall be
entitled and empowered to institute any actions or proceedings at law or in
equity for the collection of the sums so due and unpaid,
42
and may prosecute any such action or proceeding to judgment or final decree, and
may enforce any such judgment or final decree against the Company or any other
obligor on such Securities and collect in the manner provided by law out of the
property of the Company or any other obligor on such Securities wherever
situated the moneys adjudged or decreed to be payable.
In case there shall be pending proceedings for the bankruptcy or for
the reorganization of the Company or any other obligor on the Securities of any
series under Title 11, United States Code, or any other applicable law, or in
case a receiver or trustee (or similar official) shall have been appointed for
the property of the Company or such other obligor, or in the case of any other
similar judicial proceedings relative to the Company or other obligor upon the
Securities of any series, or to the creditors or property of the Company or such
other obligor, the Trustee, irrespective of whether the principal of the
Securities of any series shall then be due and payable as therein expressed or
by declaration or otherwise and irrespective of whether the Trustee shall have
made any demand pursuant to the provisions of this Section 6.02, shall be
entitled and empowered, by intervention in such proceedings or otherwise, to
file and prove a claim or claims for the whole amount of principal and interest
(or, if the Securities of that series are Original Issue Discount Securities
such portion of the principal amount as may be specified by the terms of that
series) owing and unpaid in respect of the Securities of such series and, in
case of any judicial proceedings, to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for reasonable compensation to the Trustee and each
predecessor Trustee, and their respective agents, attorneys and counsel, as
provided in Section 7.06) and of the Securityholders allowed in such judicial
proceedings relative to the Company or any other obligor on the Securities of
any series, or to the creditors or property of the Company or such other
obligor, unless prohibited by applicable law and regulations, to vote on behalf
of the holders of the Securities of any series in any election of a trustee or a
standby trustee in arrangement, reorganization, liquidation or other bankruptcy
or insolvency proceedings or person performing similar functions in comparable
proceedings, and to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute the same after the deduction
of its charges and expenses, except to the extent that such charges or expenses
arise from the negligence or bad faith of the same; and any receiver, assignee
or trustee in bankruptcy or reorganization is hereby authorized by each of the
Securityholders to make such payments to the Trustee, and, in the event that the
Trustee shall consent to the
43
making of such payments directly to the Securityholders, to pay to the Trustee
such amounts as shall be sufficient to cover reasonable compensation to the
Trustee, each predecessor Trustee and their respective agents, attorneys and
counsel, as provided in Section 7.06.
Nothing herein contained shall be construed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Securityholder any
plan of reorganization, arrangement, adjustment or composition affecting the
Securities of any series or the rights of any holder thereof or to authorize the
Trustee to vote in respect of the claim of any Securityholder in any such
proceeding.
All rights of action and of asserting claims under this Indenture, or
under any of the Securities, may be enforced by the Trustee without the
possession of any of the Securities, or the production thereof at any trial or
other proceeding relative thereto, and any such suit or proceeding instituted by
the Trustee shall be brought in its own name as trustee of an express trust, and
any recovery of judgment shall be for the ratable benefit of the holders of all
the Securities in respect of which such action was taken.
In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the holders
of the Securities of the series affected thereby and it shall not be necessary
to make any such holders of the Securities parties to any such proceedings.
SECTION 6.03. Application of Moneys Collected by Trustee. Any moneys
collected by the Trustee shall be applied in the order following, at the date or
dates fixed by the Trustee for the distribution of such moneys, upon
presentation of the several Securities of any series in respect of which moneys
have been collected, and stamping thereon the payment, if only partially paid,
and upon surrender thereof if fully paid:
FIRST: To the payment of costs and expenses of collection applicable
to each such series and reasonable compensation to the Trustee, its agents,
attorneys and counsel, as provided in Section 7.06;
SECOND: In case the principal of the outstanding Securities in respect
of which moneys have been collected shall not have become due and be unpaid,
to the payment of interest on the Securities of each such series in the order
of the maturity of the installments of such interest, with interest (to the
extent that
44
payment of such interest is enforceable under applicable law, and to the
extent that such interest has been collected by the Trustee) upon the overdue
installments of interest at the respective rates or yield to maturity (in the
case of Original Issue Discount Securities) borne by the Securities of each
such series, such payments to be made ratably to the persons entitled
thereto;
THIRD: In case the principal of the outstanding Securities in respect
of which moneys have been collected shall have become due, by declaration or
otherwise, to the payment of the whole amount then owing and unpaid upon the
Securities of each such series for principal and premium, if any, and
interest, with interest on the overdue principal and premium, if any, and (to
the extent that payment of such interest is enforceable under applicable law,
and to the extent that such interest has been collected by the Trustee) upon
overdue installments of interest at the respective rates or Yield to Maturity
(in the case of Original Issue Discount Securities) specified in the
Securities of each such series; and in case such moneys shall be insufficient
to pay in full the whole amount so due and unpaid upon the Securities of each
such series, then to the payment of such principal and premium, if any, and
interest without preference or priority of principal and premium, if any,
over interest, or of interest over principal and premium, if any, or of any
installment of interest over any other installment of interest, or of any
Security of each such series over any other Security of each such series,
ratably to the aggregate of such principal and premium, if any, and accrued
and unpaid interest.
Any surplus then remaining shall be paid to the Company or to such
other person as shall be entitled to receive it.
SECTION 6.04. Proceedings by Securityholders. No holder of any
Security of any series shall have any right by virtue of or by availing of any
provision of this Indenture to institute any suit, action or proceeding in
equity or at law upon or with respect to this Indenture or for the appointment
of a receiver or trustee, or for any other remedy hereunder, unless such holder
previously shall have given to the Trustee written notice of default and of the
continuance thereof, as hereinbefore provided, and unless also the holders of
not less than 33% in aggregate principal amount of the Securities of that series
then outstanding, or, in the case of any Event of Default described in clause
(c), (d) or (e) of Section 6.01, 33% in aggregate principal amount of all
Securities then outstanding, shall have made
45
written request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee for 60 days after
its receipt of such notice, request and offer of indemnity shall have failed to
institute any such action, suit or proceeding, it being understood and intended,
and being expressly covenanted by the taker and holder of every Security with
every other taker and holder and the Trustee, that no one or more holders of
Securities of any series shall have any right in any manner whatever by virtue
of or by availing of any provision of this Indenture to affect, disturb or
prejudice the rights of any other holder of Securities, or to obtain or seek to
obtain priority over or preference to any other such holder, or to enforce any
right under this Indenture, except in the manner herein provided and for the
equal, ratable and common benefit of all holders of Securities of the applicable
series.
Notwithstanding any other provisions in this Indenture, however, the
right of any holder of any Security to receive payment of the principal of,
premium, if any, and interest, if any, on such Security, on or after the same
shall have become due and payable, or to institute suit for the enforcement of
any such payment, shall not be impaired or affected without the consent of such
holder.
SECTION 6.05. Proceedings by Trustee. In case of an Event of Default
hereunder the Trustee may in its discretion proceed to protect and enforce the
rights vested in it by this Indenture by such appropriate judicial proceedings
as the Trustee shall deem most effectual to protect and enforce any of such
rights, either by suit in equity or by action at law or by proceeding in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement contained in this Indenture or in aid of the exercise of any power
granted in this Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law.
SECTION 6.06. Remedies Cumulative and Continuing. All powers and
remedies given by this Article Six to the Trustee or to the Securityholders
shall, to the extent permitted by law, be deemed cumulative and not exclusive of
any thereof or of any other powers and remedies available to the Trustee or the
holders of the Securities, by judicial proceedings or otherwise, to enforce the
performance or observance of the covenants and agreements contained in this
Indenture, and no delay or omission of the Trustee or of any holder of any of
the Securities to exercise any right or power accruing upon any default
occurring and continuing as
46
aforesaid shall impair any such right or power, or shall be construed to be a
waiver of any such default or an acquiescence therein; and, subject to the
provisions of Section 6.04, every power and remedy given by this Article Six or
by law to the Trustee or to the Securityholders may be exercised from time to
time, and as often as shall be deemed expedient, by the Trustee or by the
Securityholders.
SECTION 6.07. Direction of Proceedings and Waiver of Defaults by
Majority of Securityholders. The holders of a majority in aggregate principal
amount of the Securities of any series at the time outstanding shall have the
right to direct the time, method, and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee with respect to the Securities of such series; provided,
however,that (subject to the provisions of Sections 7.01 and 7.02) the Trustee
shall have the right to decline to follow any such direction if the Trustee
shall determine that the action so directed would be unjustly prejudicial to the
holders not taking part in such direction or if the Trustee being advised by
counsel determines that the action or proceeding so directed may not lawfully be
taken or if the Trustee in good faith by its board of directors or trustees,
executive committee, or a trust committee of directors or trustees and/or
Responsible Officers shall determine that the action or proceedings so directed
would involve the Trustee in personal liability. Subject to Section 6.01, the
holders of a majority in aggregate principal amount of the Securities of any
series at the time outstanding may on behalf of the holders of all of the
Securities of such series waive any past default or Event of Default including
any default or Event of Default established pursuant to Section 2.03 (or, in the
case of an event specified in clause (c), (d) or (e) of Section 6.01, the
holders of a majority in aggregate principal amount of all the Securities then
outstanding (voting as one class)) may waive such default or Event of Default,
and its consequences except a default (a) in the payment of principal of,
premium, if any, or interest on any of the Securities or (b) in respect of
covenants or provisions hereof which cannot be modified or amended without the
consent of the holder of each Security affected. Upon any such waiver the
Company, the Trustee and the holders of the Securities of that series (or of all
Securities, as the case
47
may be) shall be restored to their former positions and rights hereunder,
respectively; but no such waiver shall extend to any subsequent or other default
or Event of Default or impair any right consequent thereon. Whenever any
default or Event of Default hereunder shall have been waived as permitted by
this Section 6.07, said default or Event of Default shall for all purposes of
the Securities of that series (or of all Securities, as the case may be) and
this Indenture be deemed to have been cured and to be not continuing.
SECTION 6.08. Notice of Defaults. The Trustee shall, within 90 days
after the occurrence of a default with respect to any of the Securities of any
series, give to the Securityholders of that series, as the names and addresses
of such holders appear upon the Securities register, notice by mail of all
defaults with respect to that series known to the Trustee, unless such defaults
shall have been cured before the giving of such notice (the term "defaults" for
the purpose of this Section 6.08 being hereby defined to be the events specified
in clauses (a), (b), (c), (d) and (e) of Section 6.01, not including periods of
grace, if any, provided for therein, and irrespective of the giving of written
notice specified in clause (c) of Section 6.01); and provided that, except in
the case of default in the payment of the principal of, premium, if any, or
interest on any of the Securities of such series, or in the payment of any
sinking or purchase fund installment with respect to the Securities of such
series, the Trustee shall be protected in withholding such notice if and so long
as the board of directors or trustees, the executive committee, or a trust
committee of directors or trustees and/or Responsible Officers of the Trustee in
good faith determine that the withholding of such notice is in the interests of
the Securityholders of such series; and provided further, that in the case of
any default of the character specified in Section 6.01(c) no such notice to
Securityholders shall be given until at least 90 days after the occurrence
thereof but shall be given within 120 days after such occurrence.
SECTION 6.09. Undertaking to Pay Costs. All parties to this Indenture
agree, and each holder of any Security by his acceptance thereof shall be deemed
to have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken or omitted by it as Trustee, the filing
by any party litigant in such suit of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section 6.09 shall not apply to
any suit instituted by the Trustee, to any suit instituted by any
Securityholder, or group of Securityholders of any series, holding in the
aggregate more than 10% in principal amount of the Securities of that series (or
in the case of any suit relating to or arising under clause (c), (d) or (e) of
Section 6.01, 10% in aggregate principal amount of all Securities) outstanding,
or to any suit instituted by any Securityholder for the
48
enforcement of the payment of the principal of or premium, if any, or interest
on any Security against the Company on or after the same shall have become due
and payable.
ARTICLE SEVEN.
CONCERNING THE TRUSTEE.
SECTION 7.01. Duties and Responsibilities of Trustee. With respect to
any series of Securities issued hereunder, the Trustee, prior to the occurrence
of an Event of Default with respect to Securities of that series and after the
curing or waiving of all Events of Default which may have occurred with respect
to Securities of that series, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture with respect to such
series. In case an Event of Default with respect to the Securities of a series
has occurred (which has not been cured or waived) the Trustee shall exercise
such of the rights and powers vested in it by this Indenture with respect to
such series, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default with respect to
the Securities of a series and after the curing or waiving of all Events of
Default with respect to that series which may have occurred:
(1) the duties and obligations of the Trustee with respect to
the Securities of a series shall be determined solely by the express
provisions of this Indenture, and the Trustee shall not be liable
except for the performance of such duties and obligations with respect
to such series as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this
49
Indenture; but, in the case of any such certificates or opinions which
by any provision hereof are specifically required to be furnished to
the Trustee, the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Indenture;
(b) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer or Officers of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(c) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the Securityholders pursuant to Section 6.07, relating to the time, method
and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee, under
this Indenture.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there is reasonable ground for believing that the
repayment of such funds or liability is not reasonably assured to it.
The provisions of this Section 7.01 are in furtherance of and subject
to Sections 315 and 316 of the Trust Indenture Act of 1939.
SECTION 7.02. Reliance on Documents, Opinions, etc. In furtherance
of and subject to the Trust Indenture Act of 1939, and subject to Section 7.01
(a) the Trustee may rely and shall be protected in acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, bond, note, debenture or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(b) any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by an Officers' Certificate (unless
other evidence in respect thereof be herein specifically prescribed); and any
resolution of the Board of Directors may be evidenced to the Trustee by a
copy
50
thereof certified by the Secretary or an Assistant Secretary of the Company;
(c) the Trustee may consult with counsel and any advice or Opinion of
Counsel shall be full and complete authorization and protection in respect of
any action taken or omitted by it hereunder in good faith and in accordance
with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders, pursuant to the provisions of this
Indenture, unless such Securityholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or omitted
by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Event of Default hereunder and
after the curing or waiving of all Events of Default, the Trustee shall not
be bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond, debenture, coupon or other paper or
document, unless requested in writing to do so by the holders of not less
than a majority in principal amount of the Securities of all series affected
then outstanding; provided, however, that if the payment within a reasonable
time to the Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded to it
by the terms of this Indenture, the Trustee may require reasonable indemnity
against such expense or liability as a condition to so proceeding; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents
(including any Authenticating Agent) or attorneys, and the Trustee shall not
be responsible for any misconduct or negligence on the part of any such agent
or attorney appointed by it with due care.
51
SECTION 7.03. No Responsibility for Recitals, etc. The recitals
contained herein and in the Securities (except as to the date of the Security
and except in the certificate of authentication of the Trustee or the
Authenticating Agent) shall be taken as the statements of the Company, and the
Trustee and the Authenticating Agent assume no responsibility for the
correctness of the same. The Trustee and the Authenticating Agent make no
representations as to the validity or sufficiency of this Indenture or of the
Securities. The Trustee and the Authenticating Agent shall not be accountable
for the use or application by the Company of any Securities or the proceeds of
any Securities authenticated and delivered by the Trustee or the Authenticating
Agent in conformity with the provisions of this Indenture.
SECTION 7.04. Trustee, Authenticating Agent, Paying Agents, Transfer
Agents, Conversion Agents or Registrar May Own Securities. The Trustee or any
Authenticating Agent or any paying agent or any transfer agent or any conversion
agent or any Securities registrar, in its individual or any other capacity, may
become the owner or pledgee of Securities with the same rights it would have if
it were not Trustee, Authenticating Agent, paying agent, transfer agent,
conversion agent or Securities registrar.
SECTION 7.05. Moneys to Be Held in Trust. Subject to the provisions
of Section 12.04, all moneys received by the Trustee or any paying agent shall,
until used or applied as herein provided, be held in trust for the purpose for
which they were received, but need not be segregated from other funds except to
the extent required by law. The Trustee and any paying agent shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company. So long as no Event of Default shall have occurred and
be continuing, all interest allowed, if any, on any such moneys shall be paid
from time to time upon the written order of the Company, signed by the Chairman
of the Board of Directors, the President, any Vice President, the Treasurer or
any Assistant Treasurer of the Company.
SECTION 7.06. Compensation and Expenses of Trustee. The Company
covenants and agrees to pay to the Trustee from time to time, and the Trustee
shall be entitled to, reasonable compensation (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust), and the Company will pay or reimburse the Trustee upon its request for
all reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any of the provisions of this Indenture (including
the reasonable compensation and the
52
expenses and disbursements of its counsel and of all persons not regularly in
its employ and any amounts paid by the Trustee to any Authenticating Agent
pursuant to Section 7.12). Notwithstanding anything in this Indenture to the
contrary, the Company will have no obligation to reimburse the Trustee for any
such expense, disbursement or advance arising from the negligence or bad faith
of the Trustee. If any property other than cash shall at any time be subject to
the lien of this Indenture, the Trustee, if and to the extent authorized by a
receivership or bankruptcy court of competent jurisdiction or by the
supplemental instrument subjecting such property to such lien, shall be entitled
to make advances for the purpose of preserving such property or of discharging
tax liens or other prior liens or encumbrances thereon. The Company also
covenants to indemnify each of the Trustee, and any predecessor Trustee for, and
to hold each of them harmless against, any loss, liability or expense arising
out of or in connection with the acceptance or administration of this trust and
the performance of its duties hereunder including the costs and expenses of
defending itself against any claim of liability in the premises, except to the
extent such loss, liability or expense is due to the negligence or bad faith of
the Trustee or such predecessor Trustee. The obligations of the Company under
this Section 7.06 to compensate the Trustee and to pay or reimburse the Trustee
for expenses, disbursements and advances shall constitute additional
indebtedness hereunder. Such additional indebtedness shall be secured by a
claim prior to that of the Securities upon all property and funds held or
collected by the Trustee as such, except funds held in trust for the benefit of
the holders of particular Securities.
SECTION 7.07. Officers' Certificate as Evidence. Except as otherwise
provided in Section 7.01 and 7.02, whenever in the administration of the
provisions of this Indenture the Trustee shall deem it necessary or desirable
that a matter be proved or established prior to taking or omitting any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of negligence or bad faith on the
part of the Trustee, be deemed to be conclusively proved and established by an
Officers' Certificate delivered to the Trustee, and such Certificate, in the
absence of negligence or bad faith on the part of the Trustee, shall be full
warrant to the Trustee for any action taken or omitted by it under the
provisions of this Indenture upon the faith thereof.
SECTION 7.08. Eligibility of Trustee. The Trustee hereunder shall at
all times be a corporation having a combined capital and surplus of at least
$5,000,000, and which is eligible in accordance with the provisions of
53
Section 310(a) of the Trust Indenture Act of 1939. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of a Federal, State, Territorial or District of Columbia
supervising or examining authority, then for the purposes of this Section 7.08
the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published.
SECTION 7.09. Resignation or Removal of Trustee. (a) The Trustee, or
any trustee or trustees hereafter appointed, may at any time resign with respect
to one or more or all series of Securities by giving written notice of such
resignation to the Company and by mailing notice thereof to the holders of the
applicable series of Securities at their addresses as they shall appear on the
Securities register. Upon receiving such notice of resignation, the Company
shall promptly appoint a successor trustee or trustees with respect to the
applicable series by written instrument, in duplicate, executed by order of its
Board of Directors, one copy of which instrument shall be delivered to the
resigning Trustee and one copy to the successor trustee. If no successor
trustee shall have been so appointed with respect to any series of Securities
and have accepted appointment within 60 days after the mailing of such notice of
resignation to the affected Securityholders, the resigning Trustee may petition
any court of competent jurisdiction for the appointment of a successor trustee,
or any Securityholder who has been a bona fide holder of a Security or
Securities of the applicable series for at least six months may, subject to the
provisions of Section 6.09, on behalf of himself and all others similarly
situated, petition any such court for the appointment of a successor trustee.
Such court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur --
(1) the Trustee shall fail to comply with the provisions of
Section 310(b) of the Trust Indenture Act of 1939 with respect to any
series of Securities after written request therefor by the Company or
by any Securityholder who has been a bona fide holder of a Security or
Securities for at least six months, or
(2) the Trustee shall cease to be eligible in accordance with
the provisions of Section 310(a) of the Trust Indenture Act of 1939 and
shall fail to resign after written request
54
therefor by the Company or by any such Securityholder, or
(3) the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of
its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any such case, the Company may remove such Trustee with respect to any
series of Securities and appoint a successor trustee by written instrument, in
duplicate, executed by order of the Board of Directors, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to the
successor trustee, or, subject to Section 315(e) of the Trust Indenture Act of
1939, any Securityholder who has been a bona fide holder of a Security or
Securities of a particular series for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of such Trustee with respect to such series of
Securities and the appointment of a successor trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe,
remove the Trustee and appoint a successor trustee.
(c) The holders of a majority in aggregate principal amount of the
Securities of one or more series (each series voting as a class) or all series
(voting as one class) at the time outstanding may at any time remove the Trustee
with respect to the applicable series of Securities or all series, as the case
may be, and nominate a successor trustee with respect to the applicable series
of Securities or all series, as the case may be, which shall be deemed appointed
as successor trustee with respect to the applicable series unless within ten
days after such nomination the Company objects thereto, in which case the
Trustee so removed or any Securityholder of the applicable series, upon the
terms and conditions and otherwise as in subdivision (a) of this Section 7.09
provided, may petition any court of competent jurisdiction for an appointment of
a successor trustee with respect to such series.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 7.09 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 7.10.
SECTION 7.10. Acceptance by Successor Trustee. Any successor trustee
appointed as provided in Section 7.09
55
shall execute, acknowledge and deliver to the Company and to its predecessor
Trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor Trustee with respect to all or any
applicable series shall become effective and such successor trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, duties and obligations with respect to such series of its predecessor
hereunder, with like effect as if originally named as trustee herein; but,
nevertheless, on the written request of the Company or of the successor trustee,
the Trustee ceasing to act shall, upon payment of any amounts then due it
pursuant to the provisions of Section 7.06, execute and deliver an instrument
transferring to such successor trustee all the rights and powers of the Trustee
so ceasing to act. Upon request of any such successor trustee, the Company
shall execute any and all instruments in writing for more fully and certainly
vesting in and confirming to such successor trustee all such rights and powers.
Any Trustee ceasing to act shall, nevertheless, retain a claim upon all property
or funds held or collected by such Trustee to secure any amounts then due it
pursuant to the provisions of Section 7.06.
If a successor trustee is appointed with respect to the Securities of
one or more (but not all) series, the Company, the predecessor Trustee and each
successor trustee with respect to the Securities of any applicable series shall
execute and deliver an indenture supplemental hereto which shall contain such
provisions as shall be deemed necessary or desirable to confirm that all the
rights, powers, trusts and duties of the predecessor Trustee with respect to the
Securities of any series as to which the predecessor Trustee is not retiring
shall continue to be vested in the predecessor Trustee, and shall add to or
change any of the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trust hereunder by more than one
trustee, it being understood that nothing herein or in such supplemental
indenture shall constitute such trustees co-trustees of the same trust and that
each such trustee shall be trustee of a trust or trusts hereunder separate and
apart from any trust or trusts hereunder administered by any other such trustee.
Upon acceptance of appointment by a successor trustee as provided in
this Section 7.10, the Company shall mail notice of the succession of such
trustee hereunder to the holders of Securities of any applicable series at their
addresses as they shall appear on the Securities register. If the Company fails
to mail such notice within ten days after the acceptance of appointment by the
successor trustee, the successor trustee shall cause such notice to be mailed at
the expense of the Company.
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SECTION 7.11 Succession by Merger, etc. Any corporation into which
the Trustee may be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Trustee shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder without the execution or filing of any paper
or any further act on the part of any of the parties hereto.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Securities of any series shall have
been authenticated but not delivered, any such successor to the Trustee may
adopt the certificate of authentication of any predecessor Trustee, and deliver
such Securities so authenticated; and in case at that time any of the Securities
of any series shall not have been authenticated, any successor to the Trustee
may authenticate such Securities either in the name of any predecessor hereunder
or in the name of the successor trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Securities of such series
or in this Indenture provided that the certificate of the Trustee shall have;
provided, however, that the right to adopt the certificate of authentication of
any predecessor Trustee or authenticate Securities of any series in the name of
any predecessor Trustee shall apply only to its successor or successors by
merger, conversion or consolidation.
SECTION 7.12. Authenticating Agents. There may be one or more
Authenticating Agents appointed by the Trustee upon the request of the Company
with power to act on the Trustee's behalf and subject to its direction in the
authentication and delivery of Securities of any series issued upon exchange or
transfer thereof as fully to all intents and purposes as though any such
Authenticating Agent had been expressly authorized to authenticate and deliver
Securities of such series; provided, that the Trustee shall have no liability to
the Company for any acts or omissions of the Authenticating Agent with respect
to the authentication and delivery of Securities of any series. Any such
Authenticating Agent shall at all times be a corporation organized and doing
business under the laws of the United States or of any State or Territory
thereof or of the District of Columbia authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of at least
$5,000,000 and being subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. If such corporation publishes
reports of condition at least annually pursuant to law or the requirements of
such authority, then for the
57
purposes of this Section 7.12 the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect herein specified in this Section.
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate trust business
of any Authenticating Agent, shall be the successor of such Authenticating Agent
hereunder, if such successor corporation is otherwise eligible under this
Section 7.12, without the execution or filing of any paper or any further act on
the part of the parties hereto or such Authenticating Agent.
Any Authenticating Agent may at any time resign with respect to one or
more or all series of Securities by giving written notice of resignation to the
Trustee and to the Company. The Trustee may at any time terminate the agency of
any Authenticating Agent with respect to one or more or all series of Securities
by giving written notice of termination to such Authenticating Agent and to the
Company. Upon receiving such a notice of resignation or upon such a
termination, or in case at any time any Authenticating Agent shall cease to be
eligible under this Section 7.12, the Trustee may, and upon the request of the
Company shall, promptly appoint a successor Authenticating Agent with respect to
the applicable series eligible under this Section 7.12, shall give written
notice of such appointment to the Company and shall mail notice of such
appointment to all holders of the applicable series of Securities as the names
and addresses of such holders appear on the Securities register. Any successor
Authenticating Agent with respect to all or any series upon acceptance of its
appointment hereunder shall become vested with all rights, powers, duties and
responsibilities with respect to such series of its predecessor hereunder, with
like effect as if originally named as Authenticating Agent herein.
The Trustee agrees to pay to any Authenticating Agent from time to time
reasonable compensation for its services, and the Trustee shall be entitled to
be reimbursed for such payments, subject to Section 7.06. Any Authenticating
Agent shall have no responsibility or liability for any action taken by it as
such in accordance with the directions of the Trustee.
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If an appointment with respect to one or more series is made pursuant
to this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternate
certificate of authentication in the following form:
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
_____________________________
as Trustee
By____________________________
as Authenticating Agent
for the Trustee
By____________________________
Authorized Officer
ARTICLE EIGHT.
CONCERNING THE SECURITYHOLDERS.
SECTION 8.01. Action by Securityholders. Whenever in this Indenture
it is provided that the holders of a specified percentage in aggregate principal
amount of the Securities of any or all series may take any action (including the
making of any demand or request, the giving of any notice, consent or waiver or
the taking of any other action), the fact that at the time of taking any such
action the holders of such specified percentage have joined therein may be
evidenced (a) by any instrument or any number of instruments of similar tenor
executed by such Securityholders in person or by agent or proxy appointed in
writing, or (b) by the record of such holders of Securities voting in favor
thereof at any meeting of such Securityholders duly called and held in
accordance with the provisions of Article Nine, or (c) by a combination of such
instrument or instruments and any such record of such a meeting of such
Securityholders.
SECTION 8.02. Proof of Execution by Securityholders. Subject to the
provisions of Sections 7.01, 7.02 and 9.05, proof of the execution of any
instrument by a Securityholder or his agent or proxy shall be sufficient if made
in accordance with such reasonable
59
rules and regulations as may be prescribed by the Trustee or in such manner as
shall be satisfactory to the Trustee. The ownership of Securities shall be
proved by the Securities register or by a certificate of the Securities
registrar. The Company may set a record date for purposes of determining the
identity of holders of Securities of any series entitled to vote or consent to
any action referred to in Section 8.01, which record date may be set at any time
or from time to time by notice to the Trustee, for any date or dates (in the
case of any adjournment or reconsideration) not more than 60 days nor less than
five days prior to the proposed date of such vote or consent, and thereafter,
notwithstanding any other provisions hereof, only holders of Securities of such
series of record on such record date shall be entitled to so vote or give such
consent or revoke such vote or consent.
The record of any Securityholders' meeting shall be provided in the
manner provided in Section 9.06.
SECTION 8.03. Who Are Deemed Absolute Owners. The Company, the
Trustee, any Authenticating Agent, any paying agent, any transfer agent, any
conversion agent and any Securities registrar may deem the person in whose name
such Security shall be registered upon the Securities register to be, and may
treat him as, the absolute owner of such Security (whether or not such Security
shall be overdue and notwithstanding any notation of ownership or other writing
thereon) for the purposes of conversion and of receiving payment of or on
account of the principal of, premium, if any, and any interest on such Security
and for all other purposes; and neither the Company nor the Trustee nor any
Authenticating Agent nor any paying agent nor any transfer agent nor any
conversion agent nor any Securities registrar shall be affected by any notice to
the contrary. All such payments so made to any holder for the time being or
upon his order shall be valid, and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for moneys payable upon any
such Security.
SECTION 8.04. Securities Owned by Company Deemed Not Outstanding. In
determining whether the holders of the requisite aggregate principal amount of
Securities have concurred in any direction, consent or waiver under this
Indenture, Securities which are owned by the Company or any other obligor on the
Securities or by any person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Company or any other obligor
on the Securities shall be disregarded and deemed not to be outstanding for the
purpose of any such determination; provided that for the purposes of determining
whether the Trustee shall be protected in relying on any such direction, consent
or waiver, only Securities which a
60
Responsible Officer knows are so owned shall be so disregarded. Securities so
owned which have been pledged in good faith may be regarded as outstanding for
the purposes of this Section 8.04 if the pledgee shall establish to the
satisfaction of the Trustee the pledgee's right to vote such Securities and that
the pledgee is not the Company or any such other obligor or person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company or any such other obligor. Upon request of the
Trustee, the Company shall furnish to the Trustee promptly an Officers'
Certificate listing and identifying all Securities, if any, known by the Company
to be owned or held by or for the account of any of the above-described persons;
and, subject to the provisions of Section 8.01, the Trustee shall be entitled to
accept such Officers' Certificate as conclusive evidence of the facts therein
set forth and of the fact that all Securities not listed therein are outstanding
for the purpose of any such determination.
SECTION 8.05. Revocation of Consents; Future Holders Bound. At any
time prior to (but not after) the evidencing to the Trustee, as provided in
Section 8.01, of the taking of any action by the holders of the percentage in
aggregate principal amount of the Securities specified in this Indenture in
connection with such action, any holder of a Security (or any Security issued in
whole or in part in exchange or substitution therefor) who consented to such
action may, by filing written notice with the Trustee at its principal office
and upon proof of holding as provided in Section 8.02, revoke such action so far
as concerns such Security (or so far as concerns the principal amount
represented by any exchanged or substituted Security). Except as aforesaid any
such action taken by the holder of any Security shall be conclusive and binding
upon such holder and upon all future holders and owners of such Security, and of
any Security issued in exchange or substitution therefor, irrespective of
whether or not any notation in regard thereto is made upon such Security or any
Security issued in exchange or substitution therefor. Any action taken by the
holders of the percentage in aggregate principal amount of the Securities
specified in this Indenture in connection with such action shall be conclusively
binding upon the Company, the Trustee with respect to such Securities and the
holders of such Securities.
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ARTICLE NINE.
SECURITYHOLDERS' MEETINGS.
SECTION 9.01. Purposes of Meetings. A meeting of Securityholders of any or
all series may be called at any time and from time to time pursuant to the
provisions of this Article Nine for any of the following purposes:
(a) to give any notice to the Company or to the Trustee, or to give
any directions to the Trustee, or to consent to the waiving of any default
hereunder and its consequences, or to take any other action authorized to be
taken by Securityholders pursuant to any of the provisions of Article Six;
(b) to remove the Trustee and nominate a successor Trustee pursuant
to the provisions of Article Seven;
(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 10.02; or
(d) to take any other action authorized to be taken by or on behalf
of the holders of any specified aggregate principal amount of such Securities
under any other provisions of this Indenture or under applicable law.
SECTION 9.02. Call of Meetings by Trustee. The Trustee may at any time call
a meeting of Securityholders of any or all series to take any action specified
in Section 9.01, to be held at such time and at such place in the Borough of
Manhattan, The City of New York, as the Trustee shall determine. Notice of
every meeting of the Securityholders of any or all series, setting forth the
record date, time and the place of such meeting and in general terms the action
proposed to be taken at such meeting, shall be mailed to holders of Securities
of each series affected at their addresses as they shall appear on the
Securities register of each series affected. Such notice shall be mailed not
less than 20 nor more than 90 days prior to the date fixed for the meeting.
SECTION 9.03. Call of Meetings by Company or Securityholders. In case at
any time the Company pursuant to a resolution of the Board of Directors, or the
holders of at least 20% in aggregate principal amount of the Securities of any
or all series, as the case may be, then outstanding, shall have requested the
Trustee to call a meeting of Securityholders of any or all series, as the case
may be, by
62
written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have mailed the notice of such
meeting within 20 days after receipt of such request, then the Company or such
Securityholders, as the case may be, may determine the time and the place in
said Borough of Manhattan for such meeting and may call such meeting to take any
action authorized in Section 9.01, by mailing notice thereof as provided in
Section 9.02.
SECTION 9.04. Qualifications for Voting. To be entitled to vote at any
meeting of Securityholders a person shall be (a) a holder of one or more
Securities with respect to which the meeting is being held or (b) a person
appointed by an instrument in writing as proxy by such a holder of one or more
such Securities. The only persons who shall be entitled to be present or to
speak at any meeting of Securityholders shall be the persons entitled to vote at
such meeting and their counsel and any representatives of the Trustee and its
counsel and any representatives of the Company and its counsel.
Section 9.05. Regulations. Notwithstanding any other provisions of this
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Securityholders, in regard to proof of the holding
of Securities and of the appointment of proxies, and in regard to the
appointment and duties of inspectors of votes, the submission and examination of
proxies, certificates and other evidence of the right to vote, and such other
matters concerning the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Securityholders as provided in Section 9.03, in which case the
Company or the Securityholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by majority vote of the meeting.
Subject to the provisions of Section 8.04, at any meeting each holder
of Securities with respect to which such meeting is being held or proxy therefor
shall be entitled to one vote for each $1,000 principal amount (or in the case
of Original Issue Discount Securities, such principal amount to be determined as
provided in the definition of "outstanding") of Securities held or represented
by him; provided, however, that no vote shall be cast or counted at any meeting
in respect of any Security challenged as not outstanding and ruled by the
chairman of the meeting to be
63
not outstanding. The chairman of the meeting shall have no right to vote other
than by virtue of Securities held by him or instruments in writing as aforesaid
duly designating him as the person to vote on behalf of other Securityholders.
At any meeting of Securityholders, the presence of persons holding or
representing Securities in an aggregate principal amount sufficient to take
action on the business for the transaction of which such meeting was called
shall constitute a quorum, but, if less than a quorum is present, the persons
holding or representing a majority in aggregate principal amount of the
Securities represented at the meeting and entitled to vote may adjourn such
meeting with the same effect, for all intents and purposes, as though a quorum
had been present. Any meeting of Securityholders duly called pursuant to the
provisions of Section 9.02 or 9.03 may be adjourned from time to time by a
majority of those present, whether or not constituting a quorum, and the meeting
may be held as so adjourned without further notice.
SECTION 9.06. Voting. The vote upon any resolution submitted to any
meeting of holders of Securities with respect to which such meeting is being
held shall be by written ballots on which shall be subscribed the signatures of
such holders or of their representatives by proxy and the serial number or
numbers of the Securities held or represented by them. The permanent chairman
of the meeting shall appoint two inspectors of votes who shall count all votes
cast at the meeting for or against any resolution and who shall make and file
with the secretary of the meeting their verified written reports in triplicate
of all votes cast at the meeting. A record in duplicate of the proceedings of
each meeting of Securityholders shall be prepared by the secretary of the
meeting and there shall be attached to said record the original reports of the
inspectors of votes on any vote by ballot taken thereat and affidavits by one or
more persons having knowledge of the facts setting forth a copy of the notice of
the meeting and showing that said notice was mailed as provided in Section
9.02. The record shall show the serial numbers of the Securities voting in
favor of or against any resolution. The record shall be signed and verified
by the affidavits of the permanent chairman and secretary of the meeting and
one of the duplicates shall be delivered to the Company and the other to the
Trustee to be preserved by the Trustee, the latter to have attached thereto
the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
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ARTICLE TEN.
SUPPLEMENTAL INDENTURES.
SECTION 10.01. Supplemental Indentures without Consent of
Securityholders. The Company, when authorized by a resolution of the Board of
Directors, and the Trustee may from time to time and at any time enter into an
indenture or indentures supplemental hereto for one or more of the following
purposes:
(a) to evidence the succession of another corporation to the
Company, or successive succession, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Company
pursuant to Article Twelve hereof;
(b) to add to the covenants of the Company such further
covenants, restrictions or conditions for the protection of the holders
of all or any series of Securities (and if such covenants are to be for
the benefit of less than all series of Securities stating that such
covenants are expressly being included for the benefit of such series)
as the Board of Directors and the Trustee shall consider to be for the
protection of the holders of such Securities, and to make the
occurrence, or the occurrence and continuance, of a default in any of
such additional covenants, restrictions or conditions a default or an
Event of Default permitting the enforcement of all or any of the
several remedies provided in this Indenture as herein set forth;
provided, however, that in respect of any such additional covenant,
restriction or condition such supplemental indenture may provide for a
particular period of grace after default (which period may be shorter
or longer than that allowed in the case of other defaults) or may
provide for an immediate enforcement upon such default or may limit the
remedies available to the Trustee upon such default;
(c) to provide for the issuance under this Indenture of
Securities in coupon form (including Securities registrable as to
principal only) and to provide for exchangeability of such Securities
with the Securities issued hereunder in fully registered form and to
make all appropriate changes for such purpose;
65
(d) to establish the form or terms of Securities of any series
as permitted by Sections 2.01 and 2.03;
(e) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Securities of one
or more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one trustee,
pursuant to the requirements of Section 7.10;
(f) to make provision with respect to the conversion rights of
holders of Convertible Securities pursuant to the requirements of
Section 3.06; and
(g) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which may
be defective or inconsistent with any other provision contained herein
or in any supplemental indenture, or to make such other provisions in
regard to matters or questions arising under this Indenture or to make
any other changes hereto; provided that any such action shall not
adversely affect the interests of the holders of the Securities in any
material respect.
The Trustee is hereby authorized to join with the Company in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer and assignment of any property thereunder, but the Trustee
shall not be obligated to, but may in its discretion, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section
10.01 may be executed by the Company and the Trustee without the consent of the
holders of any of the Securities at the time outstanding, notwithstanding any of
the provisions of Section 10.02.
SECTION 10.02. Supplemental Indentures with Consent of
Securityholders. With the consent (evidenced as provided in Section 8.01) of
the holders of not less than 66-2/3% in aggregate principal amount of the
Securities at the time outstanding of all series affected by such supplemental
indenture (voting as a class), the Company, when authorized by a resolution of
the Board of Directors,
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and the Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of any supplemental indenture or of modifying in any manner the rights of the
holders of the Securities of each series so affected; provided, however, that no
such supplemental indenture shall (i) extend the final maturity of any Security,
or reduce the rate or extend the time of payment of interest thereon, or reduce
the principal amount thereof or any premium thereon, or reduce any amount
payable on redemption thereof or make the principal thereof or any interest or
premium thereon payable in any coin or currency other than that provided in the
Securities, or reduce the amount of the principal of an Original Issue Discount
Security that would be due and payable upon an acceleration of the maturity
thereof pursuant to Section 6.01 or the amount thereof provable in bankruptcy
pursuant to Section 6.02, or impair the right to convert Convertible Securities
into Common Stock on the terms set forth herein, or impair or affect the right
of any Securityholder to institute suit for payment thereof or the right of
repayment, if any, at the option of the holder, without the consent of the
holder of each Security so affected, or (ii) reduce the aforesaid percentage of
Securities the holders of which are required to act pursuant to Section 6.07 or
to consent to any such supplemental indenture, without the consent of the
holders of each Security then affected.
A supplemental indenture which changes or eliminates any covenant or
other provision of this Indenture which has expressly been included solely for
the benefit of one or more particular series of Securities, or which
modifies the rights of Securityholders of such series with respect to such
covenant or provision, shall be deemed not to affect the rights under this
Indenture of the Securityholders of any other series.
Upon the request of the Company accompanied by a copy of a resolution
of the Board of Directors certified by its Secretary or Assistant Secretary
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of Securityholders as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture.
It shall not be necessary for the consent of the Securityholders under
this Section 10.02 to approve the
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particular form of any proposed supplemental indenture, but it shall be
sufficient if such consent shall approve the substance thereof.
SECTION 10.03. Compliance with Trust Indenture Act; Effect of
Supplemental Indentures. Any supplemental indenture executed pursuant to the
provisions of this Article Ten shall comply with the Trust Indenture Act of
1939, as then in effect. Upon the execution of any supplemental indenture
pursuant to the provisions of this Article Ten, this Indenture shall be and be
deemed to be modified and amended in accordance therewith and the respective
rights, limitations of rights, obligations, duties and immunities under this
Indenture of the Trustee, the Company and the holders of Securities of each
series affected thereby shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments and all
the terms and conditions of any such supplemental indenture shall be and be
deemed to be part of the terms and conditions of this Indenture for any and all
purposes.
SECTION 10.04. Notation on Securities. Securities of any series
authenticated and delivered after the execution of any supplemental indenture
affecting such series pursuant to the provisions of this Article Ten may bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Company or the Trustee shall so determine, new
Securities of any series so modified as to conform, in the opinion of the
Trustee and the Board of Directors, to any modification of this Indenture
contained in any such supplemental indenture may be prepared and executed by the
Company, authenticated by the Trustee or the Authenticating Agent and delivered
in exchange for the Securities of any series then outstanding.
SECTION 10.05 Evidence of Compliance of Supplemental Indenture to Be
Furnished Trustee. The Trustee, subject to the provisions of Sections 7.01 and
7.02, may receive an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant hereto
complies with the requirements of this Article Ten.
SECTION 10.06. Effect on Senior Indebtedness. No supplemental
indenture shall adversely affect the rights of any holder of Senior Indebtedness
under Article Four without the consent of such holder.
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ARTICLE ELEVEN.
CONSOLIDATION, MERGER AND SALE BY THE COMPANY.
SECTION 11.01. Consolidation, Merger or Sale of Assets Permitted.
The Company covenants and agrees that it will not consolidate with, merge into,
or sell or otherwise dispose of all or substantially all its property as an
entirety to, any person other than a corporation organized under the laws of the
United States of America or any State or Territory thereof or of the District of
Columbia, lawfully entitled to acquire the same. The Company will not so
consolidate or merge, or make any such sale or other disposition, unless, and
the Company covenants and agrees that any such consolidation, merger, sale or
other disposition shall be on the condition that, (1) the provisions of Section
3.06 are complied with and (2) such corporation shall expressly assume the due
and punctual payment of the principal of and premium, if any, and interest on
all the Securities, according to their tenor, and the due and punctual
performance and observance of all of the covenants and conditions of this
Indenture to be performed by the Company, by supplemental indenture satisfactory
to the Trustee, executed and delivered to the Trustee by such corporation. The
Company covenants and agrees that it will not so consolidate or merge, or make
any such sale or other disposition, or permit any corporation to merge into the
Company, if immediately thereafter the Company or such successor corporation, as
the case may be, shall be in default in the performance or observance of any of
the covenants or conditions of this Indenture.
SECTION 11.02. Successor Corporation to Be Substituted for Company.
In case of any such merger, consolidation, sale or conveyance and upon any such
assumption by the successor corporation, such successor corporation shall
succeed to and be substituted for the Company, with the same effect as if it had
been named herein as the party of the first part, and, in case of such a sale or
conveyance other than a lease, the Company thereupon shall be relieved of any
further obligation or liability hereunder or upon the Securities, and may
thereupon or at any time thereafter be dissolved, wound up or liquidated. Such
successor corporation thereupon may cause to be signed, and may issue either in
its own name or in the name of TriMas Corporation any or all of the Securities
issuable hereunder which theretofore shall not have been signed by the Company
and delivered to the Trustee or the Authenticating Agent; and, upon the order of
such successor corporation (instead of the Company) and subject to all the
terms, conditions and limitations in this Indenture prescribed, the Trustee or
the Authenticating Agent shall authenticate and deliver any Securities which
previously
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shall have been signed and delivered by the officers of the Company to the
Trustee or the Authenticating Agent for authentication, and any Securities which
such successor corporation thereafter shall cause to be signed and delivered to
the Trustee or the Authenticating Agent for that purpose. All the Securities so
issued shall in all respects have the same legal rank and benefit under this
Indenture as the Securities theretofore or thereafter issued in accordance with
the terms of this Indenture as though all of such Securities had been issued at
the date of the execution hereof.
In case of any such consolidation, merger, sale or conveyance, such
changes in phraseology and form (but not in substance) may be made in the
Securities thereafter to be issued as may be appropriate.
SECTION 11.03. Evidence to Be Furnished Trustee. The Trustee, subject
to the provisions of Sections 7.01 and 7.02, may receive and rely upon an
Officers' Certificate and an Opinion of Counsel as conclusive evidence that any
consolidation, merger, sale or conveyance, and any such assumption complies with
the provisions of this Article Eleven.
ARTICLE TWELVE
SATISFACTION AND DISCHARGE OF INDENTURE.
SECTION 12.01 Satisfaction and Discharge of Indenture. (A) If at any
time (a) the Company shall have paid or caused to be paid the principal of and
interest on all the Securities of any series outstanding hereunder (other than
Securities of such series which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 2.08) as and when the same
shall have become due and payable, or (b) the Company shall have delivered to
the Trustee for cancellation all Securities of any series theretofore
authenticated (other than any Securities of such series which shall have been
destroyed, lost or stolen and which shall have been replaced or paid as provided
in Section 2.08) or (c) in the case of any series of Securities where the exact
amount (including the currency of payment) of principal of and interest due on
which can be determined at the time of making the deposit referred to in clause
(ii) below, (i) all the Securities of such series not theretofore delivered to
the Trustee for cancellation shall have become due and payable, or are by their
terms to become due and payable within one year or are to be called for
redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption, and (ii) the Company shall have irrevocably
deposited or caused
70
to be deposited with the Trustee as trust funds the entire amount in cash (other
than moneys repaid by the Trustee or any paying agent to the Issuer in
accordance with Section 12.04) or, in the case of any series of Securities the
payments on which may only be made in Dollars, direct obligations of the United
States of America, backed by its full faith and credit ("U.S. Government
Obligations"), maturing as to principal and interest at such times and in such
amounts as will insure the availability of cash, or a combination thereof,
sufficient in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay (A) the principal and interest on all Securities of such series
on each date that such principal or interest is due and payable at the stated
maturity thereof and (B) any mandatory sinking fund payments on the dates on
which such payments are due and payable in accordance with the terms of the
Indenture and the Securities of such series; and if, in any such case, the
Company shall also pay or cause to be paid all other sums payable hereunder by
the Company, then this Indenture shall cease to be of further effect (except as
to (i) rights of registration of transfer and exchange of Securities of such
series and the Company's right of optional redemption, if any, (ii) substitution
of mutilated, defaced, destroyed, lost or stolen Securities, (iii) rights of
holders of Securities to receive payments out of the property so deposited of
principal thereof and interest thereon, upon the original stated due dates
therefor (but not upon acceleration), and remaining rights of the holders to
receive mandatory sinking fund payments, if any, out of the property so
deposited, (iv) the rights, obligations, duties and immunities of the Trustee
hereunder, (v) the rights of the holders of Securities of such series as
beneficiaries hereof with respect to the property so deposited with the Trustee
payable to all or any of them, (vi) any remaining rights of conversion of
Convertible Securities, and (vii) the obligations of the Company under Sections
5.02, 5.03 and 5.04) and the Trustee, on demand of the Company accompanied by an
Officers' Certificate and an Opinion of Counsel and at the cost and expense of
the Company, shall execute proper instruments acknowledging such satisfaction of
and discharging this Indenture; provided, that the rights of holders of the
Securities to receive amounts in respect of principal of and interest on the
Securities held by them shall not be delayed longer than required by
then-applicable mandatory rules or policies of any securities exchange upon
which the Securities are listed. The Company agrees to reimburse the Trustee
for any costs or expenses thereafter reasonably and properly incurred and to
compensate the Trustee for any services thereafter reasonably and properly
rendered by the Trustee in connection with this Indenture or the Securities of
such series.
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(B) The following provisions shall apply to the Securities of each
series unless specifically otherwise provided in a resolution of the Board of
Directors or an indenture supplemental hereto pursuant to Section 2.03. In
addition to discharge of the Indenture pursuant to the next preceding paragraph,
in the case of any series of Securities the exact amounts (including the
currency of payment) of principal of and interest due on which can be determined
at the time of making the deposit referred to in clause (a) below, the Company
shall be deemed to have paid and discharged the entire indebtedness on all the
Securities of such a series on the 91st day after the date of the deposit
referred to in subparagraph (a) below, and the provisions of this Indenture with
respect to the Securities of such series shall no longer be in effect (except as
to (i) rights of registration of transfer and exchange of Securities of such
series and the Company's right of optional redemption, if any, (ii) substitution
of mutilated, defaced, destroyed, lost or stolen Securities, (iii) rights of
holders of Securities to receive payments out of the property so deposited of
principal thereof and interest thereon, upon the original stated due dates
therefor (but not upon acceleration), and remaining rights of the holders to
receive mandatory sinking fund payments, if any, out of the property so
deposited, (iv) the rights, obligations, duties and immunities of the Trustee
hereunder, (v) the rights of the holders of Securities of such series as
beneficiaries hereof with respect to the property so deposited with the Trustee
payable to all or any of them, (vi) any remaining right of conversion of
Convertible Securities and (vii) the obligations of the Company under Sections
5.02, 5.03 and 5.04) and the Trustee, at the expense of the Company, shall at
the Company's request, execute proper instruments acknowledging the same, if
(a) with reference to this provision the Company has irrevocably
deposited or caused to be irrevocably deposited with the Trustee as trust
funds in trust, specifically pledged as security for, and dedicated solely
to, the benefit of the holders of the Securities of such series (i) cash in
an amount, or (ii) in the case of any series of Securities the payments on
which may only be made in Dollars, U.S. Government Obligations, maturing as
to principal and interest at such times and in such amounts as will insure
the availability of cash or (iii) a combination thereof, sufficient, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay
(A) the principal and interest on all Securities of such series on each date
that such principal or interest is due and payable and (B) any mandatory
72
sinking fund payments on the dates on which such payments are due and payable
in accordance with the terms of the Indenture and the Securities of such
series;
(b) such deposit will not result in a breach or violation of, or
constitute a default under, any agreement or instrument to which the Company
is a party or by which it is bound;
(c) the Company has delivered to the Trustee an Opinion of Counsel
based on the fact that (x) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (y) since the date
hereof, there has been a change in the applicable Federal income tax law, in
either case to the effect that, and such opinion shall confirm that, the
holders of the Securities of such series will not recognize income, gain or
loss for Federal income tax purposes as a result of such deposit, defeasance
and discharge and will be subject to Federal income tax on the same amount
and in the same manner and at the same times, as would have been the case if
such deposit, defeasance and discharge had not occurred;
(d) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
provided for relating to the defeasance contemplated by this provision have
been complied with;
(e) no event or condition shall exist that, pursuant to the provisions
of Section 4.02, would prevent the Company from making payments of the
principal of or interest on the Securities of such series on the date of such
deposit or at any time during the period ending on the 91st day after the
date of such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period); and
(f) the Company has delivered to the Trustee an Opinion of Counsel to
the effect that (x) the trust funds will not be subject to any rights of
holders of Senior Indebtedness, including without limitation those arising
under Article Four of this Indenture, and (y) after the 91st day following
the deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, except that if a court were to rule under any
such law in any case or proceeding that the trust funds remained property of
the Company, no opinion is given as to the
73
effect of such laws on the trust funds except the following: (A) assuming
such trust funds remained in the Trustee's possession prior to such court
ruling to the extent not paid to holders of Securities of such series, the
Trustee will hold, for the benefit of such holders, a valid and perfected
security interest in such trust funds that is not avoidable in bankruptcy or
otherwise, (B) such holders will be entitled to receive adequate protection
of their interests in such trust funds if such trust funds are used, and (C)
no property, rights in property or other interests granted to the Trustee or
such holders in exchange for or with respect to any of such funds will be
subject to any prior rights of holders of Senior Indebtedness, including
without limitation those arising under Article Four of this Indenture.
(C) The following provisions shall apply to the Securities of any
series if so provided in a resolution of the Board of Directors or an indenture
supplemental hereto pursuant to Section 2.03. The Company shall be released
from its obligations under Section 11.01 and such other Sections hereof as are
specified in such resolution or indenture supplemental hereto with respect to
the Securities of such series outstanding on and after the date the conditions
set forth below are satisfied (hereinafter, "covenant defeasance"). For this
purpose, such covenant defeasance means that, with respect to the outstanding
Securities of any series, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in such
Section, whether directly or indirectly by reason of any reference elsewhere
herein to such Section or by reason of any reference in such Section to any
other provision herein or in any other document and such omission to comply
shall not constitute an Event of Default under Section 6.01, but the remainder
of this Indenture and such Securities shall be unaffected thereby. The
following shall be the conditions to application of this subsection (C) of this
Section 12.01:
(a) The Company has irrevocably deposited or caused to be deposited
with the Trustee as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the holders of the Securities of such series, (i)
cash in an amount, or (ii) in the case of any series of Securities the
payments on which may only be made in Dollars, U.S. Government Obligations
maturing as to principal and interest at such times and in such amounts as
will
74
insure the availability of cash or (iii) a combination thereof, sufficient,
in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay (A) the principal and interest on all Securities of such
series at the stated maturity thereof and (B) any mandatory sinking fund
payments on the day on which such payments are due and payable in accordance
with the terms of the Indenture and the Securities of such series.
(b) No Event of Default or event which with notice or lapse of time or
both would become an Event of Default with respect to the Securities shall
have occurred and be continuing on the date of such deposit or, insofar as
subsections 6.01(d) and (e) are concerned, at any time during the period
ending on the 91st day after the date of such deposit (it being understood
that this condition shall not be deemed satisfied until the expiration of
such period).
(c) Such covenant defeasance shall not cause the Trustee to have a
conflicting interest as defined in Section 7.09 and for purposes of the Trust
Indenture Act of 1939 with respect to any securities of the Company.
(d) Such covenant defeasance shall not result in a breach or violation
of, or constitute a default under, this Indenture or any other agreement or
instrument to which the Company is a party or by which it is bound.
(e) Such covenant defeasance shall not cause any Securities then
listed on any registered national securities exchange under the Securities
Exchange Act of 1934, as amended, to be delisted.
(f) No event or condition shall exist that, pursuant to the provisions
of Section 4.01, would prevent the Company from making payments of the
principal of or interest on the Securities of such series on the date of such
deposit or at any time during the period ending on the 91st day after the
date of such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period).
(g) The Company shall have delivered to the Trustee an Officers'
Certificate and Opinion of Counsel to the effect that the holders of the
Securities of such series will not recognize income, gain or loss for Federal
income tax purposes as a result of such
75
covenant defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such covenant defeasance had not occurred.
(h) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to the covenant defeasance contemplated by
this provision have been complied with.
(i) The Company has delivered to the Trustee an Opinion of Counsel to
the effect that (x) the trust funds will not be subject to any rights of
holders of Senior Indebtedness, including without limitation those arising
under Article Four of this Indenture, and (y) after the 91st day following
the deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, except that if a court were to rule under any
such law in any case or proceeding that the trust funds remained property of
the Company, no opinion is given as to the effect of such laws on the trust
funds except the following: (A) assuming such trust funds remained in the
Trustee's possession prior to such court ruling to the extent not paid to
holders of Securities of such series, the Trustee will hold, for the benefit
of such holders, a valid and perfected security interest in such trust funds
that is not avoidable in bankruptcy or otherwise, (B) such holders will be
entitled to receive adequate protection of their interests in such trust
funds if such trust funds are used, and (C) no property, rights in property
or other interests granted to the Trustee or such holders in exchange for or
with respect to any of such funds will be subject to any prior rights of
holders of Senior Indebtedness, including without limitation those arising
under Article Four of this Indenture.
SECTION 12.02 Application by Trustee of Funds Deposited for Payment of
Securities. Subject to Section 12.04, all moneys deposited with the Trustee (or
other trustee) pursuant to Section 12.01 shall be held in trust and applied by
it to the payment, either directly or through any paying agent (including the
Company acting as its own paying agent), to the holders of the particular
Securities of such series for the payment or redemption of which such moneys
have been deposited with the Trustee, of all sums due and to become due thereon
for principal and interest; but such money need not be segregated from other
funds except to the extent required by law; provided, however, that the
76
Company shall be entitled from time to time to withdraw cash and/or obligations
deposited under subsection (C) of Section 12.01 provided that the cash and
obligations thereafter on deposit and after giving effect to such withdrawal
would, if then deposited under such clause, satisfy in all respects the
requirements of such subsection. At the time of any such withdrawal, the
Company shall deliver to the Trustee an Officers' Certificate demonstrating
compliance with the provisions of such clause or sentence.
SECTION 12.03 Repayment of Moneys Held by Paying Agent. In
connection with the satisfaction and discharge of this Indenture with respect to
Securities of any series, all moneys then held by any paying agent under the
provisions of this Indenture with respect to such series of Securities shall,
upon demand of the Company, be repaid to it or paid to the Trustee and thereupon
such paying agent shall be released from all further liability with respect to
such moneys.
SECTION 12.04 Return of Moneys Held by Trustee and Paying Agent
Unclaimed for Two Years. Any moneys deposited with or paid to the Trustee or
any paying agent for the payment of the principal of or interest on any Security
of any series and not applied but remaining unclaimed for two years after the
date upon which such principal or interest shall have become due and payable,
shall, upon the written request of the Company and unless otherwise required by
mandatory provisions of applicable escheat or abandoned or unclaimed property
law, be repaid to the Company by the Trustee for such series or such paying
agent, and the holder of the Securities of such series shall, unless otherwise
required by mandatory provisions of applicable escheat or abandoned or unclaimed
property laws, thereafter look only to the Company for any payment which such
holder may be entitled to collect, and all liability of the Trustee or any
paying agent with respect to such moneys shall thereupon cease.
ARTICLE THIRTEEN.
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS.
SECTION 13.01. Indenture and Securities Solely Corporate Obligations.
No recourse for the payment of the principal of or premium, if any, or interest,
if any, on any Security, or for any claim based thereon or otherwise in respect
thereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in this Indenture or in any supplemental indenture, or in any
Security, or because of the creation of any indebtedness
77
represented thereby, shall be had against any incorporator, stockholder, officer
or director, as such, past, present or future, of the Company or of any
successor corporation of the Company, either directly or through the Company or
any successor corporation of the Company, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly understood that all such liability is hereby
expressly waived and released as a condition of, and as a consideration for, the
execution of this Indenture and the issue of the Securities.
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ARTICLE FOURTEEN.
MISCELLANEOUS PROVISIONS.
SECTION 14.01. Successors. All the covenants, stipulations, promises
and agreements in this Indenture contained by the Company shall bind its
successors and assigns whether so expressed or not.
SECTION 14.02. Official Acts by Successor Corporation. Any act or
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the like board, committee or
officer of any corporation that shall at the time be the lawful sole successor
of the Company.
SECTION 14.03. Addresses for Notices, etc. Any notice or demand which
by any provision of this Indenture is required or permitted to be given or
served by the Trustee or by the holders of Securities on the Company may be
given or served by being deposited postage prepaid by registered or certified
mail in a post office letter box addressed (until other address is filed by the
Company with the Trustee for the purpose) to TriMas Corporation, 315 East
Eisenhower Parkway, Ann Arbor, Michigan 48108, Attention: President. Any
notice, direction, request or demand by any Securityholder to or upon the
Trustee shall be deemed to have been sufficiently given or made, for all
purposes, if given or made in writing at the principal office of the Trustee, to
the attention of Corporate Trust Administration.
SECTION 14.04. New York Contract. This Indenture and each Security
shall be deemed to be a contract made under the laws of the State of New York,
and for all purposes shall be governed by and construed in accordance with the
laws of the said State.
SECTION 14.05. Evidence of Compliance with Conditions Precedent. Upon
any application or demand by the Company to the Trustee to take any action under
any of the provisions of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that in the opinion of the signers all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel stating that,
in the opinion of such counsel, all such conditions precedent have been complied
with.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this
79
Indenture (other than the Officers' Certificate called for by Section 5.05)
shall include (1) a statement that the person making such certificate or opinion
has read such covenant or condition; (2) a brief statement as to the nature and
scope of the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based; (3) a statement that, in the
opinion of such person, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and (4) a statement as to whether
or not, in the opinion of such person, such condition or covenant has been
complied with.
SECTION 14.06. Legal Holiday. In any case where the date of payment
of interest on or principal of or premium, if any, on the Securities will be in
the place of payment a legal holiday or a day on which banking institutions are
authorized by law to close, the payment of such interest on or principal of or
premium, if any, on the Securities need not be made on such date but may be made
on the next succeeding day not in such city a legal holiday or a day on which
banking institutions are authorized by law to close, with the same force and
effect as if made on the date of payment and no interest shall accrue for the
period from and after such date.
SECTION 14.07. Trust Indenture Act to Control. If and to the extent
that any provision of this Indenture limits, qualifies or conflicts with another
provision included in this Indenture by operation of Sections 310 to 317,
inclusive, of the Trust Indenture Act of 1939 (an "incorporation provision"),
such incorporation provision shall control.
SECTION 14.08. Table of Contents, Headings, etc. The table of
contents and the titles and headings of the articles and sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof, and shall in no way modify or restrict any of terms or
provisions hereof.
SECTION 14.09. Execution in Counterparts. This Indenture may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.
SECTION 14.10. No Security Interest Created. Nothing in this
Indenture or in the Securities, expressed or implied, shall be construed to
constitute a security interest under the Uniform Commercial Code or similar
legislation, as now or hereafter enacted and in effect, in
80
any jurisdiction where property of the Company or its subsidiaries is located.
ARTICLE FIFTEEN.
REDEMPTION OF SECURITIES--MANDATORY AND
OPTIONAL SINKING FUND.
SECTION 15.01. Applicability of Article. The provisions of this
Article shall be applicable to the Securities of any series which are redeemable
at the option of the Company before their maturity or to any sinking fund for
the retirement of Securities of a series except as otherwise specified as
contemplated by Section 2.03 for Securities of such series.
SECTION 15.02. Notice of Redemption; Selection of Securities. In case
the Company shall desire to exercise the right to redeem all, or, as the case
may be, any part of the Securities of any series in accordance with their terms,
it shall fix a date for redemption and shall mail a notice of such redemption at
least 30 and not more than 60 days prior to the date fixed for redemption to the
holders of Securities of such series so to be redeemed as a whole or in part at
their last addresses as the same appear on the Securities register. Such
mailing shall be by first class mail. The notice if mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or not
the holder receives such notice. In any case, failure to give such notice by
mail or any defect in the notice to the holder of any Security of a series
designated for redemption as a whole or in part shall not affect the validity of
the proceedings for the redemption of any other Security of such series.
Each such notice of redemption shall specify the date fixed for
redemption, the redemption price at which Securities of such series are to be
redeemed, the place or places of payment, that payment will be made upon
presentation and surrender of such Securities, that interest accrued to the date
fixed for redemption will be paid as specified in said notice, and that on and
after said date interest thereon or on the portions thereof to be redeemed will
cease to accrue. If less than all the Securities of such series are to be
redeemed the notice of redemption shall specify the numbers of the Securities of
that series to be redeemed. In case any Security of a series is to be redeemed
in part only, the notice of redemption shall state the portion of the principal
amount thereof to be redeemed and shall state that on and after the date fixed
for redemption, upon surrender of such Security, a new Security
81
or Securities of that series in principal amount equal to the unredeemed portion
thereof will be issued.
On or prior to the redemption date specified in the notice of
redemption given as provided in this Section, the Company will deposit with the
Trustee or with one or more paying agents an amount of money sufficient to
redeem on the redemption date all the Securities so called for redemption at the
appropriate redemption price, together with accrued interest on the date fixed
for redemption.
The Company will give the Trustee notice not less than 60 days (or such
shorter period as may be agreed to by the Trustee) prior to a redemption date as
to the aggregate principal amount of Securities of a series to be redeemed and,
in case less than all the Securities of such series are to be redeemed, the
Trustee shall select, in such manner as in its sole discretion it shall deem
appropriate and fair, the Securities of that series or portions thereof (in
integral multiples of $1,000, except as otherwise set forth in the applicable
form of Security) to be redeemed.
SECTION 15.03. Payment of Securities Called for Redemption. If notice
of redemption has been given as provided in Section 15.02 or Section 16.04, the
Securities or portions of Securities of the series with respect to which such
notice has been given shall become due and payable on the date and at the place
or places stated in such notice at the applicable redemption price, together
with interest accrued to the date fixed for redemption (unless such date is an
interest payment date, in which case such accrued interest shall be paid to the
holders of record on the relevant record date, and no such accrued interest
shall be paid with the redemption price), and on and after said date (unless the
Company shall default in the payment of such Securities at the redemption price,
together with interest accrued to said date) interest on the Securities or
portions of Securities of any series so called for redemption shall cease to
accrue. On presentation and surrender of such Securities at a place of payment
specified in said notice, the said Securities or the specified portions thereof
shall be paid and redeemed by the Company at the applicable redemption price,
together with interest accrued thereon to the date fixed for redemption (unless
such date is an interest payment date, in which case such accrued interest shall
be paid to the holders of record on the relevant record date, and no such
accrued interest shall be paid with the redemption price).
Upon presentation of any Security of any series redeemed in part only,
the Company may execute and the Trustee shall authenticate and deliver to the
holder thereof, at the expense of the Company, a new Security or
82
Securities of such series of authorized denominations, in principal amount equal
to the unredeemed portion of the Security so presented.
SECTION 15.04. Mandatory and Optional Sinking Fund. The minimum
amount of any sinking fund payment provided for by the terms of Securities of
any series determined pursuant to Section 2.03 is herein referred to as a
"mandatory sinking fund payment", and any payment in excess of such minimum
amount provided for by the terms of Securities of any series is herein referred
to as an "optional sinking fund payment". The last date on which any such
payment may be made is herein referred to as a "sinking fund payment date".
In lieu of making all or any part of any mandatory sinking fund payment
with respect to any Securities of a series in cash, the Company may at its
option (a) deliver to the Trustee Securities of that series (other than any
previously called for redemption) theretofore purchased or otherwise acquired by
the Company and (b) may apply as a credit Securities of that series which have
been previously delivered to the Trustee by the Company or Securities of that
series which have been converted or redeemed either at the election of the
Company pursuant to the terms of such Securities or through the application of
optional sinking fund payments pursuant to the next succeeding paragraph, in
each case in satisfaction of all or any part of any mandatory sinking fund
payment, provided that such Securities have not been previously so credited.
Each such Security so delivered or applied as a credit shall be credited at the
sinking fund redemption price for such Securities and the amount of any
mandatory sinking fund shall be reduced accordingly. If the Company intends so
to deliver or credit such Securities with respect to any mandatory sinking fund
payment it shall deliver to the Trustee at least 60 days (or such shorter period
as may be agreed to by the Trustee) prior to the next succeeding sinking fund
payment date for such series (a) a certificate signed by the Treasurer or an
Assistant Treasurer of the Company specifying the portion of such sinking fund
payment, if any, to be satisfied by payment of cash and the portion of such
sinking fund payment, if any, which is to be satisfied by delivering and
crediting such Securities and (b) any Securities to be so delivered, if not
previously delivered. All Securities so delivered to the Trustee shall be
cancelled by the Trustee and no Securities shall be authenticated in lieu
thereof. If the Company fails to deliver such certificate and Securities at or
before the time provided above, the Company shall not be permitted to satisfy
any portion of such mandatory sinking fund payment by delivery or credit of
Securities.
83
At its option the Company may pay into the sinking fund for the
retirement of Securities of any particular series, on or prior to each sinking
fund payment date for such series, any additional sum in cash as specified by
the terms of such series of Securities. If the Company intends to exercise its
right to make any such optional sinking fund payment, it shall deliver to the
Trustee at least 60 days (or such shorter period as may be agreed to by the
Trustee) prior to the next succeeding sinking fund payment date for such series
a certificate signed by the Treasurer or an Assistant Treasurer of the Company
stating that the Company intends to exercise such optional right and specifying
the amount which the Company intends to pay on such sinking fund payment date.
If the Company fails to deliver such certificate at or before the time provided
above, the Company shall not be permitted to make any optional sinking fund
payment with respect to such sinking fund payment date. To the extent that such
right is not exercised in any year it shall not be cumulative or carried forward
to any subsequent year.
If the sinking fund payment or payments (mandatory or optional) made in
cash plus any unused balance of any preceding sinking fund payments made in cash
shall exceed $50,000 (or a lesser sum if the Company shall so request) with
respect to the Securities of any particular series, it shall be applied by the
Trustee or one or more paying agents on the next succeeding sinking fund payment
date to the redemption of Securities of such series at the sinking fund
redemption price together with accrued interest to the date fixed for
redemption. The Trustee shall select, in the manner provided in Section 15.02,
for redemption on such sinking fund payment date a sufficient principal amount
of Securities of such series to absorb said cash, as nearly as may be, and the
Trustee shall, at the expense and in the name of the Company, thereupon cause
notice of redemption of Securities of such series to be given in substantially
the manner and with the effect provided in Sections 15.02 and 15.03 for the
redemption of Securities of that series in part at the option of the Company,
except that the notice of redemption shall also state that the Securities of
such series are being redeemed for the sinking fund. Any sinking fund moneys
not so applied or allocated by the Trustee or any paying agent to the redemption
of Securities of that series shall be added to the next cash sinking fund
payment received by the Trustee or such paying agent and, together with such
payment, shall be applied in accordance with the provisions of this Section
15.04. Any and all sinking fund moneys held by the Trustee or any paying agent
on the maturity date of the securities of any particular series, and not held
for the payment or redemption of particular Securities of such series, shall be
applied by the Trustee or such paying agent, together with other moneys, if
84
necessary, to be deposited sufficient for the purpose, to the payment of the
principal of Securities of that series at maturity.
On or prior to each sinking fund payment date, the Company shall pay to
the Trustee or to one or more paying agents in cash a sum equal to all interest
accrued to the date fixed for redemption on Securities to be redeemed on the
next succeeding sinking fund payment date pursuant to this Section.
Neither the Trustee nor any paying agent shall redeem any Securities of
a series with sinking fund moneys, and the Trustee shall not mail any notice of
redemption of Securities of such series by operation of the sinking fund, during
the continuance of a default in payment of interest on such Securities or of any
Event of Default (other than an Event of Default occurring as a consequence of
this paragraph) with respect to such Securities, except that if the notice of
redemption of any Securities shall theretofore have been mailed in accordance
with the provisions hereof, the Trustee or any paying agent shall redeem such
Securities if cash sufficient for that purpose shall be deposited with the
Trustee or such paying agent for that purpose in accordance with the terms of
this Article Fifteen. Except as aforesaid, any moneys in the sinking fund for
such series at the time when any such default or Event of Default shall occur
and any moneys thereafter paid into the sinking fund shall, during the
continuance of such default or Event of Default, be held as security for the
payment of all Securities of such series; provided, however, that in case such
Event of Default or default shall have been cured or waived as provided herein,
such moneys shall thereafter be applied on the next succeeding sinking fund
payment date on which such moneys may be applied pursuant to the provisions of
this Section 15.04.
85
Continental Bank, National Association hereby accepts the trusts in
this Indenture declared and provided, upon the terms and conditions hereinabove
set forth.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed by their respective officers thereunto duly authorized and their
respective corporate seals to be hereunto duly affixed and attested, all as of
the day and year first above written.
TRIMAS CORPORATION
Company
By /s/ Peter C. DeChants
Vice President
[CORPORATE SEAL]
Attest:
/s/ Barry Silverman
Assistant Secretary
CONTINENTAL BANK,
NATIONAL ASSOCIATION,
Trustee
By /s/ Greg Jordan
[CORPORATE SEAL]
Attest:
/s/ Nancie J. Arvin
86
STATE OF MICHIGAN )
COUNTY OF WAYNE ) ss.:
On the 2nd day of August, 1993, before me personally came Peter
DeChants, to me known, who, being by me duly sworn, did depose and say that he
resides at Ann Arbor, Michigan; that he is a Vice President of TRIMAS
CORPORATION, the corporation described in and which executed the above
instrument; that he knows the corporate seal of said corporation; that the seal
affixed to the said instrument is such corporate seal; that it was so affixed by
authority of the Board of Directors of said corporation; and that he signed his
name thereto by like authority.
/s/ Nancy S. Steinrock
Notary Public
Commission expires:
November 9, 1994
[NOTARIAL SEAL]
STATE OF ILLINOIS )
COUNTY OF COOK ) ss.:
On the 2nd day of August, 1993, before me personally came Greg Jordan,
to me known, who, being by me duly sworn, did depose and say that he resides at
Naperville, IL; that he is Vice President of CONTINENTAL BANK, NATIONAL
ASSOCIATION, one of the corporations described in and which executed the above
instrument; that he knows the corporate seal of said corporation; that the seal
affixed to the said instrument is such corporate seal; that it was so affixed by
authority of the Board of Directors of said corporation; and that he signed his
name thereto by like authority.
/s/ Margaret M. Faccenda
Notary Public
Commission expires:
February 26, 1997
[NOTARIAL SEAL]
87
EX-10.K
5
MASCO CORPORATION
1984 RESTRICTED STOCK (INDUSTRIES) INCENTIVE PLAN
(Restated September 14, 1993)
1. Purpose of the Plan
The purpose of the 1984 Restricted Stock (Industries) Incentive Plan (the
"Plan") is to aid Masco Corporation (the "Company") and its subsidiaries and
affiliated companies in securing and retaining key employees and consultants of
outstanding ability and to motivate such individuals to exert their best efforts
on behalf of the Company and its subsidiaries and affiliated companies. In
addition, the Company expects that it will benefit from the added interest which
such individuals will have in its welfare as a result of their ownership or
increased ownership in common stock of an affiliated Company, MascoTech, Inc., a
Delaware corporation (formerly Masco Industries, Inc. and referred to herein as
"Industries"). For purposes of this Plan a "subsidiary" is any corporation in
which the Company owns, directly or indirectly, stock possessing more than fifty
percent of the total combined voting power of all classes of stock. For
purposes of Paragraph 4 of the Plan, an "affiliated company" is any other cor-
poration (and its subsidiaries) in which the Company or its subsidiaries own
stock possessing at least twenty percent of the total combined voting power of
all classes of stock, and for all other purposes of the Plan, an "affiliated
company" is any other corporation, at least twenty percent of the total combined
voting power of all classes of stock of which is owned by the Company or by one
or more other corporations in a chain of corporations, at least twenty percent
of the stock of each of which is held by the Company or a subsidiary or another
corporation within such chain.
2. Stock Subject to the Plan
The total number of shares of stock that may be awarded under the Plan is
12,000,000 shares of Common Stock of Industries, $1.00 par value. Such stock
may be any shares of Industries Common Stock owned by the Company. Shares of
stock awarded under the Plan which are later reacquired by the Company as a
result of forfeiture pursuant to the Plan shall again become available for
awards under the Plan.
3. Administration
The Board of Directors of the Company shall appoint a committee (the
"Committee") consisting of three or more members of the Board of Directors who
shall administer the Plan. No director
shall become or remain a member of the Committee unless at the time of his
exercise of any discretionary function as a Committee member such director is
not eligible and has not at any time within one year prior to the exercise of
such discretion been eligible for selection as a person to whom stock may be
allocated or to whom stock options or stock appreciation rights may be granted
pursuant to the Plan or any other plan of the Company or any of its affiliates
entitling the participants therein to acquire stock, stock options or stock
appreciation rights of the Company or any of its affiliates. The Committee
shall have the authority, consistent with the Plan, to determine the terms and
conditions of each award, to interpret the Plan and the agreements under the
Plan, to adopt, amend and rescind rules and regulations for the administration
of the Plan and the awards, and generally to conduct and administer the Plan and
to make all determinations in connection therewith which may be necessary or
advisable, and all such actions of the Committee shall be binding upon all par-
ticipants.
4. Eligibility
Key employees of and consultants to the Company and its subsidiaries and
affiliated companies, including officers of the Company (who may also be
directors, but excluding members of the Committee, any person who serves only as
a director of the Company and any consultant to the Company or any of its
subsidiaries or affiliated companies who is also a director of the Company), as
may be selected from time to time by the Committee in its discretion, are
eligible to receive awards under the Plan. The Committee shall determine in its
sole discretion the number of shares to be awarded to each such participant.
5. Terms and Conditions of Awards
All shares of Industries' Common Stock awarded to participants under this
Plan shall be subject to the following terms and conditions, and to such other
terms and conditions not inconsistent with the Plan as shall be contained in
each Award Agreement ("Agreement") referred to in Paragraph 5(f):
(a) At the time of each award there shall be established for the
shares of each participant a "Restricted Period" of transfer which shall
be not less than one year. Such Restricted Period may differ among
participants and may have different expiration dates with respect to
portions of shares covered by the same award. The Committee may also
determine that the expiration of any Restricted Period shall be subject to
such additional terms and conditions as it decides in its sole discretion
and as set forth in the participant's Agreement.
2
(b) Shares of stock awarded to participants may not be sold,
encumbered or otherwise transferred, except as hereinafter provided,
during the Restricted Period pertaining to such shares. Except for such
restrictions on transfer, the participant shall have all the rights of a
stockholder including but not limited to the right to receive all
dividends paid on such shares (subject to the provisions of Paragraph 6)
and the right to vote such shares.
(c) If a participant ceases to be employed or retained by the
Company or any of its subsidiaries or affiliated companies for any reason
(including termination by reason of the fact that any corporation is no
longer a subsidiary or affiliated company), other than death, permanent
and total disability, or, in the case of an employee, retirement on or
after normal retirement date, all shares of stock theretofore awarded to
the participant which are still subject to the restrictions imposed by
Paragraph 5(b) shall upon such termination be forfeited and transferred
back to the Company, provided, however, that in the event such employment
or consulting relationship is terminated by action of the Company or any
of its subsidiaries or affiliated companies without cause or by agreement
of the Company or any of its subsidiaries or affiliated companies and the
participant, the Committee may, but need not, determine that some or all
of such shares shall not be forfeited but instead shall be subject to such
restrictions as the Committee may establish or that some or all of such
shares shall be free of restrictions. For purposes of this Paragraph
5(c), a participant's employment or consulting arrangement shall not be
considered terminated (i) in the case of transfers of employment or the
consulting arrangement among the Company, its subsidiaries and affiliated
companies, (ii) by virtue of a change of status from employee to
consultant or from consultant to employee, or (iii) in the case of
interruption in service, not exceeding one year in duration unless
otherwise approved by the Committee, for approved sick leave or other bona
fide leave of absence.
(d) If a participant ceases to be employed or retained by the
Company or any of its subsidiaries or affiliated companies by reason of
death or permanent and total disability or if any employee ceases to be
employed by the Company or any of its subsidiaries or affiliated companies
by reason of retirement on or after normal retirement date, the
restrictions imposed by Paragraph 5(b) shall lapse with respect to the
shares then subject to restrictions, except to the extent provided to the
contrary in the Agreement.
3
(e) Each certificate issued in respect of shares awarded under the
Plan shall be registered in the name of the participant and deposited by
the participant with the Company, together with a stock power endorsed in
blank, and shall bear the following legend:
"The sale, encumbrance, or other transfer of this certificate and
the shares of stock represented hereby are subject to the terms and
conditions (including a contingent transfer obligation) contained in the
Masco Corporation's 1984 Restricted Stock (Industries) Incentive Plan and
an Award Agreement entered into between the registered owner and Masco
Corporation. Copies of such Plan and Award Agreement are on file in the
office of the Secretary of Masco Corporation, Taylor, Michigan."
(f) The participant shall enter into an Agreement with the Company
in a form specified by the Committee agreeing to the terms and conditions
of the award, the expiration of the Restricted Period as to the shares
covered by the award, and such other matters, including compliance with
applicable federal and state securities laws and methods of withholding or
providing for the payment of required taxes, as the Committee shall in its
sole discretion determine. The Committee may at any time amend the terms
of any Agreement consistent with the terms of the Plan, except that
without the participant's written consent no such amendment shall
adversely affect the rights of the participant who is a party to such
Agreement.
(g) At the expiration of the Restricted Period as to shares covered
by any award, the Company shall redeliver the stock certificates deposited
with it pursuant to Paragraph 5(e) and as to which the Restricted Period
has expired, as follows:
(1) if an assignment to a trust has been made in accordance
with Paragraph 5(i), to such trust; or
(2) if the Restricted Period has expired by reason of death
and a beneficiary has been designated in form approved by the
Company, to the beneficiary so designated; or
(3) in all other cases, to the participant or the legal
representative of the participant's estate.
Upon written request, the Company will instruct its stock transfer agent
that such certificates may be reissued without legend.
4
(h) Notwithstanding any of the provisions of this Plan or
instruments evidencing awards heretofore or hereafter granted hereunder,
in the case of a Change in Control of the Company, each award granted at
least one year prior thereto shall immediately become fully vested and
non-forfeitable and shall thereupon be distributed to participants as soon
as practicable, free of all restrictions. A Change in Control shall occur
if:
(1) any "person" or "group of persons" as such terms are used
in Section 13(d) and 14(d) of the Securities Exchange Act of 1934
(the "Exchange Act") other than pursuant to a transaction or
agreement previously approved by the Board directly or indirectly
purchases or otherwise becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act) or has the right to acquire such
beneficial ownership (whether or not such right is exercisable
immediately, with the passage of time, or subject to any condition),
of voting securities representing 25% or more of the combined voting
power of all outstanding voting securities of the Company; or
(2) during any period of twenty four consecutive calendar
months, the individuals who at the beginning of such period
constitute the Company's Board of Directors, and any new directors
whose election by such Board or nomination for election by
stockholders was approved by a vote of at least two-thirds of the
members of such Board who were either directors on such Board at the
beginning of the period or whose election or nomination for election
as directors was previously so approved, for any reason cease to
constitute at least a majority of the members thereof.
(i) Notwithstanding any other provision of this Plan, a participant
may assign all rights under any award to a revocable grantor trust
established by the participant for the sole benefit of the participant
during the life of the participant, and under the terms of which the
participant is and remains the sole trustee until death or physical or
mental incapacity. Such assignment shall be effected by a written
instrument in form and content satisfactory to the Committee and the
participant shall deliver to the Committee a true copy of the agreement or
other document evidencing such trust. If in the judgment of the Committee
the trust to which a participant may attempt to assign rights under an
award does not meet the criteria of a trust to which an assignment is
permitted by the terms of this paragraph, or if after assignment, because
of amendment, by force of law or any other reason such trust no longer
meets such criteria, such attempted assignment shall be void and may be
disregarded by the Committee and the Company and all rights to any awards
shall revert to and remain solely
5
in the participant. Notwithstanding a qualified assignment, the
participant, and not the trust to which rights under an award may be
assigned, for the purpose of determining compensation arising by reason of
the award shall continue to be considered an employee or consultant, as
the case may be, of the Company, a subsidiary or affiliated company, but
such trust and the participant shall be bound by all of the terms and
conditions of the Award Agreement and this Plan.
The Committee, the Company and its officers, agents and employees
may rely upon any beneficiary designation, assignment or other instrument
of transfer, copies of trust agreements and any other documents delivered
to them by or on behalf of the participant which they believe genuine and
any action taken by them in reliance thereon shall be conclusive and
binding upon the participant, his personal representatives and all persons
asserting a claim based on an award granted pursuant to this Plan. The
delivery by a participant of a beneficiary designation, or an assignment
of rights under an award as permitted by this Paragraph 5(i), shall
constitute the participant's irrevocable undertaking to hold the Commit-
tee, the Company and its officers, agents and employees harmless against
claims, including any cost or expense incurred in defending against
claims, of any person (including the participant) which may be asserted or
alleged to be based upon an award subject to a beneficiary designation or
an assignment. In addition, the Company may decline to deliver shares to
a beneficiary until it receives indemnity against claims of third parties
satisfactory to the Company. Issuance of shares as to which restrictions
have lapsed in the name of, and delivery to, the trust to which rights may
be assigned shall be conclusively considered issuance and delivery to the
participant.
(j) The Committee, in its discretion and in accordance with the
procedures established by the Committee, may permit the participant to
satisfy, in whole or in part, the applicable income tax withholding
obligations when the restrictions imposed by Paragraph 5(b) lapse: (1) in
the case of participants who are employees of or consultants to Industries
or any of its subsidiaries, by having withheld from the shares as to which
the Restricted Period has expired or by delivering from shares of Common
Stock of Industries owned by the participant such number of shares having
a fair market value equal to the amount needed to satisfy such
obligations; or (2) in the case of all other participants, by having
withheld from the shares as to which the Restricted Period has expired or
by delivering from shares of Common Stock of Industries or common stock of
the Company owned by the participant such number of shares having a fair
market value equal to the amount needed to satisfy such obligations.
6
6. Changes in Capitalization
In the event there is a change in, reclassification, subdivision or
combination of, stock dividend on, or exchange of stock by Industries for its
outstanding Common Stock, the maximum aggregate number and class of shares as to
which awards may be granted under the Plan may be appropriately adjusted by the
Committee whose determination thereof shall be conclusive. Unless the Committee
shall determine otherwise, any shares of stock or other securities received by a
participant with respect to shares still subject to the restrictions imposed by
Paragraph 5(b) will be subject to the same restrictions and shall be deposited
with the Company.
If Industries shall be consolidated or merged with another corporation,
the stock, securities or other property which a participant is entitled to
receive by reason of his ownership of the shares of stock subject to the
restrictions imposed pursuant to Paragraph 5(b) shall be subject to the same or
equivalent restrictions unless the Committee shall determine otherwise.
7. Amendment of the Plan
The Board of Directors may from time to time amend or discontinue the
Plan, except that without the approval of Stockholders of the Company no
amendment shall increase the total number of shares which may be awarded under
the Plan, extend the date for awards of shares under the Plan beyond December
31, 1999 or change the standard of eligibility to participate in the Plan. The
total number of shares which may be awarded under the Plan may, however, be
adjusted without stockholder approval pursuant to the adjustment provisions de-
scribed in Paragraph 6 hereof.
8. Effective Date and Termination of Plan
The Plan shall become effective when approved by the stockholders of the
Company and no shares may be awarded under the Plan after December 31, 1999.
EX-10.L
6
MASCO CORPORATION
1984 STOCK OPTION PLAN
(Restated September 14, 1993)
Article I. Purpose
The purpose of the 1984 Stock Option Plan (the "Plan") is to secure for
Masco Corporation (the "Company") and its stockholders the benefits inherent in
stock ownership by selected key employees of and consultants to the Company and
its subsidiaries and affiliated companies who in the judgment of the committee
responsible for the administration of the Plan are largely responsible for the
Company's growth and success. The Plan is designed to accomplish this purpose
by offering such employees and consultants an opportunity to purchase shares of
the Common Stock of the Company. For purposes of the Plan a "subsidiary" is any
corporation in which the Company owns, directly or indirectly, stock possessing
more than fifty percent of the total combined voting power of all classes of
stock. For purposes of Articles III and VII of the Plan, an "affiliated
company" is any other corporation (and its subsidiaries) in which the Company or
its subsidiaries own stock possessing at least twenty percent of the total
combined voting power of all classes of stock, and for all other purposes of the
Plan, an "affiliated company" is any other corporation, at least twenty percent
of the total combined voting power of all classes of stock of which is owned by
the Company or by one or more other corporations in a chain of corporations, at
least twenty percent of the stock of each of which is held by the Company or a
subsidiary or another corporation within such chain.
Article II. Administration
The Plan shall be administered by a committee (the "Committee") of three
or more of the Company's directors to be appointed by the Board of Directors.
No director shall become or remain a member of the Committee unless at the time
of exercise of any discretionary function as a Committee member such director is
not eligible, and has not at any time within one year prior to the exercise of
such discretion been eligible for selection as a person to whom stock may be
allocated or to whom stock options or stock appreciation rights may be granted
pursuant to the Plan or any other plan of the Company or any of its affiliates
entitling the participants therein to acquire stock, stock options or stock
appreciation rights of the Company or any of its affiliates. The Committee
shall have authority, consistent with the Plan:
(a) to determine which key employees of and consultants to the
Company, its subsidiaries and affiliated companies shall be granted
options;
(b) to determine the time or times when options shall be granted and
the number of shares of Common Stock to be subject to each option;
(c) to determine the option price of the stock subject to each
option and the method of payment of such price;
(d) to determine the time or times when each option becomes
exercisable, limitations on exercise, and the duration of the exercise
period;
(e) to prescribe the form or forms of the instruments evidencing any
options granted under the Plan and of any other instruments required under
the Plan, and to change such forms from time to time;
(f) to designate options granted to key employees of the Company or
its "subsidiaries" under the Plan as "incentive stock options" ("ISOs"),
as such terms are defined under the Internal Revenue Code;
(g) to adopt, amend and rescind rules and regulations for the
administration of the Plan and the options and for its own acts and
proceedings; and
(h) to decide all questions and settle all controversies and
disputes which may arise in connection with the Plan.
All decisions, determinations and interpretations of the Committee shall
be binding on all parties concerned.
Article III. Participants
Key employees of and consultants to the Company, its subsidiaries or
affiliated companies, including officers of the Company (who may also be
directors, but excluding members of the Committee, any person who serves only as
a director of the Company and any consultant to the Company or any of its sub-
sidiaries or affiliated companies who is also a director of the Company), as may
be selected from time to time by the Committee in its discretion, are eligible
to receive options under the Plan. The grant of an option to an employee or
consultant shall not entitle such individual to other grants or options, nor
shall such grant disqualify such individual from further participation.
2
Article IV. Limitations
No options shall be granted under the Plan after December 31, 1999, but
options theretofore granted may extend beyond that date. The number of shares
of Common Stock of the Company which may be issued under the Plan shall not
exceed 4,000,000 in the aggregate, subject to adjustment as provided in Article
IX. To the extent that any option granted under the Plan shall expire or
terminate unexercised or for any reason become unexercisable as to any stock
subject thereto, such stock shall thereafter be available for further grants
under the Plan, within the limit specified above. If an option granted under
the Plan shall be accepted for surrender pursuant to Article VIII, any stock
covered by options so accepted shall not thereafter be available for the
granting of other options under the Plan.
Notwithstanding any provision to the contrary in the Plan, no option may
be designated an ISO unless all of the following conditions are satisfied with
respect to such option:
(a) Such option must be granted on or prior to April 24, 1994, and
such option by its terms is not exercisable after the expiration of ten
years from the date such option is granted;
(b) Either (i) the employee to whom such option is granted does not,
determined at the time such option is granted, own capital stock
representing more than ten percent of the voting power of all classes of
stock of the Company, its parent or any of its subsidiaries, or (ii) the
option price is at least 110 percent of the fair market value, determined
at the time such option is granted, of the stock subject to such option
and such option by its terms is not exercisable more than five years from
the date it is granted;
(c) Such option by its terms is not exercisable while there is
outstanding an ISO which was granted to the same employee at an earlier
time. For purposes of this clause (c), an ISO which has not been
exercised in full shall be deemed to be outstanding, notwithstanding any
cancellation or termination thereof, until the expiration of the period
during which it could have been exercised under its original terms; and
(d) The aggregate fair market value of the Common Stock subject to
such option plus the aggregate fair market value of Common Stock subject
to ISOs previously or concurrently granted to the same employee in the
same calendar year (all determined at the respective dates of grant of
such options) must not exceed $100,000 (the "Basic Amount") plus the sum
of the "Carry-Over Amounts" for each of the three calendar years
immediately preceding the year in which such option is
3
granted. The "Carry-Over Amount", as used in this clause (d) for any
calendar year, shall mean (i) fifty percent of the amount by which
$100,000 exceeds the fair market value, determined at the time of grant,
of Common Stock subject to ISOs which were granted during such calendar
year to the employee for whom the Carry-Over Amount is being determined,
or (ii) $50,000 in the case such employee has not in such calendar year
been granted any ISO. No amount shall be included in a Carry-Over Amount
for any year to the extent such amount was theretofore necessarily in-
cluded as a Carry-Over Amount to permit the qualification of an ISO under
this clause (d), and Carry-Over Amounts shall only be utilized to permit
the qualification of an ISO under this clause (d) in the order in which
they first arose and then only if the Basic Amount has not theretofore
been utilized to permit such qualification.
Article V. Stock to be Issued
The stock as to which options may be granted is the Company's Common
Stock, $1 par value. Such stock may be authorized but unissued shares or shares
of Common Stock reacquired by the Company, including but not limited to shares
purchased on the open market. The Board of Directors and the officers of the
Company shall take any appropriate action required for such issuance.
Article VI. Terms and Conditions of Options
All options granted under the Plan shall be subject to the following terms
and conditions (except as otherwise provided in Article VII) and to such other
terms and conditions as the Committee shall deem appropriate.
(a) Option Price. Each option granted hereunder shall have such per share
option price as the Committee may determine, but not less than the fair market
value of Common Stock of the Company on the date the option is granted.
(b) Term of Options. The term of an option shall not exceed eleven years
from the date of grant. The date of grant shall be the date on which the option
is awarded by the Committee.
(c) Exercise of Options.
(i) Each option shall be made exercisable at such time or times,
whether or not in installments, as the Committee shall prescribe at the
time the option is granted.
(ii) A person electing to exercise an option shall give written
notice to the Company, as may be specified by the Committee, of exercise
of the option and of the number of
4
shares of stock elected for exercise, such notice to be accompanied by
such instruments or documents as may be required by the Committee, and
such person shall at the time of such exercise tender the purchase price
of the stock elected for exercise unless otherwise directed by the
Committee.
(iii) Notwithstanding any of the provisions of this Plan or
instruments evidencing options heretofore or hereafter granted hereunder,
in the case of a Change in Control of the Company, each Option then
outstanding shall immediately become exercisable in full. A Change in
Control shall occur if:
(1) any "person" or "group of persons" as such terms are used
in Section 13(d) and 14(d) of the Securities Exchange Act of 1934
(the "Exchange Act") other than pursuant to a transaction or
agreement previously approved by the Board directly or indirectly
purchases or otherwise becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act) or has the right to acquire such
beneficial ownership (whether or not such right is exercisable
immediately, with the passage of time, or subject to any condition),
of voting securities representing 25% or more of the combined voting
power of all outstanding voting securities of the Company; or
(2) during any period of twenty four consecutive calendar
months, the individuals who at the beginning of such period
constitute the Company's Board of Directors, and any new directors
whose election by such Board or nomination for election by
stockholders was approved by a vote of at least two-thirds of the
members of such Board who were either directors on such Board at the
beginning of the period or whose election or nomination for election
as directors was previously so approved, for any reason cease to
constitute at least a majority of the members thereof.
(d) Payment for Issuance of Stock. Upon and at the time of exercise of
any option granted pursuant to the Plan, payment in full shall be made for all
such stock then being purchased either in cash or, at the discretion of the
Committee, in whole or in part in Common Stock of the Company valued at its then
fair market value. Notwithstanding the foregoing, the Committee may in its
discretion permit the issuance of stock upon such other plan of payment as it
deems reasonable, provided that the then unpaid portion of the purchase price
shall be evidenced by a promissory note at such rate of interest and upon such
other terms and conditions as the Committee shall deem appropriate. In all
cases where stock is issued for less than present full payment of the purchase
price, there shall be placed upon the certificate or certificates representing
such stock a legend setting forth the
5
amount paid at issuance, and the amount remaining unpaid thereon, and stating
that the stock is subject to call for the remainder and may not be transferred
by the holder until the balance due thereon shall be fully paid.
The Committee, in its discretion and in accordance with the procedures
established by the Committee, may permit a participant to satisfy, in whole or
in part, the applicable income tax withholding obligations in connection with
the exercise of a non-qualified stock option under the Plan: (1) in the case of
participants who are employees of or consultants to MascoTech, Inc. or any of
its subsidiaries, by delivering from shares of common stock of MascoTech, Inc.
owned by the participant such number of shares having a fair market value equal
to the amount needed to satisfy such obligations; or (2) in the case of all
other participants, by having withheld from the shares to be issued upon the
exercise of the option or by delivering from shares of Common Stock of the
Company owned by the participant such number of shares having a fair market
value equal to the amount needed to satisfy such obligations.
(e) Conditions to Issuance. The Company shall not be obligated to issue
any stock unless and until:
(i) in the event the Company's outstanding Common Stock is at the
time listed upon any stock exchange, the shares of stock to be issued have
been listed, or authorized to be added to the list upon official notice of
issuance, upon such exchange, and
(ii) in the opinion of the Company's counsel there has been
compliance with applicable law in connection with the issuance and
delivery of stock and such issuance shall have been approved by the
Company's counsel.
Without limiting the generality of the foregoing, the Company may require from
the participant such investment representation or such agreement, if any, as
counsel for the Company may consider necessary in order to comply with the
Securities Act of 1933 as then in effect, and may require that the participant
agree that any sale of the stock will be made only in such manner as shall be in
accordance with law and that the participant will notify the Company of any
intent to make any disposition of the stock whether by sale, gift or otherwise.
The participant shall take any action reasonably requested by the Company in
such connection. A participant shall have the rights of a stockholder only as
and when shares of stock have been actually issued to the participant pursuant
to the Plan.
(f) Nontransferability of Options. No option may be transferred by the
participant other than by designation of beneficiary as provided in subsection
(j) of this Article, or by
6
will or by the laws of descent and distribution, and during the participant's
lifetime the option may be exercised only by the participant.
(g) Consideration for Option. Each person receiving an option must agree
to remain as an employee or consultant upon the terms of employment or the
consulting arrangement then existing (unless different terms are mutually agreed
upon) for at least one year from the date of the granting of the option, subject
to the right of the Company, its subsidiary or affiliated company to terminate
the participant's employment or consulting arrangement at any time.
(h) Termination of Employment. If the employment of or consulting
arrangement with a participant terminates for any reason (including termination
by reason of the fact that any corporation is no longer a subsidiary or
affiliated company) other than the participant's death or permanent and total
disability or, in the case of an employee, retirement on or after normal
retirement date, unless discharged for misconduct which in the opinion of the
Committee casts such discredit on the participant as to justify termination of
the option, the participant may thereafter exercise the option as provided
below. If such termination is voluntary on the part of the participant, the
option may be exercised only within ten days after the day of termination unless
a longer period is permitted by the Committee in its discretion. If such
termination is involuntary on the part of the participant, the option may be
exercised within three months after the day of termination. Except as expressly
provided in the Plan, in no event may a participant whose employment or
consulting arrangement has been terminated voluntarily or involuntarily exercise
an option at a time when the option would not have been exercisable had the
employment or consulting arrangement continued. Notwithstanding the foregoing,
the Committee may by the express terms of the grant of the option extend the
aforesaid periods of time within which the participant may exercise an option
after the termination of employment or the consulting arrangement. For purposes
of this Article VI(h), a participant's employment or consulting arrangement
shall not be considered terminated (i) in the case of approved sick leave or
other bona fide leave of absence (not to exceed one year unless otherwise
approved by the Committee), (ii) in the case of a transfer of employment or the
consulting arrangement among the Company, its subsidiaries and affiliated
companies, or (iii) by virtue of a change of status from employee to consultant
or from consultant to employee. Unless otherwise expressly provided in the Plan
or the grant of an option, an option may be exercised only to the extent
exercisable on the date of termination of employment or of the consulting ar-
rangement by reason of death, permanent and total disability, retirement or
otherwise.
(i) Retirement; Disability. If prior to the expiration date of an option
the employee shall retire on or after normal retirement date or if the
employment or consulting relationship is
7
terminated by reason of permanent and total disability, such option may be
exercised to the extent exercisable on the date of retirement or such
termination, provided such option shall be exercised within three months of the
date of retirement or such termination. Notwithstanding the foregoing, in its
discretion the Committee may permit the exercise of an option held by a retired
or disabled option holder upon other terms and conditions as it deems advisable
under the circumstances, and if the period within which an option may be exer-
cised has been extended the Committee may terminate all unexercised options if
it shall determine that the participant has engaged in any activity detrimental
to the Company's interests.
(j) Death. If a participant dies at a time when entitled to exercise an
option, then at any time or times within one year after death (or such further
period as the Committee may allow) such option may be exercised as to all or any
of the shares which the participant was entitled to purchase immediately prior
to death (unless the Committee shall have provided in the instrument evidencing
such option that all shares covered by the option are subject to purchase upon
death), by the person or persons designated in writing by the participant in
such form of beneficiary designation as may be approved by the Company, or
failing designation by the participant's personal representative, executor or
administrator or the person or persons to whom the option is transferred by will
or the applicable laws of descent and distribution. The Company may decline to
deliver shares to a designated beneficiary until it receives indemnity against
claims of third parties satisfactory to the Company. Except as so exercised
such option shall expire at the end of such period.
Article VII. Replacement Options
The Committee may grant options under the Plan on terms differing from
those provided for in Article VI where such options are granted in substitution
for options held by employees of or consultants to other entities who
concurrently become employees of or consultants to the Company or a subsidiary
or an affiliated company as the result of a merger, consolidation or other
reorganization of such other entity with the Company or a subsidiary or an
affiliated company, or the acquisition by the Company or a subsidiary or an
affiliated company of the business, property or stock of such other entity. The
Committee may direct that the substitute options be granted on such terms and
conditions as the Committee considers appropriate in the circumstances.
8
Article VIII. Surrender of Options
The Committee may, in its discretion and upon such terms and conditions as
it deems appropriate, accept the surrender by a participant of a presently
exercisable right to purchase stock granted under an option and authorize
payment by the Company in consideration therefor of an amount equal to the
difference obtained by subtracting the option price of the stock from its fair
market value on the date of such surrender, such payment to be in cash or shares
of the Common Stock of the Company valued at fair market value on the date of
such surrender, or partly in such stock and partly in cash, provided that the
Committee determines such settlement is consistent with the purpose of the Plan.
Article IX. Changes in Stock
The Board of Directors is authorized to make such adjustments, if any, as
it shall deem appropriate in the number and kind of shares which may be granted
under the Plan, the number and kind of shares which are subject to options then
outstanding and the purchase price of shares subject to such outstanding
options, in the event of any change in capital or shares of capital stock, any
special distribution to stockholders or any extraordinary transaction (including
a merger, consolidation or dissolution) to which the Company is a party. The
determination of the Board of Directors as to such matters shall be binding on
all persons.
Article X. Employment Rights
The adoption of the Plan does not confer upon any employee of or
consultant to the Company or a subsidiary or an affiliated company any right to
continue the employment or consulting relationship with the Company or a
subsidiary or an affiliated company, as the case may be, nor does it in any way
impair the right of the Company or a subsidiary or an affiliated company to
terminate the employment of any of its employees or the consulting arrangement
with any of its consultants at any time.
Article XI. Amendments
The Committee may at any time discontinue granting options under the Plan.
The Board of Directors may at any time or times amend the Plan or amend any
outstanding option or options for the purpose of satisfying the requirements of
any changes in applicable laws or regulations or for any other purpose which may
at the time be permitted by law, provided that except to the extent permitted
under Article IX, without the approval of the stockholders of the Company no
such amendment shall increase the maximum number of shares of stock available
under the Plan, or alter the class of
9
persons eligible to receive options under the Plan, or without the consent of
the participant void or diminish options previously granted, nor increase or
accelerate the conditions and actions required for the exercise of the same,
except that nothing herein shall limit the Company's right to call stock, issued
for deferred payment which is evidenced by a promissory note, where the par-
ticipant is in default of the obligations of such note.
EX-10.M
7
MASCO CORPORATION
RESTRICTED STOCK INCENTIVE PLAN
(Restated September 14, 1993)
1. Purpose of the Plan
The purpose of the Plan is to aid Masco Corporation (the "Company") and
its subsidiaries and affiliated companies in securing and retaining key
employees and consultants of outstanding ability and to motivate such
individuals to exert their best efforts on behalf of the Company and its
subsidiaries and affiliated companies. In addition, the Company expects that it
will benefit from the added interest which such individuals will have in its
welfare as a result of their ownership or increased ownership of the Company's
Common Stock. For purposes of the Plan a "subsidiary" is any corporation in
which the Company owns, directly or indirectly, stock possessing more than fifty
percent of the total combined voting power of all classes of stock. For
purposes of Paragraph 4 of the Plan, an "affiliated company" is any other
corporation (and its subsidiaries) in which the Company or its subsidiaries own
stock possessing at least twenty percent of the total combined voting power of
all classes of stock, and for all other purposes of the Plan, an "affiliated
company" is any other corporation, at least twenty percent of the total combined
voting power of all classes of stock of which is owned by the Company or by one
or more other corporations in a chain of corporations, at least twenty percent
of the stock of each of which is held by the Company or a subsidiary or another
corporation within such chain.
2. Stock Subject to the Plan
The total number of shares of stock that may be awarded under the Plan is
4,000,000 shares of the Company's Common Stock, $1.00 par value. Such stock may
be authorized but unissued shares or shares of Common Stock reacquired by the
Company, including but not limited to shares purchased on the open market.
Shares of stock awarded under the Plan which are later reacquired by the Company
as a result of forfeiture pursuant to the Plan shall again become available for
awards under the Plan.
3. Administration
The Board of Directors of the Company shall appoint a committee (the
"Committee") consisting of three or more members of the Board of Directors who
shall administer the Plan. Members of the Committee shall not be eligible while
a member to participate in the Plan and shall not have at any time within one
year prior to appointment been eligible for selection as a person to whom stock
may have been allocated or to whom stock options of the Company may have been
granted pursuant to the Plan or any other plan of the Company. The Committee
shall have the authority, consistent with the Plan, to determine the terms and
conditions of each award, to interpret the Plan and the agreements under the
Plan, to adopt, amend and rescind rules and regulations for the administration
of the Plan and the awards, and generally to conduct and administer the Plan and
to make all determinations in connection therewith which may be necessary or
advisable, and all such actions of the Committee shall be binding upon all
participants.
4. Eligibility
Key employees of and consultants to the Company and its subsidiaries and
affiliated companies, including officers of the Company (who may also be
directors, but excluding members of the Committee, any person who serves only as
a director of the Company and any consultant to the Company or any of its
subsidiaries or affiliated companies who is also a director of the Company), as
may be selected from time to time by the Committee in its discretion, are
eligible to receive awards under the Plan. The Committee shall determine in its
sole discretion the number of shares to be awarded to each such participant.
5. Terms and Conditions of Awards
All shares of Common Stock awarded to participants under this Plan shall
be subject to the following terms and conditions, and to such other terms and
conditions not inconsistent with the Plan as shall be contained in each Award
Agreement ("Agreement") referred to in Paragraph 5(f):
(a) At the time of each award there shall be established for the
shares of each participant a "Restricted Period" which shall be not less
than one year. Such Restricted Period may differ between and among
participants and may have different expiration dates with respect to
portions of shares covered by the same award. The Committee may also
determine that the expiration of any Restricted Period shall be subject to
such additional terms and conditions as it decides in its sole discretion
and as set forth in the participant's Agreement.
(b) Shares of stock awarded to participants may not be sold,
encumbered or otherwise transferred, except as hereinafter provided,
during the Restricted Period pertaining to such shares. Except for such
restrictions on transfer, the participant shall have all the rights of a
stockholder including but not limited to the right to receive all
dividends paid on such shares (subject to the provisions of Paragraph 6)
and the right to vote such shares.
2
(c) If a participant ceases to be employed or retained by the
Company or any of its subsidiaries or affiliated companies for any
reason (including termination by reason of the fact that any
corporation is no longer a subsidiary or affiliated company), other
than death, permanent and total disability, or, in the case of an
employee, retirement on or after normal retirement date, all shares
of stock theretofore awarded to the participant which are still
subject to the restrictions imposed by Paragraph 5(b) shall upon
such termination of employment or the consulting relationship be
forfeited and transferred back to the Company, provided, however,
that in the event such employment or consulting relationship is
terminated by action of the Company or any of its subsidiaries or
affiliated companies without cause or by agreement of the Company or
any of its subsidiaries or affiliated companies and the participant,
the Committee may, but need not, determine that some or all of the
shares shall be free of restrictions. For purposes of this
Paragraph 5(c), a participant's employment or consulting arrangement
shall not be considered terminated (i) in the case of transfers of
employment or the consulting arrangement among the Company, its
subsidiaries and affiliated companies, (ii) by virtue of a change of
status from employee to consultant or from consultant to employee,
or (iii) in the case of interruption in service, not exceeding one
year in duration unless otherwise approved by the Committee, for
approved sick leave or other bona fide leave of absence.
(d) If a participant ceases to be employed or retained by the
Company or any of its subsidiaries or affiliated companies by reason of
death or permanent and total disability or if an employee ceases to be
employed by the Company or any of its subsidiaries or affiliated companies
by reason of retirement on or after normal retirement date, the
restrictions imposed by Paragraph 5(b) shall lapse with respect to the
shares then subject to restrictions, except to the extent provided to the
contrary in the Agreement.
(e) Each certificate issued in respect of shares awarded under the
Plan shall be registered in the name of the participant and deposited by
the participant with the Company, together with a stock power endorsed in
blank, and shall bear the following legend:
"The sale, encumbrance, or other transfer of this certificate and
the shares of stock represented hereby are subject to the terms and
conditions (including a contingent transfer obligation) contained in the
Masco Corporation Restricted Stock Incentive Plan and an agreement entered
into between the registered owner and Masco Corporation. Copies of such
Plan
3
and Agreement are on file in the office of the Secretary of Masco
Corporation, Taylor, Michigan."
(f) The participant shall enter into an Agreement with the Company
in a form specified by the Committee agreeing to the terms and conditions
of the award, the expiration of the Restricted Period as to the shares
covered by the award, and such other matters, including compliance with
applicable federal and state securities laws and methods of withholding or
providing for the payment of required taxes, as the Committee shall in its
sole discretion determine. The Committee may at any time amend the terms
of any Agreement consistent with the terms of the Plan, except that
without the participant's written consent no such amendment shall
adversely affect the rights of the participant who is a party to such
Agreement.
(g) At the expiration of the Restricted Period as to shares covered
by any award, the Company shall redeliver the stock certificates deposited
with it pursuant to Paragraph 5(e) and as to which the Restricted Period
has expired, as follows:
(1) if an assignment to a trust has been made in accordance
with Paragraph 5(i), to such trust; or
(2) if the Restricted Period has expired by reason of death
and a beneficiary has been designated in form approved by the
Company, to the beneficiary so designated; or
(3) in all other cases, to the participant or the legal
representative of the participant's estate.
Upon written request, the Company will instruct its stock transfer agent
that such certificates may be reissued without legend.
(h) Notwithstanding any of the provisions of this Plan or
instruments evidencing awards heretofore or hereafter granted hereunder,
in the case of a Change in Control of the Company, each award granted at
least one year prior thereto shall immediately become fully vested and
non-forfeitable and shall thereupon be distributed to participants as soon
as practicable, free of all restrictions. A Change in Control shall occur
if:
(1) any "person" or "group of persons" as such terms are used
in Section 13(d) and 14(d) of the Securities Exchange Act of 1934
(the "Exchange Act") other than pursuant to a transaction or
agreement previously approved by the Board directly or indirectly
purchases or otherwise becomes the "beneficial owner" (as defined in
4
Rule 13d-3 under the Exchange Act) or has the right to acquire such
beneficial ownership (whether or not such right is exercisable
immediately, with the passage of time, or subject to any condition),
of voting securities representing 25% or more of the combined voting
power of all outstanding voting securities of the Company; or
(2) during any period of twenty four consecutive calendar
months, the individuals who at the beginning of such period
constitute the Company's Board of Directors, and any new directors
whose election by such Board or nomination for election by
stockholders was approved by a vote of at least two-thirds of the
members of such Board who were either directors on such Board at the
beginning of the period or whose election or nomination for election
as directors was previously so approved, for any reason cease to
constitute at least a majority of the members thereof.
(i) Notwithstanding any other provision of this Plan, a participant
may assign all rights under any award to a revocable grantor trust
established by the participant for the sole benefit of the participant
during the life of the participant, and under the terms of which the
participant is and remains the sole trustee until death or physical or
mental incapacity. Such assignment shall be effected by a written
instrument in form and content satisfactory to the Committee and the
participant shall deliver to the Committee a true copy of the agreement or
other document evidencing such trust. If in the judgment of the Committee
the trust to which a participant may attempt to assign rights under an
award does not meet the criteria of a trust to which an assignment is
permitted by the terms of this paragraph, or if after assignment, because
of amendment, by force of law or any other reason such trust no longer
meets such criteria, such attempted assignment shall be void and may be
disregarded by the Committee and the Company and all rights to any awards
shall revert to and remain solely in the participant. Notwithstanding a
qualified assignment, the participant, and not the trust to which rights
under an award may be assigned, for the purpose of determining compen-
sation arising by reason of the award shall continue to be considered an
employee or consultant, as the case may be, of the Company, a subsidiary
or affiliated company, but such trust and the participant shall be bound
by all of the terms and conditions of the Award Agreement and this Plan.
The Committee, the Company and its officers, agents and employees
may rely upon any beneficiary designation, assignment or other instrument
of transfer, copies of trust agreements and any other documents delivered
to them by or on behalf of the participant which they believe genuine and
any action taken by them in reliance thereon shall be conclusive
5
and binding upon the participant, his personal representatives and all
persons asserting a claim based on an award granted pursuant to this
Plan. The delivery by a participant of a beneficiary designation, or an
assignment of rights under an award as permitted by this Paragraph 5(i),
shall constitute the participant's irrevocable undertaking to hold the
Committee, the Company and its officers, agents and employees harmless
against claims, including any cost or expense incurred in defending
against claims, of any person (including the participant) which may be
asserted or alleged to be based upon an award subject to a beneficiary
designation or an assignment. In addition, the Company may decline to
deliver shares to a beneficiary until it receives indemnity against claims
of third parties satisfactory to the Company. Issuance of shares as to
which restrictions have lapsed in the name of, and delivery to, the trust
to which rights may be assigned shall be conclusively considered issuance
and delivery to the participant.
(j) The Committee, in its discretion and in accordance with the
procedures established by the Committee, may permit the participant to
satisfy, in whole or in part, the applicable income tax withholding
obligations when the restrictions imposed by Paragraph 5(b) lapse: (1) in
the case of participants who are employees of or consultants to MascoTech,
Inc. or any of its subsidiaries, by delivering from shares of common stock
of MascoTech, Inc. owned by the participant such number of shares having a
fair market value equal to the amount needed to satisfy such obligations;
or (2) in the case of all other participants, by having withheld from the
shares as to which the Restricted Period has expired or by delivering from
shares of Common Stock of the Company owned by the participant such number
of shares having a fair market value equal to the amount needed to satisfy
such obligations.
6. Changes in Capitalization
In the event there is a change in, reclassification, subdivision or
combination of, stock dividend on, or exchange of stock by the Company for the
outstanding Common Stock of the Company, the maximum aggregate number and class
of shares as to which awards may be granted under the Plan shall be appro-
priately adjusted by the Committee whose determination thereof shall be
conclusive. Unless the Committee shall otherwise determine, any shares of stock
or other securities received by a participant with respect to shares still
subject to the restrictions imposed by Paragraph 5(b) will be subject to the
same restrictions and shall be deposited with the Company.
6
If the Company shall be consolidated or merged with another corporation,
the stock, securities or other property which a participant is entitled to
receive by reason of his ownership of the shares of stock subject to the
restrictions imposed pursuant to Paragraph 5(b) shall be subject to the same or
equivalent restrictions unless the Committee shall determine otherwise at that
time.
7. Amendment of the Plan
The Board of Directors may from time to time amend or discontinue the
Plan, except that without the approval of Stockholders no amendment shall
increase the total number of shares which may be awarded under the Plan, extend
the date for awards of shares under the Plan beyond December 31, 1991 or change
the standards of eligibility of employees eligible to participate in the Plan.
The total number of shares awardable under the Plan may, however, without
stockholder approval, be adjusted pursuant to the adjustment provisions
described in Paragraph 6 hereof.
8. Effective Date and Termination of Plan
The Plan shall become effective when approved by the stockholders of the
Company and no shares may be awarded under the Plan after December 31, 1991.
EX-10.N
8
February 28, 1995
Dear :
As you know, our company's Board of Directors has adopted a Plan whereby
supplemental retirement and other benefits, in addition to those provided under
the Company's pension and other benefit plans, will be made available to those
Company and subsidiary executives as may be designated from time to time by the
company's Chief Executive Officer. You have been previously designated as a
participant in the Plan by a letter agreement signed by you and dated December
10, 1992. This agreement amends and replaces in its entirety your previously
signed letter agreement and describes in full your benefits pursuant to the Plan
and all of the Company's obligations to you and yours to the Company under the
Plan. These benefits as described below are contractual obligations of the
Company.
For the purposes of this Agreement, words and terms are defined as follows:
a. "Retirement" shall mean your termination of employment with the
Company, on or after you attain age 65. Your acting as a consultant shall
not be considered employment.
b. "Average Compensation" shall mean the aggregate of your highest
three years' total annual cash compensation paid to you by the Company,
consisting of (i) base salaries and (ii) regular year-end cash bonuses
paid with respect to the years in which such salaries are paid, divided by
three.
c. If you become Disabled, "Total Compensation" shall mean your
annual base salary rate in the year in which you become Disabled plus the
regular year-end cash bonus paid to you for the year immediately prior
thereto.
d. "Surviving Spouse" shall be the person to whom you shall be
legally married (under the law of the jurisdiction of your permanent
residence) at the date of (i) your Retirement or death after attaining age
65 (if death terminated employment with the Company) for the purposes of
paragraphs 1, 2 and 3, (ii) your death for the purposes of
Page 2 February 28, 1995
paragraph 5, and (iii) your Disability for the purposes of paragraphs 6
and 7. For the purposes of paragraphs 10a, 10e, 10f, 10g and 10h,
"Surviving Spouse" shall be any spouse entitled to survivor's benefits.
e. "Disability" and "Disabled" shall mean your being unable to
perform your duties as a Company executive by reason of your physical or
mental condition, prior to your attaining age 65, provided that you have
been employed by the Company for two consecutive Years or more.
f. "Company" shall mean MascoTech, Inc. or any corporation in
which MascoTech, Inc. or a subsidiary owns stock possessing at least 20%
of the total combined voting power of all classes of stock.
g. "Year" shall mean twelve full consecutive months, and "year"
shall mean a calendar year.
h. "Plan Limitation" for any year shall mean (x) for 1989,
$300,000 multiplied by the Cost of Living Factor for 1988, and (y) for any
year subsequent to 1989, the Plan Limitation for the immediately preceding
year multiplied by the Cost of Living Factor for such preceding year.
i. "Cost of Living Factor" for any year shall mean, except as
otherwise provided generally with respect to the Plan by the Company's
Board of Directors, the quotient (in no event to exceed 1.03 or to be less
than .97) obtained by dividing the monthly Consumer Price Index Number (as
compiled in the Consumer Price Index for Urban Consumers by the Bureau of
Labor Statistics) for the month of December in such year by the monthly
Consumer Price Index Number for the immediately preceding month of
December.
j. A "Change in Control" shall be deemed to have occurred if,
during any period of twenty-four consecutive calendar months, the
individuals who at the beginning of such period constitute the Company's
Board of Directors, and any new directors whose election by such Board or
nomination for election by stockholders was approved by a vote of at least
two-thirds of the members of such Board who were either directors on such
Board at the beginning of the period or whose election or nomination for
election as directors was previously so approved, for any reason cease to
constitute at least a majority of the members thereof.
1. In accordance with the Plan, upon your Retirement the Company will pay
you annually during your lifetime 60% of your
Page 3 February 28, 1995
Average Compensation, less: (i) a sum equal to the annual benefit which would
be payable to you upon your Retirement if benefits payable to you under the
Company funded qualified pension plans and the defined benefit (pension) plan
restoration provisions of the Company's Retirement Benefits Restoration Plan and
any similar plan were converted to a life annuity, or if you are married when
you retire, to a joint and spouse survivor life annuity, (ii) a sum equal to the
annual benefit which would be payable to you upon Retirement if your vested
accounts in the Company's Future Service Profit Sharing Trust and the defined
contribution (profit sharing) restoration provisions of the Company's Retirement
Benefits Restoration Plan and any similar plan were converted to a life annuity,
and (iii) any retirement benefits payable to you by reason of employment by your
prior employers (excluding, however, from such deduction any portion thereof,
and earnings thereon, determined by the committee referred to in paragraph 10 to
have been contributed by you rather than your prior employers). In all cases
the amount offset pursuant to these subsections (i) and (ii) shall be determined
prior to the effect of any payments from the plans and trust referred to therein
which are authorized pursuant to a Qualified Domestic Relations Order under
ERISA.
2. Upon your death after Retirement or while employed by the Company
after attaining age 65, your Surviving Spouse shall receive for life 75% of the
annual benefit pursuant to paragraph 1 of this Agreement which was payable to
you prior to your death (or, if death terminated employment after attaining age
65, which would have been payable to you had your Retirement occurred
immediately prior to your death).
3. Upon your Retirement the Company will provide or purchase for you and
your spouse's benefit, or at its option reimburse you or your Surviving Spouse
for premiums paid, during your joint and several lives, such supplemental
medical insurance as the Company may deem advisable from time to time.
4. Under no circumstances (i) will any retirement benefits be paid to
you or your Surviving Spouse pursuant to this Agreement unless you were employed
by the Company or Disabled on your Retirement, or were employed by the Company
at the time of your death after attaining age 65, and (ii) will you or your
Surviving Spouse be entitled to receive retirement benefits under this Agreement
if your Retirement commences prior to your attaining age 65.
5. If while employed by the Company you die prior to your attaining age
65 leaving a Surviving Spouse, and provided you shall have been employed by the
Company for two consecutive Years
Page 4 February 28, 1995
or more, your Surviving Spouse shall receive annually for life 45% of your
Average Compensation, less: (i) a sum equal to the annual benefit which would
be payable to your Surviving Spouse under Company funded qualified pension plans
and the defined benefit (pension) plan restoration provisions of the Company's
Retirement Benefits Restoration Plan and any similar plan if such benefit were
converted to a life annuity, and (ii) a sum equal to the annual payments which
would be received by your Surviving Spouse as if your spouse were designated as
the beneficiary of your vested accounts in the Company's Future Service Profit
Sharing Trust and the defined contribution (profit sharing) restoration
provisions of the Company's Retirement Benefits Restoration Plan and any similar
plan and such accounts were converted to a life annuity. In all cases the
amount offset pursuant to these subsections (i) and (ii) shall be determined
prior to the effect of any payments from the plans and trust referred to therein
which are authorized pursuant to a Qualified Domestic Relations Order under
ERISA. No death benefits are payable except to your Surviving Spouse.
6. If you shall have been employed by the Company for two Years or more
and while employed by the Company you become Disabled prior to your attaining
age 65, until the earlier of your death, termination of Disability or attaining
age 65 the Company will pay you an annual benefit equal to 60% of your Total
Compensation less any benefits payable to you pursuant to long-term disability
insurance or other plans the cost of which is paid by the Company. If your
Disability continues until you attain age 65, you shall be considered retired
and you shall receive retirement benefits pursuant to paragraph 1 above, based
upon your Average Compensation as of the date it is determined you became
Disabled.
7. If you die leaving a Surviving Spouse while receiving Disability
benefits pursuant to paragraph 6 of this Agreement, notwithstanding paragraph 4
you will be deemed to have retired on your death and your Surviving Spouse shall
receive for life 75% of the annual benefit which would have been payable to you
if you had retired on the date of your death and your benefit determined
pursuant to paragraph 1, based upon your Average Compensation as of your
becoming Disabled.
8. Notwithstanding any of the provisions of this Agreement, the maximum
retirement, disability and death benefits payable to you and your spouse
pursuant to this Agreement for any year shall in no event exceed the higher of
(A) $500,000 less those sums to be deducted from benefits pursuant to clauses
(i), (ii) and (iii) of paragraph 1, clauses (i) and (ii) of paragraph 5, or
under paragraph 6, whichever is applicable, or (B) the Plan Limitation for the
year in which such benefits were first paid,
Page 5 February 28, 1995
less the aggregate annual benefit with respect to the Company's Retirement
Benefits Restoration Plan (and any future non-qualified retirement plan) to be
deducted (x) under clauses (i) and (ii) of paragraph 1, (y) under paragraph 5
should you die while employed prior to attaining age 65 or (z) under paragraph 6
should you become disabled prior to attaining age 65.
9. If you are eligible to receive benefits hereunder, unless otherwise
specifically agreed by the Company in writing, you will not be able to receive
benefits under any other Company sponsored non-qualified retirement plans other
than the Company's Retirement Benefits Restoration Plan.
10. We also agree upon the following:
a. The Compensation Committee of the company's Board of Directors,
or any other committee however titled which shall be vested with authority
with respect to the compensation of the company's officers and executives,
shall have the exclusive authority to make all determinations which may be
necessary in connection with this Agreement including the date of and
whether you are Disabled, the amount of annual benefits payable to you by
reason of employment by other employers, the interpretation of this
Agreement, and all other matters or disputes arising under this
Agreement. The determinations and findings of the Compensation Committee
or such other committee of the company's Board of Directors shall be
conclusive and binding, without appeal, upon both of us.
b. You will not during your employment or Disability, and after
Retirement or the termination of your employment, for any reason disclose
or make use of for your own or another person's benefit under any
circumstances any of the Company's Proprietary Information. Proprietary
Information shall include trade secrets, secret processes, information
concerning products, developments, manufacturing techniques, new product
or marketing plans, inventions, research and development information or
results, sales, pricing and financial data, information relating to the
management, operations or planning of the Company and any other
information treated as confidential or proprietary.
c. If your employment by the Company shall terminate for any
reason whatsoever prior to your Retirement other than by reason of your
death or Disability, for a period of two years after the termination of
your employment, and if your employment shall be terminated by reason of
Retirement or any Disability during such time as you shall receive
retirement or disability benefits pursuant to this
Page 6 February 28, 1995
Agreement, you agree that you will not directly or indirectly engage in
any business activities, whether as a consultant, advisor or otherwise, in
which the Company is engaged in any geographic area in which the products
or services of the Company have been sold, distributed or provided during
the five year period prior to the date of termination of employment or
Retirement.
In addition to the foregoing and provided no "Change in Control" has
occurred, if while you are receiving retirement or other benefits pursuant
to this Agreement, in the judgment of the committee you directly or
indirectly engage in activity or act in a manner which can be considered
adverse to the interest of the Company or any of its direct or indirect
subsidiaries or affiliated companies, the committee may terminate your
rights to any further benefits hereunder.
d. Except as may be provided to the contrary in a duly authorized
written agreement between yourself and the Company you acknowledge that
the Company has made no commitments to you of any kind with respect to the
continuation of your employment, which we expressly agree is an employment
at will, and you or the Company shall have the unrestricted right to
terminate your employment with or without cause, at any time in your or
its discretion.
e. At the Company's request, expressed through a Company officer,
you agree to provide such information with respect to matters which may
arise in connection with this Agreement as may be deemed necessary by the
Company or the Compensation or other committee, including for example only
and not in limitation, information concerning benefits payable to you from
third parties, and you further agree to submit to such medical
examinations by duly licensed physicians as may be requested by the
Company or such committee from time to time. You also agree to direct
third parties to provide such information, and your Surviving Spouse's
cooperation in providing such information is a condition to the receipt of
survivor's benefits under this Agreement.
f. To the extent permitted by law, no interest in this Agreement
or benefits payable to you or to your Surviving Spouse shall be subject to
anticipation, or to pledge, assignment, sale or transfer in any manner nor
shall you or your Surviving Spouse have the power in any manner to charge
or encumber such interest or benefits, nor shall such interest or benefits
be liable or subject in any manner for
Page 7 February 28, 1995
the liabilities of you or your Surviving Spouse's debts, contracts, torts
or other engagements of any kind.
g. No person other than you and your Surviving Spouse shall have
any rights or property interest of any kind whatsoever pursuant to this
Agreement, and neither you nor your Surviving Spouse shall have any rights
hereunder other than those expressly provided in this Agreement. Upon the
death of you and your Surviving Spouse no further benefits of whatsoever
kind or nature shall accrue or be payable pursuant to this Agreement.
h. All benefits payable pursuant to this Agreement shall be paid
in installments of one-twelfth of the annual benefit, or at such shorter
intervals as may be deemed advisable by the Company in its discretion,
upon receipt of your or your Surviving Spouse's written application, or by
the applicant's personal representative in the event of disability.
i. All benefits under this Agreement shall be payable from the
Company's general assets, which assets are subject to the claims of
general creditors, and are not set aside for your or your Surviving
Spouse's benefit.
j. This Agreement shall be governed by the laws of the State of
Michigan.
11. We have agreed that the determinations of the committee described in
paragraph 10a shall be conclusive as provided in such paragraph, but if for any
reason a claim is asserted which subverts the provisions of paragraph 10a, we
agree that, except for causes of action which may arise under paragraph 10b and
the first paragraph of paragraph 10c, arbitration shall be the sole and
exclusive remedy to resolve all disputes, claims or controversies which could be
the subject of litigation (hereafter referred to as "dispute") involving or
arising out of this Agreement. It is our mutual intention that the arbitration
award will be final and binding and that a judgment on the award may be entered
in any court of competent jurisdiction and enforcement may be had according to
its terms.
The arbitrator shall be chosen in accordance with the commercial
arbitration rules of the American Arbitration Association and the expenses of
the arbitration shall be borne equally by the parties to the dispute. The place
of the arbitration shall be the principal offices of the American Arbitration
Association in the metropolitan Detroit area.
Page 8 February 28, 1995
The arbitrator's sole authority shall be to apply the clauses of this
Agreement.
We agree that the provisions of this paragraph 11, and the decision of the
arbitrator with respect to any dispute, with only the exception provided in this
paragraph 11, shall be the sole and exclusive remedy for any alleged cause of
action in any manner based upon or arising out of this Agreement. Subject to
the foregoing exception, we acknowledge that since arbitration is the exclusive
remedy, neither of us or any party claiming under this Agreement has the right
to resort to any federal, state or local court or administrative agency
concerning any matters dealt with by this Agreement and that the decision of the
arbitrator shall be a complete defense to any action or proceeding instituted in
any tribunal or agency with respect to any dispute. The arbitration provisions
contained in this paragraph shall survive the termination or expiration of this
Agreement, and shall be binding on our respective successors, personal
representatives and any other party asserting a claim based upon this Agreement.
We further agree that any demand for arbitration must be made within one
year of the time any claim accrues which you or any person claiming hereunder
may have against the Company; unless demand is made within such period it is
forever barred.
We are pleased to be able to make this supplemental plan available to you.
Please examine the terms of this Agreement carefully and at your earliest
convenience indicate your assent to all of its terms and conditions by signing
and dating where provided below and returning a signed copy to me.
Sincerely,
MASCOTECH, INC.
By________________________________
Richard A. Manoogian
Chief Executive Officer
________________________
DATE:___________________
EX-10.0
9
MASCOTECH, INC. RETIREMENT
BENEFIT RESTORATION PLAN
SECTION l
ADOPTION OF PLAN
1.1 Adoption. MascoTech, Inc. (MascoTech) hereby adopts the MascoTech,
Inc. Retirement Benefit Restoration Plan (Plan), effective January 1, 1995
(Effective Date).
1.2 Purpose. The sole purpose of the Plan is to provide benefits to a
select group of management or highly compensated employees that would be
provided to such employees who terminate employment or retire after the
Effective Date under certain retirement plans of MascoTech, Inc. and its
subsidiaries, which plans are set forth in Appendix "A" hereto and are qualified
plans under Section 401(a) of the Internal Revenue Code of 1986, as amended
(Code) (the "Qualified Plans"), but for the benefit limitations of the Code, in
order to encourage the continued employment and diligent service of such
employees with MascoTech following the Effective Date. Accordingly (by way of
example and not limitation), in no event shall the provisions of the Plan be
construed to benefit any employee whose termination of employment occurred prior
to the Effective Date.
1.3 Construction. The Plan shall be construed in accordance with
Michigan law, except where preempted by federal law. It is intended that the
Plan shall be unfunded and maintained by MascoTech primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees, so that the Plan is exempt from the requirements of Parts
2, 3 and 4 of the Employee Retirement Income Security Act of 1974, as amended
(ERISA). All provisions of the Plan shall be interpreted in accordance with
such intentions.
SECTION 2
COVERAGE
2.1 Covered Employees. The coverage of the Plan shall be limited to
highly-compensated or management employees of MascoTech and of those
subsidiaries of MascoTech the Qualified Plans of which are listed in Appendix
"A", who (a) receive from MascoTech or the subsidiary of MascoTech which is the
employer of such person compensation otherwise eligible for coverage under the
terms of such Qualified Plan for any calendar year which compensation exceeds
$150,000 or such other adjusted limit as provided by Section 401(a)(17) of the
Code, or (b) whose benefits or contributions under the Qualified Plans are
reduced due to the application of Section 415 of the Code.
2.2 Commencement and Cessation of Coverage. An employee shall be
covered under the Plan commencing on the later of (a) the Effective Date or (b)
the earlier of the date that his plan-eligible compensation described in Section
2.1 first exceeds the annual limitation amount described in Section 2.1 or the
date his benefits or contributions under the Qualified Plans are first reduced
by the application of Code Section 415. An employee shall cease to be covered
by the Plan on his date of termination of employment from MascoTech and its
subsidiaries. If prior to such termination an employee ceases to qualify for
coverage under the Plan due to some other event (by way of examples and not as
limitation, a decrease in Plan-eligible compensation or the commencement of
employment with a MascoTech subsidiary which has no Qualified Plan or has
discontinued its Qualified Plan), his coverage under the Plan shall cease as of
the time such disqualifying event occurs and only the benefits accrued hereunder
up to such time shall be payable from this Plan.
2
SECTION 3
BENEFITS
3.1 Amount. Subject to Section 3.3 hereof, a covered employee shall be
entitled to either or both, as applicable, the supplemental retirement benefits
described below:
(a) An annual amount equal to the benefit which would have been
payable to the employee under any defined benefit (pension) Qualified Plan
in which he is a participant ("Qualified Pension Plan") but for any
benefit limitations imposed by the Code on the computation of such
benefit, reduced (but not below zero) by
(b) any benefits which the employee is eligible to receive, prior to
the giving effect to any qualified domestic relations order, under any
such Qualified Pension Plan,
each benefit being expressed for this purpose in the normal form of payment
under said Qualified Pension Plan, plus
(c) A single lump sum payment equal to the sum of amounts which
would have been contributed to the account of the employee as a company
contribution with respect to periods after December 31, 1993 under any
defined contribution (profit sharing) Qualified Plan in which he is a
participant (but in no case including any amounts, however characterized,
which the employee or the company may have contributed to any such plan
pursuant to the provisions of Section 401(k) or 401(m) of the Code)
("Qualified Profit Sharing Plan") but for any benefit limitations imposed
by the Code on the contribution amount, plus
(d) investment adjustments applied to the contribution amounts of
Section 3.1(c) which adjustments shall be applied to such accounts (i)
utilizing the same provisions for calculating the effect of investment
earnings (or losses) as prevail under the terms of any such Qualified
Profit Sharing Plan and (ii) utilizing the amount of investment earnings
(or loss) as is experienced in a given year in the MascoTech Master Profit
Sharing Trust or other investment vehicle in which
3
the assets of any such Qualified Profit Sharing Plan are invested (and in
no case applying any adjustments for forfeitures of any kind) reduced (but
not below zero) by
(e) the covered employee's account balance attributable to company
profit sharing contributions made with respect to periods after December
31, 1993 which the employee is eligible to receive, prior to the giving
effect to any qualified domestic relations order, under any such Qualified
Profit Sharing Plan,
provided, however, that any lump sum payment made pursuant to this Plan shall
have no adjustment the purpose of which is to make such payment equivalent after
the effect of any taxes which may have to be paid by the employee because such
lump sum payments from this Plan are taxable when received as ordinary income
and may not be eligible for rollover or other tax-advantaged treatment under the
Code.
3.2 Timing and Form of Payments. (a) Retirement benefit payments
hereunder which are supplemental to a Qualified Pension Plan shall be made at
the same time as benefit payments are made from the Qualified Pension Plan and
shall be payable (i) for an employee who is unmarried at the time payments
commence, in the form of a single life annuity, or (ii) for any employee who is
married when payments commence, in the form of a 50% joint and survivor annuity
with the employee's spouse, unless, in either case, the employee validly elects
another form of payment for benefits under the Qualified Pension Plan, in which
case the supplemental retirement benefit hereunder shall be paid in the same
form as benefits are paid under the Qualified Pension Plan, computed using the
same formulas and actuarial factors as set forth for the determination of
optional forms of benefits under such plan; for purposes of this Section
3.2(a), an employee's marital status and spouse shall be determined in
accordance with the Qualified Pension Plan.
(b) Retirement benefit payments hereunder which are supplemental to a
Qualified Profit Sharing Plan shall be payable in a lump sum and shall be made
at the time and to the same person as the lump sum payment is made from the
Qualified Profit Sharing Plan.
3.3 Forfeitability. Payment of benefits under the Plan shall be
conditioned upon receipt of benefit payments from the respective Qualified Plans
and shall be vested in the same manner and to the same extent as benefits under
such Qualified Plans.
4
3.4 No Payment During Employment. Notwithstanding the foregoing, no
periodic payments computed under paragraphs (a) and (b) of Section 3.1 of this
Plan shall be made during such time as any person both receives payments from
any Qualified Plan and is employed by MascoTech or any affiliated company, and
no lump sum payment computed under paragraphs (c), (d) and (e) of Section 3.1 of
this Plan shall be made until after the covered employee's termination of
employment.
5
SECTION 4
COST OF BENEFITS
4.1 Current Expense. The entire cost of providing benefits under the
Plan, including the costs of the Plan Administrator, shall be paid by MascoTech
out of its current operating budget, and MascoTech's obligations under the Plan
shall be an unfunded and unsecured promise to pay. MascoTech shall not be
obligated under any circumstances to separately fund its obligations under the
Plan.
4.2 Option to Fund Informally. Notwithstanding Section 4.1, MascoTech
may, at its sole option, or by agreement, informally fund its obligations under
the Plan in whole or in part, provided, however, in no event shall such informal
funding be construed to create any trust fund, escrow account or other security
for an employee with respect to the payment of benefits under the Plan, other
than as permitted under Internal Revenue Service and Department of Labor rules
and regulations for unfunded supplemental retirement plans. Furthermore, if
MascoTech decides to informally fund the Plan, in whole or in part, by
procuring, as owner, life insurance for its own benefit on the lives of
employees, the form of such insurance and the amounts thereof shall be the sole
decision of MascoTech, and in no event shall an employee have any incidents of
ownership in any such policies of insurance.
4.3 Physical Examinations. If a physical examination is required for
MascoTech to obtain insurance for covered employees under Section 4.2, each
employee agrees to undergo such physical examinations as may be required by the
insurance carrier. Such physical examinations shall be conducted by a physician
approved by MascoTech, at the expense of MascoTech.
4.4 No Employee Contributions or Loans. No loans or hardship
distributions or contributions by employees are permitted or required under the
Plan.
6
SECTION 5
ADMINISTRATION
5.1 Plan Administrator and Named Fiduciary. The Plan Administrator and
Named Fiduciary of the Plan for purposes of ERISA shall be MascoTech Corporation
whose business address is 21001 Van Born Road, Taylor, MI 48180, and whose
telephone number is (313) 274-7400. MascoTech shall have the right to change
the Plan Administrator and Named Fiduciary of the Plan at any time, and to
change the address and telephone number of the same. MascoTech shall give each
covered employee written notice of any such change in the Plan Administrator and
Named Fiduciary, or in the address or telephone number of the same.
5.2 Claims Procedure. The Plan Administrator has the power to interpret
all provisions of the Plan and make final determinations concerning the meaning
of the Plan and the right of any person to benefits under the Plan.
Each covered employee, or other person claiming through the employee, must
file a written claim for benefits with the Plan Administrator as a prerequisite
to the payment of benefits under the Plan. Any denial by the Plan Administrator
of a claim for benefits under the Plan by an employee or other person
(collectively referred to as "claimant") shall be stated in writing by the Plan
Administrator and delivered or mailed to the claimant within 90 days after
receipt of the claim, unless special circumstances require an extension of time
for processing the claim. If such an extension of time is required, written
notice of the extension shall be furnished to the claimant prior to the
termination of the initial 90-day period. In no event shall such extension
exceed a period of 90 days from the end of the initial period.
Any notice of denial shall set forth the specific reasons for the denial,
specific reference to pertinent provisions of the Plan upon which the denial is
based, a description of any additional material or information necessary for the
claimant to perfect his claim, with an explanation of why such material or
information is necessary, and any explanation of claim review procedures under
the Plan, written to the best of the Plan Administrator's ability in a manner
that may be understood
7
without legal or actuarial counsel.
A claimant whose claim for benefits has been wholly or partially denied by
the Plan Administrator may request, within 90 days following the date of such
denial, in a writing addressed to the Plan Administrator, a review of such
denial. The claimant shall be entitled to submit such issues or comments in
writing or otherwise, as he shall consider relevant to a determination of his
claim, and may include a request for a hearing in person before the Plan
Administrator. Prior to submitting his request, the claimant shall be entitled
to review such documents as the Plan Administrator shall agree are pertinent to
his claim. The claimant may, at all stages of review, be represented by
counsel, legal or otherwise, of his choice, provided that the fees and expenses
of such counsel shall be borne by the claimant.
All requests for review shall be promptly resolved. The Plan
Administrator's decision with respect to any such review shall be set forth in
writing and shall be mailed to the claimant not later than 60 days following
receipt by the Plan Administrator of the claimant's request unless special
circumstances, such as the need to hold a hearing, require an extension of time
for processing, in which case the Plan Administrator's decision shall be so
mailed not later than 120 days after receipt of such request.
5.3 Arbitration. Exhaustion of the claim and claim review procedures of
Section 5.2 is prerequisite to any further consideration of a claim. In the
event that any claim remains fully or partially unresolved after exhaustion of
the claim and claim review procedures of Section 5.2, any remaining dispute
shall, within 30 days of the date of the Plan Administrator's final decision on
review, be submitted to arbitration, which shall be the sole and exclusive
remedy. The arbitration decision shall be final and binding on the Plan,
MascoTech, the claimant, and any other party involved. All claims shall be
arbitrated in Taylor, Michigan. The arbitrator shall be chosen in accordance
with the Voluntary Labor Arbitration Rules of the American Arbitration
Association then in effect, and the expense of the arbitration shall be shared
equally by MascoTech and the claimant. Any claim shall be deemed waived unless
presented within the time limits specified in Section 5.2 and this Section 5.3.
The arbitrator shall not have jurisdiction or authority to change, add to or
subtract from any of the provisions of the Plan. The arbitrator's sole
authority shall be to interpret or apply the provisions of the Plan. Because
arbitration is the exclusive remedy with respect to any claim hereunder, neither
MascoTech, the claimant nor any
8
other party has the right to resort to any federal, state or local court or
administrative agency concerning any claim, and the decision of the arbitrator
shall be a complete defense to any suit, action or proceeding instituted in any
federal, state or local court or before any administrative agency with respect
to any dispute which is arbitrable as herein set forth. The arbitration
provisions hereof shall, with respect to any claim, survive the termination of
the Plan.
9
SECTION 6
LIMITATION OF COVERED EMPLOYEE'S RIGHTS
6.1 No Contract of Employment. The Plan shall not be deemed to create a
contract of employment between MascoTech or any MascoTech subsidiary and any
covered employee and shall create no right in any covered employee to continue
in the employ of MascoTech or any of its subsidiaries for any specific period of
time, or to create any other rights in any covered employee or obligations on
the part of MascoTech, except as are set forth explicitly herein or in a written
employment contract. In consideration of his coverage hereunder each covered
employee shall be deemed to have agreed that MascoTech has the right to
terminate him at any time, with or without cause, and nothing in the Plan shall
restrict the right of any covered employee to terminate his employment.
6.2 Unsecured Creditor. The rights of any employee or any person
claiming through the employee under the Plan shall be solely those of an
unsecured general creditor of MascoTech. Any employee, or any person claiming
through the employee, shall only have the right to receive from MascoTech those
payments as specified herein. Each covered employee agrees that he or any
person claiming through him shall have no rights or interests in any asset of
MascoTech, including any insurance policies or contracts which MascoTech may
possess to informally fund the Plan.
6.3 No Trust. No asset used or acquired by MascoTech in connection with
the liabilities it has assumed under the Plan shall be deemed to be held under
any trust for the benefit of any employee, nor shall any such asset be
considered security for the performance of the obligations of MascoTech, but
shall be, and remain, a general unpledged and unrestricted asset of MascoTech,
except as may be provided by separate agreement and as permitted under Internal
Revenue Service and Department of Labor rules and regulations for unfunded
supplemental retirement plans.
10
SECTION 7
AMENDMENT OR TERMINATION
7.1 Right to Amend or Terminate Plan. MascoTech reserves the right to
amend the Plan in any manner deemed appropriate by MascoTech's Board of
Directors, and MascoTech reserves the right to terminate the Plan for any reason
and at any time in whole or part by action of the Board of Directors.
7.2 Limitations. Notwithstanding Section 7.1, no such amendment or
termination shall reduce or otherwise affect the benefits payable to or on
behalf of any covered employee that have accrued prior to such amendment or
termination without the written consent of the employee (or beneficiary, if
applicable). In addition, the complete or partial termination of this Plan,
should it occur or be deemed by facts and circumstances to have occurred, shall
have the same effect on the vesting of benefits accrued to date under this Plan
as in the case of a complete or partial termination of a Qualified Plan.
7.3 Payment of Benefits Upon Termination. Upon termination or partial
termination of the Plan MascoTech may elect the method by which benefits accrued
through the date of such termination or partial termination shall be provided.
Such election may include the payment of the present value of all such accrued
benefits directly to covered employees (or beneficiaries, if applicable) or any
other method of payment or funding which MascoTech may, in its sole discretion,
determine.
11
SECTION 8
MISCELLANEOUS PROVISIONS
8.1 Independence of Benefits. Except as otherwise provided herein or
pursuant to the terms of any separate agreement with an employee, the benefits
payable under the Plan shall be independent of, and in addition to, any other
benefits or compensation, whether by salary, or bonus or otherwise, payable
under any employment agreements that now exist or may hereafter exist from time
to time between MascoTech and any employee. The Plan does not involve a
reduction in salary or foregoing of an increase in future salary by any
employee, nor does the Plan in any way affect or reduce the existing and future
compensation and other benefits of any employee.
8.2 Nonalienation of Benefits. Except insofar as this provision may be
contrary to applicable law (such as an order of divorce or separation), no sale,
transfer, alienation, assignment, pledge, collateralization, or attachment of
any benefits under the Plan shall be valid or recognized by MascoTech.
8.3 Payments for the Benefit of Employee. In the event that MascoTech
shall find that any person to whom a benefit is payable under the Plan is unable
to care for his affairs because of illness or accident, is otherwise mentally or
physically incompetent, or is unable to give a valid receipt, MascoTech may
cause the payments becoming due to such person to be paid to another individual
for such person's benefit, without responsibility on the part of MascoTech to
follow application of such payment. Any such payment shall be a payment on
account of such person and shall operate as a complete discharge of MascoTech
from all liability under the Plan.
8.4 Use of Words. Wherever any words are used in the Plan in the
masculine gender, they shall be construed as though they also were used in the
feminine gender in all cases where they would so apply, and wherever any words
are used in the Plan in the singular forms they shall be construed as though
they also were used in the plural form in all cases where they would so apply,
and vice versa.
8.5 Headings. Headings of Sections herein are
12
inserted for convenience of reference. They constitute no part of the Plan and
are not to be considered in the construction of the Plan.
8.6 Savings Clause. If any provisions of the Plan shall be for any
reason invalid or unenforceable, the remaining provisions nevertheless shall be
carried into effect.
13
SECTION 9
DEFINITIONS
Terms capitalized in the text of this Plan shall have the meanings
referred to below, unless the context requires otherwise. Terms not defined
herein shall be construed in reference to the same or similar terms as used in
the applicable Qualified Plan.
9.1 Code. See Section 1.2.
9.2 Effective Date. See Section 1.1.
9.3 ERISA. See Section 1.3.
9.4 Plan. See Section 1.1.
9.5 MascoTech. See Section 1.1.
14
SECTION 10
EXECUTION
IN WITNESS WHEREOF, MascoTech, Inc. has caused the Plan to be executed on
, 1995.
MascoTech, Inc.
By:
Its_______________________
15
APPENDIX A
RETIREMENT PLANS LIST
MASCOTECH, INC.
DEFINED BENEFIT PLANS DEFINED CONTRIBUTION PLANS
MascoTech, Inc. Pension Plan MascoTech, Inc. Future Service
Profit Sharing Plan
MascoTech, Inc. Master Defined
Contribution Plan
NI Industries, Inc. Salaried
Retirement Plan
16
EX-10.P
10
June 29, 1989
Dear :
This will confirm the previously agreed terms of your participation in the
program of Masco Industries, Inc. (the "Company") providing our executive
management with an opportunity on extended payment terms to purchase shares of
Common Stock, $.01 par value, of TriMas Corporation. As you are aware, the
program has been adopted by the Company's Board of Directors to permit our
executive management group to acquire a significant economic interest in TriMas,
our new affiliated company, and, at the same time, to encourage the continuance
over a prolonged period of the outstanding commitment which the individual
members of our executive management group have collectively shown in the past to
the Company and its interests.
Under the program the Company agrees to sell to you and you agree to
purchase from the Company shares (the "Stock") of TriMas Common Stock on
the following terms and conditions:
1. The purchase price per share for the Stock is $45.00 (the "Per Share
Price"), payable by your delivery to the Company of your promissory note in the
form of Annex 1 (the "Note"), such purchase to occur as promptly as practicable
on or after the date hereof. Promptly after the purchase, certificates for the
shares of Stock will be delivered to you.
The Note will be in a principal amount equal to the Per Share Price
multiplied by the number of shares of Stock stated above, will bear simple
interest at the rate of 7% per annum, payable at the due date of the Note, and,
except as otherwise provided herein or therein, will be due together with
accrued interest on June 30, 1994. The Note may be prepaid at any time together
with accrued interest on the principal being prepaid. Interest on the Note may
be prepaid at any time, whether or not any portion of the principal is then
being prepaid.
If your employment by the Company is terminated for any reason, with or
without cause, at the written request of the Company, other than by reason of
your permanent and total disability, the payment of accrued interest on the Note
shall be forgiven, all interest theretofore prepaid on the Note shall be
refunded to you and you shall have no further liability with respect to such
interest.
If your employment by the Company is terminated for any reason, with or
without cause (other than at the written request of the Company or by reason of
your retirement on or after normal retirement age, your death or your permanent
and total disability), the then unpaid principal amount of the Note plus accrued
interest thereon (except if the option of the Company provided under Paragraph 2
is exercised), will become due and payable on the earlier of the date which is
one year after the date of such termination or June 30, 1994.
If your employment by the Company is terminated for any reason whether
with or without cause or by you or by the Company (other than following an event
which constitutes a "Change in Control" as described in Paragraph 5 or by reason
of your retirement on or after normal retirement age or your permanent and total
disability), or in the event of your death following retirement or disability,
you agree that, if requested by the Company, you or your estate, as the case may
be, will pledge to secure the Note under arrangements satisfactory to the
Company all Stock then owed by you and, with respect to Stock theretofore sold
by you, the net after-tax proceeds attributable to the sale thereof less any
prior prepayments of principal and interest on the Note. Your rights to sell
the Stock so pledged under the Registration Statement (as hereinafter defined)
shall continue thereafter in the manner provided herein provided that the net
after-tax proceeds from all such sales are held in pledge by the Company until
full payment of the principal of and, if applicable, interest on the Note is
made, and upon such payment the Stock shall be returned to you or your estate.
If you or your estate fail to make the pledge required hereunder within 30 days
after requested in writing by the Company, the principal of and accrued interest
on the Note shall become due and payable on such 30th day notwithstanding any
later maturity date otherwise provided in this letter agreement.
2. If prior to June 30, 1994 your employment by the Company is
terminated (other than by reason of your retirement on or after normal
retirement age, your death or your permanent and total disability), the Company
shall have the option, by written notice delivered to you within one year of the
date of termination (or if such termination occurs after June 30, 1993,
delivered to you prior to June 30, 1994), to rescind your purchase of the Stock
hereunder (a) by delivering the Note and any principal and interest thereon
prepaid by you in exchange for the Stock originally purchased hereunder by you
or (b) if you have theretofore sold any of the Stock, by delivering the Note and
such prepaid principal and interest in exchange for (i) the shares of Stock not
so sold, and (ii) in lieu of shares of Stock so sold (the "Disposed Shares"),
cash in the amount of the sum of (x) the aggregate after-tax profit, if any,
attributable to the sale of the Disposed Shares, plus (y) the Per Share Price
multiplied by the number of the Disposed Shares. The closing of the transaction
under this Paragraph 2 shall occur on the date specified in the Company's notice
to you of its exercise of the foregoing option, which date shall be not more
than 30 days after the delivery of such notice.
3. Solely for purposes of the provisions of Paragraphs 1 and 2 above, a
termination of employment, other than with your written consent or by reason of
your retirement on or after normal retirement age, your death or your permanent
and total disability, shall be deemed to have occurred only if such termination
is first approved by the Compensation Committee of the Company's Board of
Directors.
4. Except for sales made under the Registration Statement, other
dispositions after June 30, 1994 which, in the opinion of counsel to the
Company, are in compliance with applicable State and Federal securities laws, or
transfers by operation of law or to an inter vivos trust under a trust
arrangement acceptable to the Board of Directors or a Committee thereof, the
Stock may not be sold, hypothecated or transferred prior to June 30, 1996. On
and after June 30, 1996, the Stock may only be sold, hypothecated or transferred
by operation of law or if the transaction, in the opinion of counsel to the
Company, is in compliance with applicable State and Federal securities laws.
The Company agrees, either separately or in conjunction with Masco
Corporation, to cause TriMas to file promptly after January 1, 1992 a
registration statement (the "Registration Statement") with respect to the Stock
and, at the election of the Company, such other shares of TriMas Corporation
Common Stock as the Company may designate, and to use all reasonable efforts to
cause such Registration Statement to become effective promptly thereafter and to
remain effective until the earlier of June 30, 1996 or such date as all of the
Stock either has been sold under the Registration Statement or may be publicly
sold under Rule 144 or under a similar exemption without regard to the
Registration Statement. The costs of the Registration Statement shall be borne
by you and the other selling shareholders named therein pro rata based on the
respective proportions of shares owned by you and such other selling
shareholders which are covered by such Registration Statement.
You agree, in connection with such Registration Statement, that you will
deliver to TriMas Corporation such indemnities, contribution agreements and
legal opinions as are then customarily given to issuers of registered public
offerings, and that you will furnish to TriMas Corporation such information
involving you and the Stock which any law, rule or regulation requires to be
disclosed in the Registration Statement.
You agree that you will not sell the shares of Stock under the
Registration Statement in amounts which would result in more than 50% of the
total shares of Stock being sold prior to January 1, 1993, or more than 75% of
the total shares of Stock being sold prior to January 1, 1994.
The Company will, promptly after the closing of the purchase and sale of
Stock hereunder, provide you with its agreement summarizing your rights
hereunder to participate in the registration rights which the Company has
separately received from TriMas Corporation with respect to the Stock being
purchased by you. You understand that you will be required to file such
agreement with TriMas Corporation, when requested by the Company, in order to be
entitled to the benefits provided under this Paragraph 4.
5. Notwithstanding the foregoing, if, prior to June 30, 1994, a "Change
in Control", as defined in Paragraph 5(h) of the Company's restricted stock
incentive plan currently in effect, shall have occurred:
(i) All rights of the Company under Paragraph 2 shall
thereupon terminate, the provisions of the next to the last paragraph of
Paragraph 1 shall no longer be applicable and the pledge referred to in
the last paragraph of Paragraph 1 shall be discharged with the Stock
returned to you;
(ii) If the Registration Statement has theretofore become
effective, the provisions of the next to last paragraph of Paragraph 4
shall no longer be applicable; and
(iii) If the Registration Statement has not theretofore become
effective, the Company shall be obligated to cause TriMas to file and make
effective a registration statement under the Securities Act of 1933
permitting the public sale of all of the Stock not previously sold by you
within 60 days thereafter and, if such registration statement shall not
have become effective within such 60 day period, you will have the right
for a period of 90 days thereafter to require the Company to buy all of
the Stock not previously sold by you at its last publicly traded price on
the date of such Change in Control, as reported in The Wall Street Journal
or The New York Times (or if such Change in Control occurred on a date for
which there is no reported publicly traded price in either of such
publications, then on the next preceding date for which there is such a
publicly reported price).
6. You agree that appropriate legends reflecting the effect of this
letter agreement may be placed on certificates for the Stock. You represent
that you are purchasing the Stock for investment and not with a view to or in
connection with the distribution thereof. In addition, you acknowledge that:
(i) You have received and reviewed copies of the following
documents: TriMas Corporation Annual Report to Stockholders for the year
ended December 31, 1988; TriMas Corporation Annual Report on Form 10-K for
the year ended December 31, 1988; TriMas Corporation Quarterly Report on
Form 10-Q for the quarter ended March 31, 1989; and Proxy Statement for
meeting of TriMas Corporation stockholders held on May 31, 1989. The
exhibits to each of the foregoing have been furnished to you to the extent
you have so requested.
(ii) You have evaluated the merits and risks of an investment
in the Stock and understand that you must bear the economic risk of such
investment for an extended period of time.
7. We represent to you that the Company, in good faith, is not relying
upon the Stock as any "indirect" collateral in the extension or maintenance of
the credit provided by the Note.
8. By agreeing to the terms of purchase, you acknowledge that all of
your rights with respect to this purchase are contained in this letter
agreement, that the letter agreement and Note are to be construed in accordance
with and governed by Michigan law, and that the Company's agreement to the terms
hereof does not affect the Company's continuing right, with or without cause
(unless otherwise specifically agreed to in writing) to terminate your
employment at any time. All notices permitted hereunder are to be deemed given
when deposited in the mail, first class postage prepaid.
If the foregoing conforms with your understanding of the terms with
respect to the purchase and sale of the Stock, please acknowledge this binding
agreement between you and the Company by signing and returning one copy of this
letter agreement to the undersigned.
Very truly yours,
Masco Industries, Inc.
By__________________________________
Richard Manoogian
Chairman
The foregoing represents
my agreement with you:
EX-10.T
11
AMENDMENT TO REGISTRATION AGREEMENT
This is an Amendment dated as of May 26, 1994 to a Registration Agreement
dated as of December 27, 1988 and amended as of April 21, 1992 and January 5,
1993 (the "Registration Agreement") among TriMas Corporation, a Delaware
corporation ("TriMas"), Masco Corporation, a Delaware corporation ("Masco"), and
MascoTech, Inc. (formerly Masco Industries, Inc.), a Delaware corporation
("Industries").
WHEREAS, the common stock, par value $.01 per share, of TriMas is referred
to herein as the "Common Stock";
WHEREAS, Masco and Industries have certain registration rights pursuant to
the Registration Agreement with respect to their shares of Common Stock;
WHEREAS, the Registration Agreement provides that Masco and Industries may
assign certain of their registration rights under certain circumstances to
transferees who purchase shares of Common Stock from Masco and Industries;
WHEREAS, Masco and Industries sold certain shares of Common Stock (the
"Executive Shares") to certain members of their senior management (the
"Executives'), including Richard A. Manoogian, pursuant to letter agreements
dated June 29, 1989 (the "Executive Letter Agreements");
WHEREAS, Masco and Industries gave the Executives certain registration
rights pursuant to the Executive Letter Agreements with respect to the Executive
Shares;
WHEREAS, TriMas, Masco and Industries wish to amend the Registration
Agreement to alter the arrangements for registration of the Executive Shares
owned by Richard A. Manoogian; and
WHEREAS, Masco, Industries and Richard A. Manoogian are entering into
conforming amendments to Richard A. Manoogian's Executive Letter Agreements
concurrently herewith.
NOW, THEREFORE, the parties hereto agree as follows:
A. Paragraph 1(b) of the Registration Agreement is hereby amended and
restated in its entirety to read as follows:
"(b) Richard A. Manoogian. Promptly on or after the date of this
Amendment, TriMas shall prepare and file a Common Stock Registration Statement
covering all of the Executive Shares which Richard A. Manoogian purchased under
his Executive Letter Agreements (as adjusted from time to time for stock splits,
dividends and similar events) and shall use its best efforts to cause the Common
Stock Registration Statement to become effective as soon as possible. TriMas
shall use its best efforts to keep
such Common Stock Registration Statement effective and in compliance with the
Securities Act on a continuous basis (i.e., a "shelf" registration), and to
provide Richard A. Manoogian with prospectuses and prospectus supplements in
compliance with the Securities Act as may be required from time to time, until
the earlier of (A) June 30, 1996 or (B) the date when Richard A. Manoogian
ceases to own any of the Common Stock registered thereunder. All expenses
(other than fees and expenses of counsel to Richard A. Manoogian) in connection
with such registration pursuant to this Paragraph 1(b) shall be borne by TriMas.
If Richard A. Manoogian proposes to sell any shares of Common Stock under such
Common Stock Registration Statement pursuant to this
Paragraph 1(b), he shall notify the Vice President - General Counsel or the Vice
President - Investments of Masco, who in turn shall notify the President (or, if
the President is absent or unavailable, any Vice President) of TriMas, and he
shall not consummate such sale until the President or a Vice President of TriMas
has been notified (or if more than 10 days have elapsed since the last such
notice was given); provided, however, that following a "Change in Control" of
Masco (as defined in the Executive Letter Agreement) he may notify the President
(or, if the President is absent or unavailable, any Vice President) of TriMas
directly. TriMas will have the right at any time to suspend all sales of
Executive Shares under this Paragraph 1(b), for a period not exceeding a total
of 90 days, by notice to Richard A. Manoogian if in its good faith judgment the
relevant prospectus contains an untrue statement of material fact, or omits to
state a material fact necessary in order to make the statements made, in the
light of the circumstances under which they were made, not misleading. Richard
A. Manoogian shall sell his Executive Shares under the Common Stock Registration
Statement pursuant to this Paragraph 1(b) only in accordance with the terms of
the related prospectus and any prospectus supplements, and shall not sell any
Executive Shares pursuant to such Common Stock Registration Statement while any
suspension of sales thereunder is in effect. In lieu of a Common Stock
Registration Statement, TriMas at its option may utilize a prospectus or
prospectus supplement under its currently effective shelf registration
statement, in which event the rights and obligations with respect thereto shall
be the same as if TriMas had filed a Common Stock Registration Statement."
B. Except as provided herein, the Registration Agreement shall remain
in full force and effect and not otherwise be modified or affected by the
provisions hereof. This Amendment to Registration Agreement may be executed in
multiple counterparts.
2
IN WITNESS WHEREOF, the undersigned have executed this Amendment to
Registration Agreement as of the date first set forth above.
MASCO CORPORATION MASCOTECH, INC.
By /s/ Richard A. Manoogian By /s/ Richard A. Manoogian
Richard A. Manoogian Richard A. Manoogian
Chairman Chairman
TRIMAS CORPORATION TRIMAS OVERSIGHT COMMITTEE
By /s/ Brian P. Campbell By /s/ Herbert S. Amster
Brian P. Campbell Herbert S. Amster
President
By /s/ Helmut F. Stern
Helmut F. Stern
3
EX-10.X
12
REGISTRATION AGREEMENT
This Agreement is made as of March 31, 1993, between Masco Industries,
Inc., a Delaware corporation (the "Company") and Masco Corporation, a Delaware
corporation ("Masco").
WHEREAS, Masco currently holds certain Company securities; and
WHEREAS, Masco is acquiring certain Company securities pursuant to a
Purchase Agreement (the "Purchase Agreement") and an Exchange Agreement (the
"Exchange Agreement"), each with the Company of even date herewith, and may
acquire additional Company securities pursuant to a Securities Purchase
Agreement (the "Securities Purchase Agreement") with the Company of even date
herewith; and
WHEREAS, in connection with the Purchase Agreement, the Exchange Agreement
and the Securities Purchase Agreement, the Company has agreed to provide to
Masco certain registration rights with respect to certain Company securities as
provided herein.
NOW, THEREFORE, the parties agree as follows:
1. Definitions.
"Common Stock" means the Company's Common Stock par value $1.00 per
share.
"Convertible Debentures" means the Company's 6% Convertible Subordinated
Debentures due 2011.
"Preferred Stock" means the Company's 10% Exchangeable Preferred Stock
issued pursuant to the Exchange Agreement and the Company's exchangeable
preferred stock that may be issued pursuant to the Securities Purchase
Agreement.
"Registrable Securities" means (i) the 17,946,498 shares of Common Stock
held by Masco as of the date hereof (after giving effect to the Company's
acquisition of 10 million shares of Common Stock pursuant to the Exchange
Agreement between the Company and Masco of even date herewith) and shares of
Common Stock that may be reacquired by Masco pursuant to the Masco Corporation
1984 Restricted Stock (Industries) Plan, (ii) $130 million principal amount of
Convertible Debentures held by Masco, (iii) Preferred Stock, (iv) Subordinated
Debentures, (v) Warrants, (vi) Common Stock issuable upon conversion of the
Convertible Debentures and upon exercise of the Warrants, and (vii) any
securities issued or issuable with respect to, or derived from, the securities
referred to in clauses (i) through (vi) by way of stock dividend, stock split or
other distribution or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization.
"Subordinated Debentures" means the Company's subordinated debentures that
are issuable upon redemption and exchange of the Preferred Stock and the
Company's subordinated debentures that may be issued pursuant to the Securities
Purchase Agreement.
"Warrants" means the warrants issued by the Company to purchase 10 million
shares of Common Stock, which warrants were issued pursuant to the Purchase
Agreement.
2 (a). Registration of Registrable Securities. Whenever the Company
shall receive a written request signed by Masco requesting the Company to file a
registration statement under the Securities Act of 1933, as in effect at the
relevant time, or a comparable statement under any similar Federal statute then
in effect (a "Registration Statement"), covering any class or series of
Registrable Securities held by Masco, the Company shall promptly prepare and
file a Registration Statement covering the Registrable Securities requested to
be registered. The registration request may, at the option of Masco, require
the Registration Statement to include Registrable Securities held by persons
who acquired such Registrable Securities directly from Masco in a private
placement (hereinafter referred to, together with Masco, as a "Selling Holder").
The Company shall use its best efforts to cause the Registration Statement to
become effective and remain effective for the period required to permit the
offering and sale of the Registrable Securities covered thereby, which may be an
indefinite period of time if the registration request shall specify a delayed or
continuous offering pursuant to Rule 415 of the Securities and Exchange
Commission or any successor or comparable provision then in effect ("Shelf
Registration").
2 (b). Limitations on Registration and Disposition. (i) The Company
shall not be obligated to (A) file a Registration Statement with respect to less
than $25 million market value of Registrable Securities (as determined in good
faith by Masco at the time of the request), except that if the Company shall
have redeemed or exchanged any class or series of Registrable Securities such
that Masco holds less than $25 million market value of such class or series,
Masco may request registration of all of any such class or series then held, or
(B) make any such filing within 6 months from the effective date of the next
preceding filing made pursuant hereto, except Masco may, within the period
commencing with the date of issuance of Preferred Stock or Subordinated
Debentures issued pursuant to the Securities Purchase Agreement or Subordinated
Debentures issued upon redemption and exchange of Preferred Stock and ending six
months from such effective date, require the filing of a Registration Statement
covering such Preferred Stock or Subordinated Debentures.
2
(ii) No disposition of Registrable Securities shall be made under a Shelf
Registration unless the Selling Holder of such securities shall give the Company
five days' prior written notice of such holder's intent to make such
disposition.
(iii) The Company may elect to defer, for a period not exceeding a total
of 90 days, the preparation of any Registration Statement or the disposition of
Registrable Securities pursuant to an effective Shelf Registration if in the
Company's good faith judgment pending or prospective business developments
(including financing plans) justify a temporary delay or the prospectus
contained in an effective Shelf Registration contains an untrue statement of a
material fact or omits to state a material fact necessary to make the statements
made in the light of the circumstances in which they were made, not misleading.
(iv) The exercise of Warrants or conversion of Convertible Debentures
shall not constitute a disposition of Registrable Securities for purposes of
clauses (ii) and (iii) above.
2 (c). Registration Procedures. (i) Whenever the Company shall file a
Registration Statement pursuant hereto, the Company shall (A) thereafter, for
such period of time as shall be required in connection with the transactions
contemplated thereby and permitted by applicable rules, regulations and
administrative practice, file all post-effective amendments and supplements
thereto or to the prospectus contained therein and all filings under the
Securities Exchange Act of 1934 that are necessary or appropriate so that
neither the Registration Statement nor any related prospectus shall contain any
material misstatement or omission relative to the Company or any of its assets
or its business or affairs and so that the Registration Statement and such
prospectus will otherwise comply with all applicable legal requirements, subject
to the provisions of Paragraph 2(b) (iii) above, (B) furnish to the Selling
Holders of the registered Registrable Securities such number of copies of the
Registration Statement and any related preliminary prospectus, prospectus, post-
effective amendment or supplement as such Selling Holders reasonably may
request, and (C) take all action that may be necessary under the securities or
Blue Sky laws of any state and as reasonably may be requested to permit the
public offering and sale of the Registered Securities covered by the
Registration Statement; provided, however, that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not now
qualified or to take any action which would subject it to service of process in
suits, other than those arising out of the offering or sale of the Registrable
Securities, in any jurisdiction where it is not now subject. In connection with
any such Registration Statement, the Company shall deliver to such Selling
Holders and any underwriters such indemnities, contribution agreements, opinions
of counsel and letters of independent public accountants as are then customarily
given to underwriters of registered public
3
offering and selling security holders. The underwriters and such Selling
Holders shall deliver to the Company such indemnities, contribution agreements
and opinions as are then customarily given to issuers of registered public
offerings.
(ii) Anything in this Agreement to the contrary notwithstanding, the
Company shall not be obligated to file a Registration Statement unless the
Selling Holders of the Registrable Securities being registered shall have
furnished the Company in writing all information with respect to such Selling
Holders, the Registrable Securities held by such Selling Holders requested to be
so included, the transaction or transactions which such Selling Holders
contemplate and each underwriter, if any, who will act for such Selling Holders
in connection therewith, that any law, rule or regulation requires to be
disclosed therein.
(iii) The Company covenants that it will file the reports required to be
filed by it under the Securities Exchange Act of 1934, as in effect from time to
time, and the rules and regulations adopted by the Securities and Exchange
Commission thereunder, and will deliver to Masco at its request a written
statement affirming that it has complied with such requirements.
(iv) Whenever a Registration Statement is requested with respect to
Subordinated Debentures, the Company will enter into an indenture on
substantially similar terms and conditions (but not materially inconsistent with
the terms of such Subordinated Debentures) as those contained in the Indenture
dated as of November 1, 1986 between the Company and Morgan Guaranty Trust
Company of New York. The trustee designated by the Company to act as trustee
under the Indenture shall be a bank or trust company or national banking
association which has a combined capital and surplus in excess of $50,000,000.
(v) The Company will, at its own expense, take whatever action is
necessary to cause all Registrable Securities registered pursuant to these
registration rights to be listed on a national securities exchange or to be
included for quotation in the over-the-counter market as reported by the
National Association of Securities Dealers Automated Quotation System or similar
organization.
(vi) All expenses (other than fees (including underwriters' discounts and
commissions) and expense of any underwriters and counsel to the Selling Holders)
in connection with registrations undertaken pursuant hereto shall be borne by
the Company, provided, however, that if Masco withdraws or abandons its request,
then Masco shall reimburse the Company for all expenses reasonably incurred by
the Company in complying with such request.
4
(vii) Masco shall be deemed to be the representative of all Selling
Holders, with full authority to select a managing underwriter, withdraw or
abandon the Registration Statement, and make comparable decisions on behalf of
all Selling Holders after reasonable consultation therewith.
(viii) The Company will make available for inspection any Selling Holder,
any underwriter participating in any disposition pursuant to a Registration
Statement and any attorney, accountant or other professional retained by any
Selling Holder or any such underwriter (collectively, the "Inspectors"), all
financial and other records, pertinent corporate documents and properties of the
Company (collectively, the "Records") as shall be reasonably necessary to enable
them to exercise their due diligence responsibility, and cause the Company's
officers, directors and employees to supply all information reasonably requested
by any Inspectors in connection with such registration statement. Records which
the Company determines, in good faith, to be confidential and which it notifies
the Inspectors are confidential shall not be disclosed by the Inspectors unless
(i) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in such Registration Statement or (ii) the release of
such Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction. Information obtained as a result of such inspections
shall be deemed confidential and shall not be used as the basis for any market
transactions in the securities of the Company unless and until such is made
generally available to the public. Each Selling Holder of such Registrable
Securities will, upon learning that disclosure of such Records is sought in a
court of competent jurisdiction, give notice to the Company and allow the
Company, at its expense, to undertake appropriate action to prevent disclosure
of the Records deemed confidential.
3 (a). Amendments and Waivers. This Agreement may not be amended or
terminated, nor any condition or term hereof be waived orally, but only by an
instrument in writing duly executed by the parties hereto or, in the case of a
waiver, by the party otherwise entitled to performance.
3 (b). Benefit of Agreement. This Agreement shall inure to the benefit
of and be binding upon the parties hereto, and upon their respective successors
and assigns, provided, however, that Masco may not assign any of its rights
hereunder.
3 (c). Governing Law. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Michigan.
5
3 (d). Paragraph and Other Headings. The paragraph and other headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
MASCO CORPORATION
By /s/ Wayne B. Lyon
MASCO INDUSTRIES, INC.
By /s/ Timothy Wadhams
EX-11
13
Exhibit 11
MASCOTECH, INC.
Computation of Earnings (Loss) Per Common Share
Primary and Fully Diluted
(In Thousands Except Per Share Amounts)
For The Years Ended December 31
1994 1993 1992
PRIMARY:
Income (loss) from continuing operations
before extraordinary items.................. $(234,420) $ 70,890 $ 39,040
Preferred stock dividends..................... 12,960 14,930 9,300
Earnings (loss) for computing primary earnings
(loss) from continuing operations per
common share before extraordinary items..... (247,380) 55,960 29,740
Discontinued operations:
Income (loss) from operations of
discontinued energy segment............... --- 2,630 (610)
Gain (loss) on disposition.................. 11,700 (22,270) ---
Earnings (loss) for computing primary
earnings (loss) per common share before
extraordinary items......................... (235,680) 36,320 29,130
Extraordinary income (loss)................... 2,600 (3,650) ---
Earnings (loss) attributable to common
stock....................................... $(233,080) $ 32,670 $ 29,130
Weighted average number of common shares
outstanding during each period.............. 58,910 53,140 59,490
Addition from assumed exercise of stock
options and warrants (1).................... --- 4,300 1,360
Addition from assumed conversion of
preferred stock (1)......................... --- --- ---
Weighted average number of common shares and
equivalents outstanding during each period
--without dilution.......................... 58,910 57,440 60,850
Primary earnings (loss) per common share:
Continuing operations..................... $(4.20) $ .97 $ .49
Discontinued operations:
Income (loss) from operations of
discontinued energy segment........... -- .05 (.01)
Gain (loss) on disposition.............. .20 (.39) --
Income (loss) before extraordinary
items................................... (4.00) .63 .48
Extraordinary income (loss)............... .04 (.06) --
Net income (loss)......................... $(3.96) $ .57 $ .48
Exhibit 11
MASCOTECH, INC.
Computation of Earnings (Loss) Per Common Share
Primary and Fully Diluted
(In Thousands Except Per Share Amounts)
(concluded)
For The Years Ended December 31
1994 1993 1992
FULLY DILUTED:
Income (loss) from continuing operations
before extraordinary items.................. $(234,420) $ 70,890 $ 39,040
Preferred stock dividends..................... 12,960 14,930 9,300
Add after-tax convertible debenture
related expenses............................ 9,520 6,760 7,480
Earnings (loss) for computing fully diluted
earnings (loss) from continuing operations
per common share before extraordinary
items....................................... (237,860) 62,720 37,220
Discontinued operations:
Income (loss) from operations of
discontinued energy segment............... --- 2,630 (610)
Gain (loss) on disposition.................. 11,700 (22,270) ---
Earnings (loss) for computing fully diluted
earnings (loss) per common share
before extraordinary items.................. (226,160) 43,080 36,610
Extraordinary income (loss)................... 2,600 (3,650) ---
Earnings (loss) attributable to common
stock, as adjusted.......................... $(223,560) $ 39,430 $ 36,610
Weighted average number of common shares
outstanding during each period.............. 58,910 53,140 59,490
Addition from assumed conversion of
convertible debentures as of the issue date. 10,090 9,680 10,380
Addition from assumed exercise of stock
options and warrants........................ 3,340 5,940 1,650
Addition from assumed conversion of
preferred stock............................. 10,800 --- ---
Weighted average number of common shares and
equivalents outstanding during each period
--fully diluted basis....................... 83,140 68,760 71,520
Fully diluted earnings (loss)
per common share (2):
Continuing operations..................... $(4.20) $ .91 $ .49
Discontinued operations:
Income (loss) from operations of
discontinued energy segment........... -- .04 (.01)
Gain (loss) on disposition.............. .20 * --
Income (loss) before extraordinary
items................................... (4.00) .63 .48
Extraordinary income (loss)............... .04 * --
Net income (loss)......................... $(3.96) $ .57 $ .48
(1) The dilutive effect of options, warrants and preferred stock conversions in
1994 would be anti-dilutive.
(2) Amounts for 1994 and 1992 agree to primary earnings (loss) per common share
amounts since the results of assumed conversion of dilutive securities are
anti-dilutive.
* Anti-dilutive
EX-12
14
Exhibit 12
MASCOTECH, INC.
Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends
(Dollars In Thousands)
For The Years Ended December 31
1994 1993 1992 1991 1990
Earnings Before Income
Taxes and Fixed Charges:
Income (loss) from continuing
operations before income
taxes (credit) and
extraordinary income
(loss).......... $(264,490) $121,180 $ 68,250 $(12,470) $(30,240)
Deduct equity in
undistributed earnings
of less-than-fifty-
percent owned companies.... (23,350) (19,930) (21,760) (3,530) (3,430)
Add interest on
indebtedness, net.......... 51,290 83,000 87,830 124,220 139,770
Add amortization of debt
expense.................... 3,450 4,390 1,930 2,230 2,670
Estimated interest factor
for rentals................ 6,220 5,550 5,740 5,220 4,520
Earnings (loss) before income
taxes and fixed charges....$(226,880) $194,190 $141,990 $115,670 $113,290
Fixed Charges:
Interest on indebtedness,
net........................$ 51,540 $ 83,110 $ 87,980 $124,370 $140,380
Amortization of debt
expense.................... 3,450 4,390 1,930 2,230 2,670
Estimated interest factor
for rentals................ 6,220 5,550 5,740 5,220 4,520
Total fixed charges...... 61,210 93,050 95,650 131,820 147,570
Preferred stock dividend
requirement (a)............ 14,630 25,860 17,140 11,350 120
Combined fixed charges and
preferred stock dividends..$ 75,840 $118,910 $112,790 $143,170 $147,690
Ratio of earnings to
fixed charges................ ---(b) 2.1 1.5 .9(d) .8(f)
Ratio of earnings to combined
fixed charges and preferred
stock dividends.............. ---(c) 1.6 1.3 .8(e) .8(g)
(a) Represents amount of income before provision for income taxes required to
meet the preferred stock dividend requirements of the Company and its 50%
owned companies.
(b) 1994 results of operations are inadequate to cover fixed charges by
$288,090.
(c) 1994 results of operations are inadequate to cover combined fixed charges
and preferred stock dividends by $302,720.
(d) 1991 earnings are inadequate to cover fixed charges by $16,150.
(e) 1991 earnings are inadequate to cover combined fixed charges and preferred
stock dividends by $27,500.
(f) 1990 earnings are inadequate to cover fixed charges by $34,280.
(g) 1990 earnings are inadequate to cover combined fixed charges and preferred
stock dividends by $34,400.
EX-21
15
Exhibit 21
MASCOTECH, INC.
(a Delaware Corporation)
Subsidiaries
Jurisdiction of
Incorporation
Name or Organization
Acme Steel Door Corp. New York
Acme Steel Partition Co., Inc. New York
Architectural Building Components, Inc. Massachusetts
Flush-Metal Partition Corp. New York
Acme Steel Shelving Corp. New York
Acme Office Group, Inc. New York
Arrow Specialty Company Delaware
Atlas Roll-Lite Door Corporation Delaware
Atlas Roll-Lite Co. Ltd. Ontario
BLD Products, Ltd. Michigan
Novo Products, Inc. Florida
Crossing Metal Spinning & Stamping Co., Inc. New York
Eagle Window & Door, Inc. Iowa
American Glassmith, Inc. Delaware
Eagle Service Company Delaware
Eagle Window & Door of Bellevue, Inc. Delaware
EW&D of Maine, Inc. Delaware
Glaspie Engineering, Inc. Michigan
Haas Door Company Ohio
International Brake Industries, Inc. Delaware
Kendallville Foundry, Inc. Delaware
Longman Enterprises, Inc. Florida
Pylon Manufacturing Corp. Delaware
Directly owned subsidiaries appear at the left hand margin, first tier and
second tier subsidiaries are indicated by single and double indentation,
respectively, and are listed under the names of their respective parent
companies. Unless otherwise indicated, all subsidiaries are wholly-owned.
Certain of these companies may also use tradenames or other assumed names in the
conduct of their business.
Jurisdiction of
Incorporation
Name or Organization
Masco Industries International Sales, Inc. Barbados
W.C. McCurdy Co. Michigan
McGuane Industries, Inc. Delaware
MascoTech Automotive Systems Group, Inc. Michigan
C & C Performance, Inc. Michigan
Coach Builders of America, Inc. Michigan
G.M. Spoilers, Inc. New York
Spoilers Plus, Inc. New York
MascoTech Coatings, Inc. Michigan
MascoTech Europe, Inc. Delaware
MascoTech European Holdings, Inc. Delaware
Glo SpA Italy
MascoTech GmbH Germany
H & B Hyprotec Technology OHG Germany
Huber & Bauer GmbH 20% Germany
Holzer GmbH & Co. Germany
Holzer Limited United Kingdom
Holzer Verwaltungs - GmbH Germany
MascoTech Forming Technologies-Fort Wayne, Inc. Delaware
MascoTech Holding Company Delaware
MascoTech Industrial Components, Inc. Delaware
Huron/St. Clair Manufacturing Company Delaware
MascoTech Accessories, Inc. California
MascoTech Services, Inc. Delaware
MascoTech Sintered Components, Inc. Delaware
MascoTech Sintered Components of Indiana, Inc. Delaware
MascoTech Limited United Kingdom
MascoTech Engineering - Europe Ltd. United Kingdom
MascoTech Engineering - Europe, Inc. Michigan
MascoTech Engineering GmbH Germany
Canewdon Consultants Ltd. United Kingdom
MascoTech Stamping Technologies, Inc. Delaware
MascoTech Tubular Products, Inc. Michigan
MASX Energy Services Group, Inc. Delaware
NI Wheel, Inc. Canada
Jurisdiction of
Incorporation
Name or Organization
NI Industries, Inc. Delaware
NI Foreign Military Sales, Inc. Delaware
Norris Industries, Inc. California
NI West, Inc. California
Steelcraft Service Company, Inc. Delaware
Steelcraft Holding Company Delaware
Taylor Building Products Company Michigan
Trylon Corporation Michigan
CRM, Inc. - 51% Michigan
EX-23.A
16
Exhibit 23.a
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the prospectuses included
in the registration statements of MascoTech, Inc. on Form S-3 (Registration Nos.
33-59222 and 33-55837) and on Form S-8 (Registration Nos. 33-30735 and 33-42230)
of our report dated February 17, 1995, on our audits of the consolidated
financial statements and financial statement schedule of MascoTech, Inc. and
subsidiaries as of December 31, 1994 and 1993, and for each of the three years
in the period ended December 31, 1994, which report is included in this Annual
Report on Form 10-K. We also consent to the reference to our Firm under the
caption "Experts" in such prospectuses.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
March 23, 1995
EX-23.B
17
Exhibit 23.b
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the prospectuses included
in the registration statements of MascoTech, Inc. on Form S-3 (Registration Nos.
33-59222 and 33-55837) and on Form S-8 (Registration Nos. 33-30735 and 33-42230)
of our report dated February 8, 1995, on our audits of the consolidated
financial statements and financial statement schedule of TriMas Corporation and
subsidiaries as of December 31, 1994 and 1993, and for each of the three years
in the period ended December 31, 1994, which report is included in this Annual
Report on Form 10-K. We also consent to the reference to our Firm under the
caption "Experts" in such prospectuses.
COOPERS & LYBRAND L.L.P.
Detroit, Michigan
March 23, 1995
EX-27
18
5
1000
YEAR
DEC-31-1994
JAN-01-1994
DEC-31-1994
61,950
62,110
173,460
1,590
91,950
598,170
626,000
(246,670)
1,530,690
187,620
868,240
56,610
0
10,800
313,730
1,530,690
1,702,260
1,702,260
1,385,430
1,385,430
400,000
0
49,830
(264,490)
(30,070)
(234,420)
11,700
2,600
0
(220,120)
(3.96)
(3.96)