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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
|X| Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the fiscal year ended December 31, 1998
OR
|_| Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _________________ to ______________.
Commission File No. 1-4018
DOVER CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 53-0257888
(State or other jurisdiction of Incorporation (I.R.S. Employer
or organization) Identification No.)
280 Park Avenue, New York, NY 10017
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(212) 922-1640
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- -------------------
Common Stock, par value $1. New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Title of class
--------------
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 (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past ninety days. Yes |X| No |_|
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss. 229.405 of this chapter) 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. |_|
The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of the close of business March 1, 1999 was $6,858,775,697.
Registrant's closing price as reported on the New York Stock Exchange-Composite
Transactions for March 1, 1999 was $34.1250 per share.
The number of outstanding shares of the Registrant's common stock as of March 1,
1999 was 215,894,434.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I and II - Certain portions of the Annual Report to Stockholders
for Fiscal Year Ended December 31, 1998 (the "1998
Annual Report").
Part III - Certain portions of the Proxy Statement for Annual
Meeting of Stockholders to be held on April 27, 1999
(the "1999 Proxy Statement").
Special Notes Regarding Forward Looking Statements
This Annual Report on Form 10-, cash flow and operating improvements
and may be indicated by words or phrases such as "anticipates," "supports,"
"plans," "projects," "expects," "should," "hope," "forecast," "Dover believes,"
"management is of the opinion" and similar words or phrases. Such statements may
also be made by management orally. Forward-looking statements are subject to
inherent uncertainties and risks, including among others: increasing price and
product/service competition by foreign and domestic competitors, including new
entrants; technological developments and changes; the ability to continue to
introduce competitive new products and services on a timely, cost effective
basis; the mix of products/services; the achievement of lower costs and
expenses; domestic and foreign governmental and public policy changes including
environmental regulations; protection and validity of patent and other
intellectual property rights; the continued success of the Company's acquisition
program; the cyclical nature of the Company's business; and the outcome of
pending and future litigation and governmental proceedings. In addition, such
statements could be affected by general industry and market conditions and
growth rates, and general domestic and international economic conditions
including interest rate and currency exchange rate fluctuations. In light of
these risks and uncertainties, actual events and results may vary significantly
from those included in or contemplated or implied by such statements. Readers
are cautioned not to place undue reliance on such forward-looking statements.
The Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
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PART I
Item 1. BUSINESS
General
Dover Corporation ("Dover" or the "Company"), originally
incorporated in 1947 in the State of Delaware, is a diversified industrial
manufacturing corporation encompass-ing over 45 operating companies which
manufacture a broad range of specialized industrial products and sophisticated
manufacturing equipment.
The Company's businesses are divided into four business segments.
Dover Diversified builds assembly and production machines, heat transfer
equipment, food refrigeration and display cases, and specialized compressors, as
well as sophisticated products for use in the defense, aerospace and other
industries. Dover Industries makes products for use in the waste handling, bulk
transport, automotive service, commercial food service and machine tool
industries. Dover Resources manufactures products primarily for the automotive,
fluid handling, petroleum and chemical industries. Dover Technologies builds
sophisticated automated assembly and testing equipment for the electronics
industry, industrial printers for coding and marking and, specialized electronic
components. Dover Elevator, which was the Company's fifth business segment for
all of 1998, was sold to Thyssen Industrie AG on January 5, 1999. Dover Elevator
manufactures, installs and services elevators primarily in North America and is
accounted for as a discontinued operation in the Company's Consolidated
Financial Statements.
The Company emphasizes growth and strong internal cash flow. It has
a long-standing and successful acquisition program pursuant to which, from
January 1, 1994 through December 31, 1998, the Company made 57 acquisitions at a
total acquisition cost of $1,608,000,000. For more detail regarding acquisitions
over the past several years, see page 4 of the 1998 Annual Report as well as
Note 2 to the Consolidated Financial Statements on pages 27-28 of the 1998
Annual Report, which are hereby incorporated by reference. These acquisitions
have had a substantial impact on the Company's increase in sales and earnings
since 1994. The Company's acquisition program traditionally focused on acquiring
new or stand-alone businesses. However, since 1994, increased emphasis has been
placed on acquiring businesses that can be added on to existing operations. In
1998, the Company completed 4 stand-alone and 10 add-on acquisitions at a total
cost of about $556 million. The Company aims to be in businesses marked by
growth, innovation and higher than average profit margins. It seeks to have each
of its businesses be a leader in its market as measured by market share,
innovation, profitability and return on assets.
The Company practices a highly decentralized management style. The
presidents of operating companies are very autonomous and have a high level of
independent responsibility for their businesses and their performance. This is
in keeping with the Company's operating philosophy that small independent
operations are better able to serve customers by focusing closely on their
products and reacting quickly to customer needs. The Company's executive
management becomes involved only to guide and manage capital, assist in major
acquisitions, evaluate, motivate and, if necessary, replace operating
management, and provide selected other services.
Dover Diversified manufactures equipment and components for
industrial, commercial, and defense applications. The largest operations are
Belvac, acquired in 1993 (can-making machinery), Tranter (process industry heat
exchangers), A-C Compressor, acquired in 1992, and expanded in 1997 with the
acquisitions of Preco and Conmec (process industry compressors), and Hill
Phoenix, acquired in 1993-94 (refrigeration cases and systems for supermarkets).
Other Dover Diversified businesses produce such products as fluid film and
self-lubricating bearings, metal and fabric expansion joints, submarine and
aircraft hydraulic controls, remote manipulators and industrial cleaning
equipment, engineered high-performance racing products and packaging machinery.
In 1998, Dover Diversified companies completed four "add-ons": Ing Mas, Prox
International, Sonic Industries and ThermoFluid International.
Dover Industries manufactures a diverse mix of equipment and
components for use in the waste handling, bulk transport, automotive service,
commercial food service, machine tool and other industries. The largest
operations are Heil, acquired in 1993 (trailerized tanks and refuse collecting
vehicles),
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Rotary Lift (automotive lifts), Tipper Tie (clip closures for food packaging),
Marathon (solid waste compaction, transporting and recycling equipment) and
DovaTech (welding, cutting and laser equipment and supplies). Other Dover
Industries operations produce auto collision measuring and repair systems,
touchless car washing equipment, food service equipment, commercial
refrigeration equipment and screw machines. In 1998, Dover Industries companies
acquired three "add-on" businesses: Avtec Industries, Koolant Koolers and
Thompson Carmichael Holdings, Inc.
Dover Resources manufactures components and equipment primarily for
the automotive, fluid handling, petroleum and chemical industries. Its largest
businesses are De-Sta-Co (compressor valves and workholding devices), OPW
Fueling Components (gasoline nozzles and related service station equipment),
Wilden Pump (air operated double diaphram pumps, acquired in 1998) and Blackmer
(rotary vein and progressive cavity pumps and gas compressors). In addition to
the Wilden purchase, in 1998 Dover Resources acquired Quartzdyne, a manufacturer
of high-pressure quartz transducers used in the petroleum industry. In late
1996, Dover Resources acquired Tulsa Winch, a producer of winches and speed
reducers and in 1997 Hydro Systems (cleaning chemical dispensing equipment).
Other Dover Resources companies produce liquid monitoring, filtration and
control systems, oil and gas production equipment, and other valve,
instrumentation and control systems and products. During 1998, two Dover
Resources companies made two "add-on" acquisitions: Hydro Systems acquired Nova
Controls and De-Sta-Co acquired CCMOP.
Dover Technologies sells assembly and testing equipment, screen
printers, and soldering machines for the printed circuit board industry, as well
as components for communications (including wireless) and military applications.
The most significant business in this segment is Universal Instruments which, in
1998, suffered an operating profit decline of nearly 50% on about a 25% revenue
decrease, substantially accounting for Technologies' lower performance. This
overall decline reflects the periodic cyclical downturn in the electronics
assembly and test equipment business. Universal Instruments is the world's
largest producer of thru-hole printed circuit board assembly equipment, as well
as a significant manufacturer of surface mount printed circuit board assembly
equipment. For 1998, Dover Technologies' most profitable business was Imaje, a
manufacturer of continuous inkjet marking systems, which was acquired in 1995.
During 1996, Dover Technologies sold Measurement Systems, Inc., a manufacturer
of manual positioning controls. In the third quarter of 1996, Quadrant, which
is part of Dover Technologies, acquired KVG, a manufacturer of high frequency
crystals and oscillators. In November 1996, Dover Technologies acquired Everett
Charles Technologies, based in Pomona, California. Everett Charles is the
leading producer of machines for the testing of circuitry on printed circuit
boards before the boards are populated with components. In addition, it is the
leader in design and manufacture of test fixtures for populated boards and the
largest producer of spring-loaded test probes, which are used in both
bare-board and populated-board testing. Late in 1997, Soltec acquired
Vitronics, a U.S. based manufacturer of reflow soldering ovens. In 1998, Dover
Technologies made one add-on acquisition, atg test services, GmbH.
Dover sells its products and services both directly and through
various distributors, sales and commission agents and manufacturers
representatives, in all cases consistent generally with the custom of the
industry and market being served. For more information on these segments and
their products, sales, markets served, earnings before tax and total assets for
the six years ended December 31, 1998, see pages 10-22 and 33-34 of the 1998
Annual Report, which are hereby incorporated by reference.
Discontinued Operation
Dover Elevator, which was the Company's fifth business segment for all of
1998, was sold to Thyssen Industrie AG on January 5, 1999 for $1.1 billion plus
the sharing of certain expenses arising out of the transaction. The Company had
earlier decided in May 1998 to spin-off Dover Elevator in a tax-free
distribution to its stockholders to resolve management, operational and
financial differences which resulted from operating dissimilar businesses within
the same corporate group. The sale to Thyssen Industrie AG replaced the planned
spin-off.
Dover Elevator's business, principally the installation and service of a
product based on largely mature technology, was seen as fundamentally different
from Dover's other businesses which focused on manufacturing a variety of
products based on sophisticated and developing technology. Dover Elevator's
business was conducted by service employees at thousands of construction sites
and buildings
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around the country, while Dover's other businesses are conducted largely by
manufacturing employees centered in factories. As a result, Dover found that its
experience in managing its other businesses, while transferable among those
businesses, was not equally applicable to the elevator business, which
consequently required a disproportionate amount of management attention.
At the time of sale, Dover Elevator was the nation's largest
manufacturer and installer, and one of the largest servicers of elevators for
low and mid-rise buildings. Dover Elevator also participated in the high-rise
market for new equipment and service and sold and serviced elevators in foreign
markets, principally in Canada and Asia. Somewhat less than half of Dover
Elevator's sales and almost all of its profits in 1998 were generated by the
service business. In 1997, Dover Elevator sold its German and U.K. operations
for a pre-tax gain of $32 million, based upon its analysis that they did not
represent a sufficiently strong base for developing a meaningful position in
Europe. For more information with respect to the operating results of Dover
Elevator, see pages 2 and 28 of the 1998 Annual Report, which are hereby
incorporated by reference.
Although there is no fixed schedule for doing so, Dover intends to
invest the after-tax proceeds from the sale (approximately $800 million) in
stock repurchases and in acquisitions of existing companies that fit the
Company's growth model.
Raw Materials
Dover's operating companies use a wide variety of raw materials,
primarily metals and semi-processed or finished components, which are generally
available from a number of sources. Temporary shortages may occur occasionally,
but have not resulted in business interruptions or major problems, nor are any
such problems anticipated. To date, fluctuations in the cost of raw materials
have not had a material impact on operating profits.
Research and Development
Dover's operating companies are encouraged to develop new products
as well as upgrade and improve existing products to satisfy customer needs,
expand sales opportunities, improve product reliability and reduce production
costs. During 1998, approximately $131.3 million was spent on research and
development, compared with $106.7 million and $93.7 million in 1997 and 1996,
respectively, excluding spending by Dover Elevator.
Intellectual Property
Dover holds or is licensed to use a substantial number of U.S.
patents covering a number of its product lines, and to a far lesser degree
patents in certain foreign countries where it conducts business. Dover licenses
some of its patents to other companies for which it collects royalties which are
not significant. These patents have been obtained over a number of years and
expire at various times. Although patents in the aggregate are important to
Dover, the loss or expiration of any one patent or group of patents would not
materially affect Dover or any of its segments. Where patents have expired,
Dover believes that its commitment to leadership in continuous engineering
improvements, manufacturing techniques, and other sales, service and marketing
efforts are significant to maintaining its general market leadership position.
From time to time Dover has had disputes regarding its alleged use of other
patented technology, most recently regarding claims by the Lemelson Foundation
relating to vision systems and bar-coding technology. Dover expects to resolve
any such matters without any material impact on its businesses.
Many of the Company's products are sold under various registered and
unregistered trademarks and tradenames owned or licensed by the Company. Among
the most significant are: A-C Compressor, Belvac, Blackmer, De-Sta-Co,
Davenport, DEK, Dover, Duncan, Everett Charles, Groen, Heil, Imaje, Marathon,
Midland, Norris, OPW, Quadrant, Rotary Lift, Sargent, SWEP, Tipper Tie, Tranter,
Universal, Wiseco and Wilden.
In connection with the sale of Dover Elevator, which closed on
January 5, 1999, the Company transferred all its intellectual property used by
Dover Elevator to the buyers, with the exception
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of the Dover name and logo and certain patents in the United States, Australia,
Canada and Great Britain which were used by Dover Elevator and other Dover
segments. The Company granted the buyers a 3 1/2 year royalty-free license to
use the Dover name and logo on Dover Elevator products made in the ordinary
course of business within the territories in which Dover Elevator operated as of
the sale. The buyers were granted an exclusive, paid-up irrevocable, worldwide
license to use the 25 patents used by Dover Elevator and other Dover segments
within the conduct of Dover Elevator's business after the sale, but only to the
extent such business was conducted as of the sale.
Seasonality
Dover's operations are generally not seasonal, although performance
tends to be stronger in the second and fourth quarters of the year.
Customers
Dover's businesses serve thousands of customers, no one of which
accounted for more than 10% of the Company's consolidated revenues in 1998.
Within each of the four segments, no customer accounted for more than 10% of
that segment's sales in 1998.
Backlog
Backlog generally is not a significant factor in Dover's businesses,
as most of Dover's products have relatively short delivery periods. It is more
relevant to those businesses in the segments, which produce larger and more
sophisticated machines, or have long-term government contracts, primarily A-C
Compressor, Belvac, Heil Trailer, Mark Andy, Sargent Controls and Universal.
Total Company backlog as of December 31, 1998 and 1997 was $726
million and $796 million, respectively, excluding that backlog relating to the
elevator business. The Company believes that this backlog may reasonably be
filled during the fiscal year 1999.
Competition
Dover's competitive environment is complex because of the wide
diversity of products manufactured and markets served. In general, Dover
companies are market leaders which compete with only a few companies where the
key competitive factors are customer service, product quality and innovation. In
addition, since most of Dover's manufacturing operations are in the United
States, Dover usually is a more significant competitor domestically than in
foreign markets.
In the Technologies segment, Dover competes globally against a few
very large companies, primarily based in Japan or Europe. Its primary
competitors are Japanese producers, including Fuji Machine, Panasonic and TDK.
Within the other segments, competition is primarily domestic,
although an increasing number of Dover subsidiaries see more international
competitors and several serve markets which are predominatly international,
particularly A-C Compressor, Alberta Oil Tool, Belvac, Civacon, CRL, De-Sta-Co,
Duncan, Norris, OPW Fueling Components, Ronningen-Petter, Tipper Tie Technopak,
Tranter, Wilden and Wittemann.
In the Elevator segment, Dover competed for the manufacture and
installation of elevators with a few generally large multinational competitors
and maintained a strong domestic position. Its primary competitors were Otis,
Westinghouse/Schindler and Montgomery/Kone. For service work, there were
numerous local, regional and national competitors.
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International
For foreign sales, export sales and an allocation of the assets of
the Company's continuing operations, see Note 14 to the Consolidated Financial
Statements on page 32 of the 1998 Annual Report, which is incorporated herein by
reference.
Although international operations are subject to certain risks, such
as price and exchange rate fluctuations and foreign governmental restrictions,
Dover intends to increase its expansion into foreign markets as domestic markets
mature.
The countries where most of Dover's foreign subsidiaries and
affiliates are based are Canada, France, Great Britain, Germany and Sweden.
Environmental Matters
Dover believes its operations generally are in substantial
compliance with applicable regulations. In some instances, particular plants and
businesses have been the subject of administrative and legal proceedings with
governmental agencies relating to the discharge or potential discharge of
substances. Where necessary, these matters have been addressed with specific
consent orders to achieve compliance. Dover believes that continued compliance
will not have any material impact on the Company's financial position going
forward and will not require significant capital expenditures.
Employees
The Company had about 23,350 employees as of December 31, 1998,
excluding employees of Dover Elevator.
Item 2. PROPERTIES
The number, type, location and size of the Company's properties as of December
31, 1998 are shown on the following charts, by segment.
<TABLE>
<CAPTION>
Number and Nature of Square Footage
Facilities(1) (000's)
------------------------ ------------------
Ware- Sales/
Segment Mfg. house Service Owned Leased
------- ---- ----- ------- ----- ------
<S> <C> <C> <C> <C> <C>
Diversified 32 9 51 2,428 716
Industries 43 11 31 3,193 804
Resources 61 13 32 2,540 512
Technologies 53 12 114 1,194 1,139
<CAPTION>
Locations Leased Facilities
------------------------- ------------------------
expiration dates (years)
North
Segment American Europe Other Minimum Maximum
------- -------- ------ ----- ------- -------
<S> <C> <C> <C> <C> <C>
Diversified 51 26 3 1 12
Industries 62 11 1 1 15
Resources 79 16 3 1 16
Technologies 65 53 52 1 20
</TABLE>
(1) Does not include properties owned by Dover Elevator, all of which were
transferred to Thyssen Industrie AG and its direct and indirect
subsidiaries on January 5.
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The facilities are generally well maintained and suitable for the
operations conducted. The productive capacity of its plants is generally
adequate for current needs.
Item 3. LEGAL PROCEEDINGS
Dover is party to a number of legal proceedings arising out of the
normal course of its businesses. In general, most claims arose in connection
with activities of its Elevator segment operations and certain of its other
businesses which make products used by the public. In connection with the sale
of Dover Elevator, which closed on January 5, 1999, all liabilities of Dover
Elevator were transferred to the buyers who have given the Company an
appropriate indemnity.
Dover is continuously involved with an examination by the Internal
Revenue Service (the "IRS") of the Company's Federal income tax returns. The
Company and the IRS have settled tax years through 1993, and during 1998, the
IRS completed its examination of the Company's 1994 and 1995 Federal income tax
returns. The Company expects to resolve these years in the near future, all
within the amounts paid and/or reserved for these liabilities. The IRS is
currently examining the Company's 1996 and 1997 Federal income tax returns. In
addition, matters have arisen under various environmental laws, as well as under
local regulatory compliance agencies. For a further description of such matters,
see Note 10 to the Consolidated Financial Statements on page 30 of the 1998
Annual Report, which is incorporated herein by reference.
The Company has also reviewed its exposure with respect to "Year
2000" issues, which is discussed in detail on pages 33-34 of the 1998 Annual
Report, which are incorporated herein by reference.
Based on insurance availability, established reserves and periodic
reviews of those matters, management is of the opinion that the ultimate
resolution of current pending claims and known contingencies should not have a
material adverse effect on Dover's financial position, results of operations or
cash flows, taken as a whole.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to the vote of the Company's security
holders in the last quarter of 1998.
EXECUTIVE OFFICERS OF THE REGISTRANT
All officers are elected annually at the first meeting of the Board
of Directors following the annual meeting of stockholders and are subject to
removal at any time by the Board of Directors. The executive officers of Dover
as of March 1, 1999, and their positions with the Company (and, where relevant,
prior business experience) for the past five years are as follows:
Name Age Positions Held and Prior Business Experience
- ---- --- --------------------------------------------
Thomas L. Reece 56 Director, President and (since May 1994)
Chief Executive Officer.
John F. McNiff 56 Director (since May 1996); Vice
President-Finance and Treasurer.
Robert G. Kuhbach 51 Vice President, General Counsel and
Secretary.
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Robert A. Tyre 54 Vice President-Corporate Development (since
February 1995); prior thereto President, Rye
Transaction Consultants, Inc. (acquisition
consultants), from February 1993 to January
1995.
George F. Meserole 53 Vice President, Controller (since August,
1998); prior thereto Assistant Controller.
Charles R. Goulding 49 Vice President, Taxation (since August,
1998); prior thereto Director of Taxation.
Lewis E. Burns 60 Vice President and President of Dover
Industries, Inc.
Rudolf J. Herrmann 48 Vice President and President of Dover
Resources, Inc.
John E. Pomeroy 57 Director (since May 1998); Vice President
and President of Dover Technologies
International, Inc.
Jerry W. Yochum 60 Vice President and President of Dover
Diversified, Inc.
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PART II
Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The principal market in which the Company's Common Stock is traded
is the New York Stock Exchange. Information on the high and low sales prices of
such stock, and the frequency and the amount of dividends paid during the last
two years is set forth on Page 35 of the 1998 Annual Report and incorporated
herein by reference. The Company's Common Stock is also listed on the London
Stock Exchange.
The number of holders of record of the Company's Common Stock as of
March 1, 1999, as shown by the records of the Company's transfer agent was
13,000. This figure includes participants in the Company's 401(K) program.
On December 16, 1998, pursuant to the 1996 Non-Employee Directors'
Stock Compensation Plan, the Company issued 1,400 shares of its Common Stock to
each of its three U.S. resident outside directors as compensation for serving as
a director of the Company during 1998. At that time, the Company issued 2,000
shares of its Common Stock to each of its two non-U.S. residents outside
directors who are not subject to U.S. withholding tax, as compensation for
serving as a director of the Company during 1998. In addition, the Company
issued 500 shares of its Common Stock to Mr. Anthony Ormsby, a non-U.S. resident
outside director who retired from the Board in April, 1998.
Item 6. SELECTED FINANCIAL DATA
The information for the years 1988 through 1998 is set forth in the
table "11-Year Consolidated Summary of Selected Financial Data" in the 1998
Annual Report on pages 36 and 37 and is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information set forth in the 1998 Annual Report on pages 33 and
34 is incorporated herein by reference.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
INTEREST RATES
The Company's exposure to market risk for changes in interest rates
relates primarily to the fair value of long-term fixed interest rate debt,
commercial paper borrowings and investments in cash equivalents. Generally, the
fair market value of fixed-interest rate debt will increase as interest rates
fall and decrease as interest rates rise. A 65 basis point increase in interest
rates (10% of the Company's long-term debt interest rate) would have an
immaterial effect on the fair value of the Company's long-term debt. Commercial
paper borrowings under revolving credit facilities are at variable interest
rates, and have maturities of three months or less. A 55 basis point increase in
the interest rates (10% of the Company's weighted average commercial paper
interest rate) on commercial paper borrowings would have an immaterial impact
on the Company's pre-tax earnings. All highly liquid investments, including
highly liquid debt instruments purchased with an original maturity of three
months or less, are considered cash equivalents. The Company places its
investments in cash equivalents with high credit quality issuers and limits the
amount of exposure to any one issuer. A 54 basis point decrease in interest
rates (10% of the Company's weighted average interest rate) would have an
immaterial impact on the Company's pre-tax earnings. The Company does not enter
into derivative financial or derivative commodity instruments for trading or
speculative purposes.
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FOREIGN EXCHANGE
The Company conducts business in various foreign currencies,
primarily in Canada, Europe, Japan and other Asian countries. Therefore, changes
in the value of the currencies of these countries affect the Company's financial
position and cash flows when translated into U.S. Dollars. As of December 31,
1998 the Company had not established a foreign currency-hedging program. The
Company has mitigated and will continue to mitigate a portion of its currency
exposure through decentralized operating companies in which all costs are
local-currency based. A 10% change in the value of all foreign currencies would
have an immaterial effect on the Company's financial position and cash flows.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information set forth in the 1998 Annual Report on pages 22
through 32 is incorporated herein by reference.
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
Ms. Magalen O. Bryant, Director of Carlisle Companies Incorporated
and O'Sullivan Corp., has been a director of the Company since 1979 and will
retire in April 1999. Mr. John F. Fort, a director of the Company from 1989
until his resignation on January 29, 1999, was Consultant, Full Circle
Investments; Director of Tyco International Ltd. and formerly Chairman and Chief
Executive Officer; and Director, Roper Industries. Mr. Anthony J. Ormsby, a
private investor, was a director of the Company from 1971 until his retirement
in April 1998. The information with respect to the continuing directors of the
Company required to be included pursuant to this Item 10 is included under the
caption "1. Election of Directors" in the 1999 Proxy Statement relating to the
1999 Annual Meeting of Stockholders filed with the Securities and Exchange
Commission (the "Commission") pursuant to Rule 14a-6 under the Securities
Exchange Act of 1934, as amended, and is incorporated in this Item 10 by
reference. The information with respect to the executive officers of the Company
required to be included pursuant to this Item 10 is included under the caption
"Executive Officers of the Registrant" in Part I of this Annual Report on Form
10-K and is incorporated in this Item 10 by reference. The information with
respect to Section 16(a) reporting compliance required to be included in this
Item 10 is included under the caption "Section 16(a) Beneficial Ownership
Reporting Compliance" in the 1999 Proxy Statement and is incorporated in this
Item 10 by reference.
Item 11. EXECUTIVE COMPENSATION
The information with respect to executive compensation required to
be included pursuant to this Item 11 is included under the caption "Executive
Compensation" in the 1999 Proxy Statement and is incorporated in this Item 11 by
reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information regarding security ownership of certain beneficial
owners and management that is required to be included pursuant to this Item 12
is included under the captions "General" and "Security Ownership" in the 1999
Proxy Statement and is incorporated in this Item 12 by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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The information with respect to any reportable transaction, business
relationship or indebtedness between the Company and the beneficial owners of
more than 5% of the Common Stock, the directors or nominees for director of the
Company, the executive officers of the Company or the members of the immediate
families of such individuals that is required to be included pursuant to this
Item 13 is included under the caption "1. Election of Directors-Directors'
Compensation" in the 1999 Proxy Statement and is incorporated in this Item 13 by
reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) Financial Statements
The following consolidated financial statements of Dover Corporation
and its subsidiaries are set forth in the 1998 Annual Report, which
financial statements are incorporated herein by reference:
(A) Report of Independent Accountants.
(B) Consolidated balance sheets as of December 31, 1998 and 1997.
(C) Consolidated statements of earnings, accumulated comprehensive
earnings and retained earnings for the years ended December
31, 1998, 1997 and 1996.
(D) Consolidated statements of cash flows for the years ended
December 31, 1998, 1997 and 1996.
(E) Notes to consolidated financial statements.
(2) Financial Statement Schedule
The following financial statement schedule is attached to Part IV of
this report on form 10-K:
Schedule II -- Valuation and Qualifying Accounts
Report of Independent Accountants.
All other schedules are not required and have been omitted.
(3) See (c) below.
(b) Current Reports on Form 8-K:
On December 8, 1998, the Company filed with the Securities and
Exchange Commision a required report on Form 8-K, with respect to
the sale of its elevator business operations which contained
unaudited pro-forma condensed consolidation financial information
reflecting such sale.
(c) Exhibits:
(2) Purchase Agreement dated as of November 23, 1998 by and
among Thyssen Industrie AG, Thyssen Elevator Holding
Corporation, as buyers, and Dover Corporation, as seller,
filed as Exhibit 2.1 to the Company's Current Report on
Form 8-K filed December 8, 1998, is incorporated by
reference. Schedules relating to Purchase Price Allocation,
U.S. Federal Income Taxes, Elevator Financial
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<PAGE> 13
Statements and Executive Employment Arrangements have been
omitted, but will be furnished supplementally to the
Securities and Exchange Commission upon request.
(3)(i) Restated Certificate of Incorporation, filed as Exhibit 3.1
to the Company's Quarterly Report on Form 10-Q for the
Period Ended June 30, 1998, is incorporated by reference.
(3)(ii) By-Laws of the Company filed as Exhibit 3.1 to Quarterly
Report on Form 10-Q for Period Ended June 30, 1998, are
incorporated by reference.
(4.1) Amended and Restated Rights Agreement, dated as of November
15, 1996, between Dover Corporation and Harris Trust
Company of New York, filed as Exhibit 1 to Form 8-A/A dated
November 15, 1996, is incorporated by reference.
(4.2) Indenture, dated as of June 8, 1998 between Dover
Corporation and The First national Bank Chicago, as
Trustee, filed as Exhibit 4.1 to the Company's Current
Report on Form 8-K filed June 12, 1998, is incorporated by
reference.
(4.3) Form of 6.25% Note due June 1, 2008 ($150,000,000 aggregate
principal amount), filed as Exhibit 4.3 to the company's
Current Report on Form 8-K filed June 12, 1998, is
incorporated by reference.
(4.4) Form of 6.65% Note due June 1, 2028 ($200,000,000 aggregate
principal amount), filed as Exhibit 4.4 to the Company's
Current Report on Form 8-K filed June 12, 1998, is
incorporated by reference.
(4.5) Form of Indenture between the Company and The First
National Bank of Chicago, as Trustee, relating to the 6.45%
Notes due November 15, 2005 (including the form of the
note), filed as Exhibit 4 to the Company's Registration
Statement on Form S-3 (Reg. No. 33-63713) filed under the
Securities Act of 1933, is incorporated by reference.
(4.6) The Company agrees to furnish to the Securities and
Exchange Commission. Upon request, a copy of any instrument
with respect to long-term debt under which the total amount
of securities authorized does not exceed 10 percent of the
total consolidated assets of the Company.
(10.1) 1984 Incentive Stock Option and Cash Performance Program,
filed as Exhibit 10(a) to Annual Report on Form 10-K for
year ended December 31, 1984, is incorporated by
reference.*
(10.2) Employee Savings and Investment Plan, filed as Exhibit 99
to Registration Statement on Form S-8 filed under
Securities Act of 1933 (Reg. No.33-01419), is incorporated
by reference.*
(10.3) 1995 Incentive Stock Option and 1995 Cash Performance
Program, as amended.*
(10.4) 1996 Non-Employee Directors' Stock Compensation Plan,
included as Exhibit A to the Proxy Statement, dated March
16, 1998 is incorporated by reference.*
(10.5) Executive Officer Annual Incentive Plan, included as
Exhibit A to the Proxy Statement dated, March 16, 1998, is
incorporated by reference.*
(10.6) Form of Executive Severance Agreement.*
(13) Incorporated portions of Dover's Annual Report to
Stockholders for its fiscal year ended December 31, 1998
as filed with the Commission by EDGAR on March 23, 1999;
are incorporated by reference.
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<PAGE> 14
(21) Subsidiaries of Dover.
(23.1) Consent of PricewaterhouseCoopers LLP.
(24) Form of Power of Attrorney.
(27) Financial Data Schedule (in EDGAR filing only).
* Executive compensation plan or arrangement.
(d) Not applicable.
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<PAGE> 15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities and Exchange Act of 1934, the Registrant has duly caused this Report
to be signed on its behalf by the undersigned thereto duly authorized.
DOVER CORPORATION
By: /s/ Thomas L. Reece
-------------------------------------
Thomas L. Reece
President and Chief Executive Officer
Date: March 29, 1999
Pursuant to the requirements of the Securities and Exchange Act of
1934, this Report to be signed below on behalf of the Registrant in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Thomas L. Reece
- ---------------------------
Thomas L. Reece President and Chief Executive
Officer and Director
(Principal Executive Officer) March 29, 1999
/s/ John F. McNiff
- ---------------------------
John F. McNiff Treasurer and Director
(Principal Financial Officer) March 29, 1999
/s/ George F. Meserole
- ---------------------------
George F. Meserole Controller March 29, 1999
(Principal Accounting Officer)
/s/ Gary L. Roubos
- ---------------------------
Gary L. Roubos Chairman and Director* March 29, 1999
/s/ David H. Benson
- ---------------------------
David H. Benson Director* March 29, 1999
/s/ Magalen O. Bryant
- ---------------------------
Magalen O. Bryant Director* March 29, 1999
/s/ Jean-Pierre M. Ergas
- ---------------------------
Jean-Pierre M. Ergas Director* March 29, 1999
/s/ Roderick J. Fleming
- ---------------------------
Roderick J. Fleming Director* March 29, 1999
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<PAGE> 16
/s/ James L. Koley
- ---------------------------
James L. Koley Director* March 29, 1999
/s/ John E. Pomeroy
- ---------------------------
John E. Pomeroy Director* March 29, 1999
* By: /s/ Robert G, Kuhbach
---------------------
Robert G. Kuhbach
Attorney-in-Fact
16
<PAGE> 17
EXHIBIT INDEX
(2) Purchase Agreement dated as of November 23, 1998 by and among
Thyssen Industrie AG, Thyssen Elevator Holding Corporation, as
buyers, and Dover Corporation, as seller, filed as Exhibit 2.1 to
the Company's Current Report on Form 8-K filed December 8, 1998, is
incorporated by reference. Schedules relating to Purchase Price
Allocation, U.S. Federal Income Taxes, Elevator Financial Statements
and Executive Employment Arrangements have been omitted, but will be
furnished supplementally to the Securities and Exchange Commission
upon request.
(3)(i) Restated Certificate of Incorporation, filed as Exhibit 3.1 to the
Company's Quarterly Report on Form 10-Q for the Period Ended June
30, 1998, is incorporated by reference.
(3)(ii) By-Laws of the Company filed as Exhibit 3.1 to Quarterly Report on
Form 10-Q for Period Ended June 30, 1998, are incorporated by
reference.
(4.1) Amended and Restated Rights Agreement, dated as of November 15,
1996, between Dover Corporation and Harris Trust Company of New
York, filed as Exhibit 1 to Form 8-A/A dated November 15, 1996, is
incorporated by reference.
(4.2) Indenture, dated as of June 8, 1998 between Dover Corporation and
The First National Bank Chicago, as Trustee, filed as Exhibit 4.1 to
the Company's Current Report on Form 8-K filed June 12, 1998, is
incorporated by reference.
(4.3) Form of 6.25% Note due June 1, 2008 ($150,000,000 aggregate
principal amount), filed as Exhibit 4.3 to the Company's Current
Report on Form 8-K filed June 12, 1998, is incorporated by
reference.
(4.4) Form of 6.65% Note due June 1, 2028 ($200,000,000 aggregate
principal amount), filed as Exhibit 4.4 to the Company's Current
Report on Form 8-K filed June 12, 1998, is incorporated by
reference.
(4.5) Form of Indenture between the Company and The First National Bank of
Chicago, as Trustee, relating to the 6.45% Notes due November 15,
2005 (including the form of the note), filed as Exhibit 4 to the
Company's Registration Statement on Form S-3 (Reg. No. 33-63713)
filed under the Securities Act of 1933, is incorporated by
reference.
(4.6) The Company agrees to furnish to the Securities and Exchange
Commission. Upon request, a copy of any instrument with respect to
long-term debt under which the total amount of securities authorized
does not exceed 10 percent of the total consolidated assets of the
Company.
(10.1) 1984 Incentive Stock Option and Cash Performance Program, filed as
Exhibit 10(a) to Annual Report on Form 10-K for year ended December
31, 1984, is incorporated by reference.*
(10.2) Employee Savings and Investment Plan, filed as Exhibit 99 to
Registration Statement on Form S-8 filed under Securities Act of
1933 (Reg. No.33-01419), is incorporated by reference.*
(10.3) 1995 Incentive Stock Option and 1995 Cash Performance Program, as
amended.*
(10.4) 1996 Non-Employee Directors' Stock Compensation Plan, included as
Exhibit A to the Proxy Statement, dated March 16, 1998 is
incorporated by reference.*
(10.5) Executive Officer Annual Incentive Plan, included as Exhibit A to
the Proxy Statement, dated March 16, 1998, is incorporated by
reference.*
(10.6) Form of Executive Severance Agreement.*
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<PAGE> 18
(13) Incorporated portions of Dover's Annual Report to
Stockholders for its fiscal year ended December 31, 1998
as filed with the Commission by EDGAR on March 23, 1999;
are incorporated by reference.
(21) Subsidiaries of Dover.
(23.1) Consent of PricewaterhouseCoopers LLP.
(24) Form of Power of Attorney.
(27) Financial Data Schedule (in EDGAR filing only).
* Executive compensation plan or arrangement.
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<PAGE> 19
SCHEDULE II
DOVER CORPORATION AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years Ended December 31, 1998, 1997, 1996
<TABLE>
<CAPTION>
Additions
Balance at Charged to Balance at
Beginning of Cost and Deductions Close of
Year Expense (1) Year
---- ------- --- ----
(000's omitted)
<S> <C> <C> <C> <C>
Year Ended December 31, 1998
Allowance for Doubtful Accounts $19,468 $ 6,542 $ 5,055 $20,955
Year Ended December 31, 1997
Allowance for Doubtful Accounts $16,569 $ 7,248 $ 4,349 $19,468
Year Ended December 31, 1996
Allowance for Doubtful Accounts $15,907 $ 4,472 $ 3,810 $16,569
</TABLE>
Notes:
(1) Represents uncollectible accounts written off and reduction of prior
years' over-provision less recoveries of accounts previously written off,
net of $540, $1 ,499 and $921 related to acquisitions and divestitures in
1998, 1997 and 1996, respectively.
<TABLE>
<CAPTION>
Charged,
Balance at (Credited) to Balance at
Beginning of Cost and Acq. by Close of
Year Expense Merger Year
---- ------- ------ ----
(000's omitted)
<S> <C> <C> <C> <C>
Year Ended December 31, 1998
Lifo Reserve $40,629 $ (189) $ -- $40,440
Year Ended December 31, 1997
Lifo Reserve $39,787 $ 842 $ -- $40,629
Year Ended December 31, 1996
Lifo Reserve $39,616 $ 171 $ -- $39,787
</TABLE>
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<PAGE> 20
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors and Stockholders of Dover Corporation:
Our audits of the consolidated financial statements referred to in our report
dated February 5, 1999 appearing in the 1998 Annual Report to Shareholders of
Dover Corporation, which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K also included an
audit of the financial statement schedules listed in item 14(a)(2) of this Form
10-K. In our opinion, this financial statement schedule presents fairly, in all
materials respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.
PricewaterhouseCoopers LLP
New York, New York
February 5, 1999
20
<PAGE> 1
Exhibit 10.3
DOVER CORPORATION
1995 INCENTIVE STOCK OPTION PLAN
AND
1995 CASH PERFORMANCE PROGRAM
(as amended through March 1999)
A. PURPOSE AND SCOPE OF
PLAN AND PROGRAM
1. Purpose. The 1995 Incentive Stock Option Plan (the "Plan") and 1995
Cash Performance Program (the "Program") are intended to promote the long-term
success of Dover Corporation by providing salaried officers and other key
employees of Dover Corporation and its subsidiaries, on whom major
responsibility for the present and future success of Dover Corporation rests,
with a long-range inducement to remain with the organization and to encourage
them to increase their efforts to make Dover Corporation successful. The term
"Corporation" shall mean Dover Corporation and any present or future corporation
which is or would be a "subsidiary corporation" of Dover Corporation as defined
in Section 424 of the Internal Revenue Code of 1986, as amended (the "Code"),
unless the context requires otherwise.
2. Successor Plan and Program. The Plan and the Program are successors to
the 1984 Incentive Stock Option Plan and Cash Performance Program (hereinafter
the "Predecessor Plans"). No further grants of options or incentive awards may
be made under the Predecessor Plans. Options and incentive awards under the
Predecessor Plans shall be administered pursuant to the provisions of those
respective Plans.
3. Administration. The Plan and the Program shall be administered and
interpreted by the Compensation Committee (or such other Committee of the Board
of Directors as the Board may designate if there is no Compensation Committee;
hereinafter the "Committee"), consisting of not less than three persons
appointed by the Board of Directors of the Corporation from among its members. A
person may serve as a Committee member provided he or she shall comply in all
respects with any qualifications required by law, including specifically being a
"disinterested person" for purposes of the rules promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and an
"outside director" for purposes of Section 162(m) of the Code. The Committee
will have sole and complete authority to administer all aspects of the Plan and
the Program, including but not limited to: (a) determining the individuals
eligible to receive options and restricted stock under the Plan and/or to
participate in the Program; (b) granting options, restricted stock and
participations; (c) determining the number of options and the amount of
restricted stock and participations to be granted to any such eligible
individuals at any time or from time to time; (d) determining the terms and
conditions under which grants and participations will be made; and (e)
determining whether objectives and conditions for performance bonuses have been
met. The Committee may, subject to the provisions of the Plan and Program, from
time to time establish such rules and regulations as it deems appropriate for
the proper administration of the Plan and the Program. The Committee's decisions
shall be final, conclusive and binding with respect to the interpretation and
administration of the Plan and the Program and any grants or
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<PAGE> 2
awards made thereunder.
4. Eligibility. Grants may be made to any employee of the Corporation who
is a salaried officer or other key employee, including salaried members of the
Board of Directors (hereinafter sometimes referred to as "participants"). The
Committee shall select the participants eligible and determine the terms of the
grants and participations to each.
5. Shares Available for Grant. 20,000,000 shares of Common Stock of Dover
Corporation (the "Common Stock") will be reserved for issuance upon exercise of
options to purchase Common Stock granted under the Plan, which options may be
granted at any time prior to January 30, 2005, and for awards of restricted
stock. These maximum numbers are subject to appropriate adjustment resulting
from future stock splits, stock dividends, recapitalizations, reorganizations
and other similar changes to be computed in the same manner as that provided for
in Paragraph 14 below. If any option or award of restricted stock granted under
the Plan expires, terminates or is canceled for any reason without having been
exercised in full, the number of unpurchased shares under such option or
restricted stock under such award will again be available for the purpose of the
Plan.
B. STOCK OPTION AWARDS
6. Stock Options. Options granted under the terms of this Plan shall be
designated as either "non-qualified" stock options or "incentive" stock options
within the meaning of Section 422 of the Code, and shall contain such terms and
conditions as the Committee may from time to time determine, subject to the
following limitations:
(a) Option Price. The option price for shares covered by any option
will be determined by the Committee, but shall in no event be less than the fair
market value of such shares on the date the option is granted. The fair market
value will be construed to be the average of the high and low sales price of the
Common Stock on the New York Stock Exchange (the "Exchange") on the date the
option is granted by the Committee or, if no sales have occurred on that date,
such value will be the closing price on the Exchange on the trading day next
preceding the granting of the option.
(b) Option Exercise Period. The term of each option will be for such
period as the Committee may determine, but in no event may an option be
exercised more than 10 years following the granting thereof.
(c) Rights of Option Holder. A recipient of stock options shall have
no rights as a stockholder with respect to any shares issuable or transferable
upon exercise thereof until the date of issuance of a stock certificate for such
shares. Except as specifically set forth in Paragraph 14 below, no adjustment
shall be made for dividends or other distributions of cash or other property on
or with respect to shares of stock covered by these options paid or payable to
holders of record prior to such issuance.
(d) Limits on Individuals. Options on a maximum number of 600,000
shares may be granted each year to a single participant. The aggregate fair
market value (determined on the
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<PAGE> 3
date of grant) of Common Stock with respect to which a participant is granted
incentive stock options (including incentive stock options granted under any
Predecessor Plan) which first become exercisable during any given calendar year
shall not exceed $100,000.
7. Exercise of Option. Stock options may be exercised at such time or
times and subject to such terms and conditions as the Committee shall determine
and are specified in the option instrument, not inconsistent with the terms of
the Plan; provided, however, that except as set forth in Paragraphs 11 and 14,
no option may be exercised prior to the third anniversary of such Option grant
and any partial exercise of an option shall be for not less than 500 shares. To
exercise an option, the option holder must give written notice to the
Corporation of the number of shares to be purchased accompanied by payment of
the full purchase price of such shares as set forth in Paragraph 8. The date of
actual receipt by the Corporation of such notice and payment shall be deemed the
date of exercise of the option with respect to the shares being purchased and
the stock certificates therefor shall be issued as soon as practicable
thereafter. The shares to be issued upon exercise of an option will be either
treasury or authorized and unissued stock, in the sole discretion of the
Corporation.
8. Payment. Payment of the option exercise price must be made in full at
the time of exercise (a) by check made payable to the Corporation, (b) if
available, through the Loan Program (as hereinafter described), (c) by transfer
to the Corporation of shares of Common Stock owned by the participant or (d)
with a combination of the foregoing. If payment is made by the transfer of
shares, the value per share of the shares so transferred to the Corporation to
be credited toward the purchase price will be the average between the high and
the low sales price per share of Common Stock on the Exchange on the date the
option is exercised or, if no sales have occurred on that date, such value will
be the closing price per share on the Exchange on the trading day next preceding
the exercise of the option. The shares transferred to Dover will be added to the
Corporation's treasury shares or canceled and become authorized and unissued
shares.
9. Option Transfers. The options granted under the Plan may not be sold,
transferred, hypothecated, pledged or otherwise disposed of by any of the
holders except by will or by the laws of descent and distribution, or as
otherwise provided herein. The option of any person to acquire stock and all
rights thereunder shall terminate immediately if the holder attempts to or does
sell, assign, transfer, pledge, hypothecate or otherwise dispose of the option
or any rights thereunder to any other person except as permitted herein.
Notwithstanding the foregoing, a participant may transfer any non-qualified
option granted under this Plan to members of the holder's immediate family
(defined as a spouse, children and/or grandchildren), or to one or more trusts
for the benefit of such family members if the instrument evidencing such option
expressly so provides and the option holder does not receive any consideration
for the transfer; provided that any such transferred option shall continue to be
subject to the same terms and conditions that were applicable to such option
immediately prior to its transfer (except that such transferred option shall not
be further transferred by the transferee during the transferee's lifetime).
10. Registration. The Corporation will stamp stock certificates delivered
to the stockholder with an appropriate legend if the shares are not registered
under the Securities Act of 1933, as amended (the "Act"), or are otherwise not
free to be transferred by the holder and will issue appropriate stop-order
instructions to the transfer agent for the Common Stock, if and to the
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<PAGE> 4
extent such stamping or instructions may then be required by the Act or by any
rule or regulation of the Securities and Exchange Commission issued pursuant to
the Act.
11. Effect of Death, or Permanent Disability or Retirement. If an option
holder dies or becomes permanently disabled while employed by the Corporation,
the option holder or such holder's estate or the legatees or distributees of
such holder's estate or of the option, as the case may be, shall have the right,
on or before the earlier of the expiration date of the option or sixty (60)
months following the date of such death or permanent disability, to purchase
under the option the number of shares, if any, which the option holder was
entitled to purchase as of such date of death or permanent disability. If an
option holder retires at or after age 65 (or at an earlier retirement date
approved by the Committee and subject to the provisions of Paragraph 37 below),
the option holder shall have the right, on or before the earlier of the
expiration date of the option or sixty (60) months following the date of such
retirement, to purchase shares under any options which at retirement are, or
within sixty (60) months following retirement would become, exercisable.
12. Voluntary or Involuntary Termination. If any option holder's
employment with the Corporation is voluntarily or involuntarily terminated for
any reason, other than for reasons specified above or for "cause" (as defined
below), the option holder shall have the right to purchase under the option the
number of shares, if any, which such holder was entitled to purchase at the time
of such termination at any time on or before the earlier of three (3) months
following the effective date of such termination of employment or the expiration
date of the option.
13. Termination for Cause. If an option holder's employment with the
Corporation is terminated for cause (defined as (a) a felony conviction of the
option holder; (b) the commission by the option holder of an act of fraud or
embezzlement against the Corporation; or (c) the option holder's willful
misconduct or gross negligence materially detrimental to the Corporation), the
option shall be canceled and the holder shall have no further rights to exercise
any such option and all of such holder's rights thereunder shall terminate as of
the effective date of termination of employment.
14. Effect of Stock Dividends, Merger, Recapitalization or Reorganization
or Similar Events. If any Common Stock dividend is paid by the Corporation, if
any non-cash distribution if made by the Corporation as respects its Common
Stock, if the shares of Common Stock are split or reclassified, if the
Corporation should be reorganized or consolidated or merged with or into another
corporation, or if all or substantially all the assets of the Corporation are
transferred to any other corporation in a reorganization, each option holder
shall be entitled, upon exercise of such holder's option, to receive for the
same aggregate exercise price the same number and kind of shares of stock (to
the nearest whole number) as he or she would have been entitled to receive upon
the happening of such stock dividend, distribution, stock split,
reclassification, reorganization, consolidation, merger or transfer, if he or
she had been, immediately prior to such event, the holder of such shares.
Outstanding options shall be appropriately amended as to price and other terms
in a manner consistent with the aforementioned adjustment to the shares of
Common Stock subject to the Plan. The Board of Directors shall have the power,
in the event of any disposition of substantially all of the assets of the
Corporation, its dissolution, any merger or consolidation, or the merger or
consolidation of any other corporation into the Corporation, to amend all
outstanding options to permit their exercise prior to the effectiveness of any
such transaction and to terminate
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<PAGE> 5
such options as of such effectiveness. If the Board of Directors shall exercise
such power, all options outstanding shall be deemed to have been amended to
permit the exercise thereof in whole or in part by the holder at any time or
from time to time as determined by the Board of Directors prior to the
effectiveness of such transaction and such options shall be deemed to terminate
upon such effectiveness.
15. Loan Program. Except in unusual circumstances, it is the Corporation's
expectation that shares acquired through the exercise of options are to be held
by participants for the duration of their employment with the Corporation. In
order to help participants finance the exercise of their options and resulting
income taxes, if any, the Corporation may provide for loans to Plan participants
at any time and from time to time after May 1, 1995. If established by the
Board, any loan program will be administered by the Committee and may apply to
all existing unexercised options, with the exception of incentive options,
and/or all future option grants, as the Committee shall decide. The terms of any
loans shall be specified by the Committee, as they may deem appropriate,
provided that the following terms shall apply:
(a) The maximum amount of any loan cannot be greater than the option
exercise price of the acquired stock, together with the amount of any taxes due
as a result of such exercise, and in any event cannot exceed the fair market
value of the acquired stock. In the event the participant chooses to satisfy all
or a portion of the option exercise price by surrender, at fair market value, of
other Common Stock already owned by the participant, the maximum amount of the
loan will be reduced by the value of the stock surrendered.
(b) Loans will be evidenced by promissory notes having a term of not
more than ten (10) years, which notes shall be subject to further extension for
additional periods of time not exceeding ten (10) years at each such extension.
Prepayment of loan principal may not be required during the participant's
employment with the Corporation and/or subsidiaries. Repayment in full must be
made within one (1) month of termination of employment; however, this period is
extended to six (6) months if employment ceases due to death, permanent
disability or retirement. Loan prepayment may be made by the participant at the
participant's discretion but, once reduced, the loan may not be subsequently
increased.
(c) The Corporation shall have the right to hold as collateral all
stock acquired under a particular option instrument, regardless of the amount of
the loan, until the loan is fully repaid. Such stock will be registered in the
participant's name (or such other name as the Plan permits) so that the
participant may vote the stock and receive the dividends applicable thereto,
provided the loan is current.
(d) The participant will be responsible for the full repayment of
the loan, regardless of the value of the stock. However, no additional
collateral for the loan will be required regardless of the fair market value of
the stock.
(e) Interest on the loan balance will be due quarterly, in arrears,
and will be at a sufficient rate so as not to result in any imputed income to
the participant under the terms of the Code.
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16. Change of Control. Options and grantees of options shall be subject to
the terms of Paragraph 36 below related to a change of control of the
Corporation.
C. RESTRICTED STOCK AWARDS
17. Grant. Subject to the provisions and as part of the Plan, the
Committee shall have sole and complete discretion and authority to determine the
eligible persons who shall receive shares of Common Stock which are subject to
certain forfeiture restrictions during the restriction period and subject to the
terms of the Plan ("restricted stock"). Awards of restricted stock shall contain
such terms and conditions as the Committee may from time to time determine,
subject to the following limitations.
18. Term of Restriction Period. The Committee may adopt such vesting
schedules, not longer than five (5) years from the date of the award, as it may
deem appropriate with respect to awards of restricted stock and may condition
the lapse of the restrictions applicable to an award upon the attainment by the
Corporation or any subsidiary or division or by the participant of any
performance objectives set by the Committee.
19. Issuance of Shares. Certificates issued for restricted stock shall be
registered in the name of the participant and deposited by the participant with
the Secretary of the Corporation, together with a stock power endorsed in blank.
Upon lapse of the applicable restriction period, the Corporation shall deliver
such certificates to the participant. In the event that the shares of restricted
stock are forfeited, such shares automatically shall be transferred back to the
Corporation. The Corporation will stamp the stock certificates delivered to the
participant with an appropriate legend if the shares are not registered under
the Act, or are otherwise not free to be transferred by the participant and will
issue appropriate stop-order instructions to the transfer agent for the Common
Stock, if and to the extent such stamping or instructions may then be required
by the Act or by any rule or regulation of the Securities and Exchange
Commission issued pursuant to the Act.
20. Dividends and Voting Rights. In the discretion of the Committee,
dividends which become payable with respect to restricted stock during the
restriction period will be reinvested in additional shares of restricted stock
for the account of the award recipient, accumulated for later distribution to
vested participants, or distributed to the award recipient as paid. An employee
who receives an award of restricted stock may also in the discretion of the
Committee be entitled, during the restriction period, to exercise voting rights
with respect to such restricted stock.
21. Nontransferability. Shares of restricted stock may not be sold,
assigned, transferred, pledged or otherwise encumbered and shall not be subject
to execution, attachment, garnishment or other similar legal process, except as
otherwise provided in the applicable award agreement. Upon any attempt to sell,
transfer, assign, pledge, or otherwise encumber or dispose of the restricted
stock contrary to the provisions of the award agreement or the Plan, the
restricted stock shall immediately be forfeited to the Corporation.
22. Termination of Employment. In the case of a participant's permanent
disability, death, termination of employment by the Corporation other than for
cause (as defined in Paragraph 13 above) or special circumstances, as determined
by the Committee, any restrictions remaining
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with respect to shares of restricted stock as of the date of the participant's
termination of employment shall lapse. If the participant's employment with the
Corporation is terminated as a result of the retirement of the participant at or
after age 65 (or at an earlier retirement date approved by the Committee and
subject to the provisions of Paragraph 37 below), the shares of restricted stock
shall continue to vest as if the participant's employment had not terminated
until such time as the remaining restrictions lapse. If a participant's
employment with the Corporation is voluntarily or involuntarily terminated for
any other reason during the restriction period, the shares of restricted stock
shall be forfeited.
23. Effect of Stock Dividends, Merger, Recapitalization or Reorganization
or Similar Events. In the event of a stock dividend, merger, recapitalization,
reorganization or other transaction described in Paragraph 14 above, the terms
and conditions of the restricted stock awards shall be adjusted in a manner
consistent with adjustments made to options granted under the Plan.
24. Change of Control. Awards of restricted stock and persons who are
awarded restricted stock shall be subject to the terms of Paragraph 36 below.
25. Cancellation. The Committee may at any time require the cancellation
of any award of restricted stock in consideration of a cash payment or
alternative award under the Plan equal to the fair market value of the cancelled
award of restricted stock.
D. CASH PERFORMANCE AWARDS
26. Awards and Period of Contingency. The Committee may, concurrently
with, or independently of, the granting of an option under the Plan, in its sole
discretion, grant to a participant the opportunity to earn a cash performance
payment, conditional upon the attainment of an objective performance goal during
a performance period. The performance period shall be not less than three fiscal
years of the Corporation, including the year in which the conditional grant is
made. Any performance goal established by the Committee shall include an
objective formula or standard for determining the amount of the performance
payment payable to a participant if the goal is attained. The performance goal
may be fixed by the Committee for the Corporation as a whole or for a subsidiary
or division of the Corporation, depending on the Committee's judgment as to what
is most appropriate for the individual involved, and shall be set by the
Committee before the 90th day after the commencement of the period of services
to which the performance payment relates. Performance goals shall be based on at
least one or more of the following factors which the Committee deems
appropriate, as they apply to the Corporation as a whole or to a subsidiary or a
division: (a) earnings per share, (b) operating earnings, (c) return on equity
and (d) return on investment. The performance goal with respect to a performance
period will be the same for all persons within the same business unit. The
material terms of the performance goals shall be subject to stockholder approval
to the extent provided in regulations promulgated under Section 162(m) of the
Code.
27. Determination of Payment Amount. The aggregate maximum cash payout for
any business unit within the Corporation or the Corporation as a whole shall not
exceed a fixed percentage of the annual average earnings increase of the
relevant entity during the performance period, such percentages and dollar
amounts to be determined by the Committee annually when
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performance goals are established. In no event can an individual receive an
annual payment which exceeds $2 million. A performance payment shall be payable
with respect to a performance period only if the Committee shall have certified
that the applicable performance target has been attained. The Committee shall
also have the power to approve proportional or adjusted payments under the
Program to address situations where participants join the Corporation, or
transfer within the Corporation, during a performance period. The Committee
shall have the discretion to decrease the amount payable upon attainment of the
performance goal (as determined under such formula or standard) to take into
account the effect of any unusual, non-recurring circumstance, but shall have
the discretion to increase the amount payable to take into account any such
effect only if such discretion would not cause such compensation to fail to
qualify as "qualified performance-based compensation" for purposes of Section
162(m) of the Code.
28. Effect of Death, Disability or Other Early Termination of Employment.
If the participant in the Program (a) dies, becomes permanently disabled while
employed by the Corporation or terminates employment for any reason designated
by the Committee, subject to the provisions of Paragraph 37 below, as an
"approved termination" (other than related to retirement), in each case before
the date of payment or distribution of any final award, or (b) otherwise ceases
to be an employee, whether voluntarily or involuntarily, after the performance
measurement period and before the payment date for any reason other than
termination by the employer for cause, the participant (or the participant's
estate or the legatees or distributees of the participant's estate, as the case
may be) shall be entitled to receive on the payment date the cash payment which
the participant would have earned had the participant then been an employee of
the Corporation multiplied by a fraction, the numerator of which is the number
of months the participant was employed by the Corporation during the performance
measurement period and the denominator of which is the number of months of the
performance measurement period (treating fractional months as whole months in
each case).
29. Effect of Normal Retirement. If before the date of payment, the
participant retires on or after age 65 years (or at an earlier retirement date
approved by the Committee and subject to the provisions of Paragraph 37 below),
the participant shall be entitled to receive on the payment date the same amount
of cash which the participant would have earned had such participant then been
an employee of the Corporation as of such date.
30. Effect of Other Termination. If the participant's employment with the
Corporation is terminated for any reason during or after the performance period
and before the payment date other than as set forth in the preceding two
paragraphs, whether such termination be voluntary or involuntary, such
participation shall be canceled and all of the participant's rights under the
grant shall terminate as of the effective date of termination of such
employment.
31. Change of Control. The terms of a performance goal and each
participant in the Cash Performance Program shall be subject to the terms of
Paragraph 36 below.
E. GENERAL PROVISIONS
32. Legal Compliance. It is the intent of the Corporation that the Plan
comply in all respects with applicable provisions of the Exchange Act, including
Section 16 and Rule 16b-3, so
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that any grant of options to, or other transaction by, a participant who is
subject to the reporting requirements of Section 16(a) of the Exchange Act shall
not result in short-swing profits liability under Section 16(b) (except for any
transaction exempted under alternative Exchange Act rules or intended by such
participant to be a non-exempt transaction). It is also the intent of the
Corporation that any compensation income realized in connection with options or
restricted stock and any performance payments made under the Plan and Program
constitute "performance-based compensation" within the meaning of Section
162(m)(4)(C) of the Code so that any deduction to which the Corporation is
entitled in connection with such compensation will not be subject to the
limitations of Section 162(m)(1) of the Code. Accordingly, if any provision of
the Plan or Program or any agreement relating to an option, grant of restricted
stock or participation does not comply with the requirements of Rule 16b-3 as
then applicable to any such transaction so that such a participant would be
subject to Section 16(b) liability (except for any transaction exempted under
alternative Exchange Act rules or intended by such participant to be a
non-exempt transaction), or if any provision of the Plan or Program or any
agreement relating to an option, grant of restricted stock or participation
would limit, under Section 162(m)(1) of the Code, the amount of compensation
income to an optionee or participant that the Corporation would otherwise be
entitled to deduct, such provision shall be construed or deemed amended to the
extent necessary to conform to such requirements, or to eliminate such
deductibility limitation, and the participant shall be deemed to have consented
to such construction or amendment.
33. Withholding Taxes. The Committee shall make arrangements for the
collection of any Federal, State or local taxes of any kind required to be
withheld with respect to any transactions effected under the Plan or the
Program. The obligations of the Corporation under the Plan and the Program shall
be conditional on satisfaction of such obligations and the Corporation, to the
extent permitted by law, shall have the right to deduct any such taxes from any
payment of any kind otherwise due to a participant.
34. Effect of Recapitalization or Reorganization. The obligations of the
Corporation with respect to an option or restricted stock granted under the Plan
or a participation under the Program shall be binding upon the Corporation, its
successors or assigns, including any successor or resulting company either in
liquidation or merger of the Corporation into another company owning all the
outstanding voting stock of the Corporation or in any other transaction whether
by merger, consolidation or otherwise under which such succeeding or resulting
company acquires all or substantially all the assets of the Corporation and
assumes all or substantially all its obligations unless options are terminated
in accordance with Paragraph 14.
35. Employment Rights and Obligations. Neither the granting of any option
or award of restricted stock under the Plan or participation under the Program
nor the provisions related to a change of control of the Corporation (as defined
below) or a Person seeking to effect a change of control of the Corporation
shall alter or otherwise affect the rights of the Corporation to change any and
all the terms and conditions of employment of any participant including, but not
limited to, the right to terminate such participant's employment.
36. Change of Control.
(a) Each participant, upon acceptance of a grant of options or
restricted stock or
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the opportunity to earn a cash performance payment, and as a condition to such
grant, shall be deemed to have agreed that, in the event any Person begins a
tender or exchange offer, circulates a proxy to shareholders, or takes other
steps seeking to effect a change of control of the Corporation (as defined
below), such participant will not voluntarily terminate his or her employment
with the Corporation or with a direct or indirect subsidiary of the Corporation,
as the case may be, and, unless terminated by the Corporation or such
subsidiary, will continue to render services to the Corporation or such
subsidiary until such Person has abandoned or terminated efforts to effect a
change of control.
(b) In the event of a change of control,
(i) all options to purchase shares of common stock of the
Corporation shall immediately vest and become exercisable in accordance with the
terms of the appropriate stock option agreement;
(ii) all outstanding restrictions with respect to any
restricted stock shall immediately expire;
(iii) with respect to performance awards under the Cash
Performance Program:
(A) all performance awards outstanding shall immediately
vest and become immediately due and payable;
(B) the performance measurement period of all
performance awards outstanding shall terminate on the last day of the month
prior to the month in which the change of control occurs;
(C) the participant shall be entitled to a cash payment
the amount of which shall be determined in accordance with the terms and
conditions of the Program and the appropriate program award agreement, which
amount shall be multiplied by a fraction, the numerator of which is the actual
number of months in the performance measurement period (as determined in
accordance with clause (iii)(B) above) and the denominator of which is 36 (or 48
if the performance measurement period established at the date of grant is four
years or more); and
(D) the Continuing Directors (as defined in Article
Fourteenth of the Corporation's Certificate of Incorporation) shall promptly
determine whether the participant is entitled to any performance award, and any
performance award payable shall be paid to the participant promptly but in no
event more than five days after a change of control;
(iv) the Continuing Directors shall have the sole and complete
authority and discretion to decide any questions concerning the application,
interpretation or scope of any of the terms and conditions of any grant or
participation under the Plan or the Program, and their decisions shall be
binding and conclusive upon all interested parties; and
(v) other than as set forth above, the terms and conditions of
all grants and
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participations shall remain unchanged.
(c) A "change of control" shall be deemed to have taken place upon
the occurrence of any of the following events (capitalized terms are defined
below):
(i) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Corporation (not including in the securities
beneficially owned by such Person any securities acquired directly from the
Corporation or its Affiliates) representing 20% or more of either the then
outstanding shares of common stock of the Corporation or the combined voting
power of the Corporation's then outstanding securities, excluding any Person who
becomes such a Beneficial Owner in connection with a transaction described in
clause (A) of paragraph (iii) below; or
(ii) the following individuals cease for any reason to
constitute a majority of the number of directors then serving: individuals who,
on February 1, 1995, constituted the Board and any new director (other than a
director whose initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Corporation) whose
appointment or election by the Board or nomination for election by the
Corporation's stockholders was approved or recommended by a vote of at least
two-thirds (2/3) of the directors in office at the time of such approval or
recommendation who either were directors on February 1, 1995 or whose
appointment, election or nomination for election was previously so approved or
recommended; or
(iii) there is consummated a merger or consolidation of the
Corporation or any direct or indirect subsidiary of the Corporation with any
other corporation, other than (A) any such merger or consolidation after the
consummation of which the voting securities of the Corporation outstanding
immediately prior to such merger or consolidation continue to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity or any parent thereof) at least 50% of the combined voting
power of the voting securities of the Corporation or such surviving entity or
any parent thereof outstanding immediately after such merger or consolidation,
or (B) any such merger or consolidation effected to implement a recapitalization
of the Corporation (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Corporation (not
including in the securities Beneficially Owned by such Person any securities
acquired directly from the Corporation or its Affiliates) representing 20% or
more of either the then outstanding shares of common stock of the Corporation or
the combined voting power of the Corporation's then outstanding securities; or
(iv) the stockholders of the Corporation approve a plan of
complete liquidation or dissolution of the Corporation or there is consummated
an agreement for the sale or disposition by the Corporation of all or
substantially all of the Corporation's assets, other than a sale or disposition
by the Corporation of all or substantially all of the Corporation's assets to an
entity, at least 50% of the combined voting power of the voting securities of
which are owned by stockholders of the Corporation in substantially the same
proportions as their ownership of the Corporation immediately prior to such
transaction or series of transactions.
(d) For purposes of this Paragraph 36, the following terms shall
have the
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meanings indicated:
(i) "Affiliate" shall have the meaning set forth in Rule 12b-2
under Section 12 of the Exchange Act.
(ii) "Beneficial Owner" shall have the meaning set forth in
Rule 13d-3 under the Exchange Act, except that a Person shall not be deemed to
be the Beneficial Owner of any securities which are properly filed on a Form
13-G.
(iii)"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
(iv) "Person" shall have the meaning given in Section 3(a)(9)
of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof,
except that such term shall not include (i) the Corporation or any of its
Affiliates, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Corporation or any of its Affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities or (iv) a corporation owned, directly or indirectly, by the
stockholders of the Corporation in substantially the same proportions as their
ownership of stock of the Corporation.
37. Non-compete. (a) Any approval by the Committee of a participant who
takes early retirement being accorded the same treatment as a participant
retiring at or after age 65, as contemplated in Paragraphs 11, 22 and 29, and
any designation by the Committee of a termination as an "approved termination"
under Paragraph 28(a) shall be subject to the provisions of this Paragraph 37.
Any participant who is the beneficiary of any such approval or designation by
the Committee shall be deemed to have expressly agreed not to compete with the
Corporation or any subsidiary of the Corporation at which such participant was
employed at any time in the three years immediately prior to termination of
employment, as the case may be, in the geographic area in which the Corporation
or such subsidiary actively carried on business at the end of the participant's
employment there, for the period with respect to which such approval or
designation affords the participant enhanced benefits, which period shall be,
(a) with respect to stock options, the additional period allowed the participant
for the vesting and exercise of options outstanding at termination of
employment, (b) with respect to restricted stock, the period remaining after the
participant's termination of employment until the end of the original
restriction period for such restricted stock, and (c) with respect to
performance awards under the Cash Performance Program, the period until the
payment date following the end of the last applicable performance period.
(b) In the event that a participant shall fail to comply with the
provisions of this Paragraph 37, the Committee's approval and/or designation, as
applicable, described above shall be automatically rescinded and the participant
shall forfeit the enhanced benefits referred to above and shall return to the
Corporation the economic value theretofore realized by reason of such benefits
as determined by the Committee. If the provision of this Paragraph 37, or the
corresponding provisions of a grant, award or participation agreement, shall be
unenforceable as to any participant, the Committee may rescind any such approval
or designation with respect to such participant.
(c) If any provision of this Paragraph 37, or the corresponding
provisions of a
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grant, award or participation agreement, is determined by a court to be
unenforceable because of its scope in terms of geographic area or duration in
time or otherwise, the Corporation and the participant agree that the court
making such determination is specifically authorized to reduce the duration
and/or geographical area and/or other scope of such provision and, in its
reduced form, such provision shall then be enforceable; and in every case the
remainder of this Paragraph 37, or the corresponding provisions of a grant,
award or participation agreement, shall not be affected thereby and shall remain
valid and enforceable, as if such affected provision were not contained herein
or therein.
38. Interpretation. The Committee shall have the sole and complete
authority and discretion to decide any questions concerning the application,
interpretation or scope of any of the terms and conditions of the Plan and the
Program, of any stock option agreement, loan or restricted stock award agreement
entered into pursuant to the Plan, or of any participation under the Program,
and its decisions shall be binding and conclusive upon all interested parties.
39. Amendment. Except as expressly provided in the next sentence, the
Board of Directors may amend the Plan or Program in any manner it deems
necessary or appropriate (including any of the terms, conditions or definitions
contained herein), or terminate the Plan and/or Program at any time prior to
January 30, 2005; provided, however, that any such termination will not affect
the validity of any then outstanding options or restricted stock awards
previously granted under the Plan or outstanding participations under the
Program, as the case may be. Without the approval of the Corporation's
stockholders, the Board cannot: (a) increase the maximum number of shares
covered by the Plan or change the class of employees eligible to receive options
or restricted stock awards; (b) reduce the option price below the fair market
value of the Common Stock on the date of the option grant; or (c) extend beyond
120 months from the date of the grant the period within which an option may be
exercised.
40. Effectiveness, and Termination of Plan. The Plan and the Program will
become effective on the date of their adoption by the Board of Directors,
subject to ratification of the adoption of the Plan and the Program by
affirmative vote of holders of a majority of the issued and outstanding shares
of Common Stock. The Plan and Program will both terminate on January 30, 2005
and no option or restricted stock award grant or participation grant, as the
case may be, may be made on or after such date.
41. Foreign Jurisdictions. The Committee may adopt, amend, and terminate
such arrangements, not inconsistent with the intent of the Plan and the Program,
as it may deem necessary or desirable to make available tax or other benefits of
the laws of foreign jurisdictions to participants who are subject to such laws.
42. Governing Law. The Plan, the Program and all grants, options, awards
and payments made hereunder shall be governed by and interpreted in accordance
with the internal laws of the State of New York, without regard to conflicts of
law principles.
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Exhibit 10.6
EXECUTIVE SEVERANCE AGREEMENT
AGREEMENT made as of this 1st day of January, 1998 by and between DOVER
CORPORATION, a Delaware corporation (the "Corporation"), and __________________
(the "Executive");
W I T N E S S E T H :
WHEREAS, the Board of Directors of the Corporation (the "Board") has
determined that the Executive is a key executive of the Corporation or of a
direct or indirect subsidiary of the Corporation (a "Subsidiary");
WHEREAS, the Board considers the establishment and maintenance of a sound
and vital management to be essential to protecting and enhancing the best
interests of the Corporation and its stockholders;
WHEREAS, the possibility of an unsolicited tender offer or other takeover
bid for the Corporation and the consequent change of control, and the
uncertainty and questions which such possibility may raise among management, may
result in the departure or distraction of the Executive to the detriment of the
Corporation and its stockholders;
WHEREAS, the Corporation desires to provide the Executive with severance
benefits in the event that the Executive's employment with the Corporation or
with a Subsidiary, as the case may be, is terminated under certain circumstances
in order to assure a continuing dedication by the Executive to the performance
of the Executive's duties notwithstanding the occurrence of a tender offer or
other takeover bid for the Corporation and, particularly, to ensure that the
Executive will be in a position to assess and advise the Board whether proposals
from third persons would be in the best interests of the Corporation and its
stockholders without being influenced by the uncertainties as to the Executive's
own situation;
WHEREAS, the Executive has agreed that in addition to his or her regular
duties the Executive will, in the best interests of the Corporation and its
shareholders and as requested by the Board, assist the Corporation in the
evaluation of any such takeover or tender offer proposal or potential
combination or acquisition and render such other assistance in connection
therewith as the Board may determine to be appropriate, on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto agree as follows:
1. Services During Certain Events.
In the event any Person begins a tender or exchange offer, circulates a
proxy to shareholders, or takes other steps seeking to effect a Change of
Control (as hereinafter defined), the Executive will not voluntarily terminate
his or her employment with the Corporation or a Subsidiary, as the case may be,
and will continue to render services to the Corporation or such Subsidiary until
such Person has abandoned or terminated efforts to effect a Change of Control or
until 180 days after a Change of Control has occurred; provided, however, that
this Section 1 shall
<PAGE> 2
not apply if an Executive experiences a Termination (as defined in Section
3(a)).
2. Definitions.
(a) "Affiliate" shall have the meaning set forth in Rule 12b-2 under
Section 12 of the Exchange Act.
(b) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3
under the Exchange Act, except that a Person shall not be deemed to be the
Beneficial Owner of any securities which are properly filed on a Form 13-G.
(c) A "Change of Control" shall be deemed to have taken place upon the
occurrence of any of the following events:
(i) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Corporation (not including in the securities
beneficially owned by such Person any securities acquired directly from the
Corporation or its Affiliates) representing 20% or more of either the then
outstanding shares of common stock of the Corporation or the combined voting
power of the Corporation's then outstanding securities, excluding any Person who
becomes such a Beneficial Owner in connection with a transaction described in
clause (A) of paragraph (iii) below; or
(ii) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on the date
hereof, constitute the Board and any new director (other than a director whose
initial assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation, relating
to the election of directors of the Corporation) whose appointment or election
by the Board or nomination for election by the Corporation's stockholders was
approved or recommended by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors on the date hereof or whose
appointment, election or nomination for election was previously so approved or
recommended; or
(iii) there is consummated a merger or consolidation of the
Corporation or any direct or indirect subsidiary of the Corporation with any
other corporation, other than (A) a merger or consolidation which would result
in the voting securities of the Corporation outstanding immediately prior to
such merger or consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving entity
or any parent thereof) at least 50% of the combined voting power of the voting
securities of the Corporation or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization of the Corporation (or
similar transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Corporation (not including in the
securities Beneficially Owned by such Person any securities acquired directly
from the Corporation or its Affiliates) representing 20% or more of either the
then outstanding shares of common stock of the Corporation or the combined
voting power of the Corporation's then outstanding securities; or
(iv) the stockholders of the Corporation approve a plan of complete
liquidation or dissolution of the Corporation or there is consummated an
agreement for the sale or disposition by
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the Corporation of all or substantially all of the Corporation's assets, other
than a sale or disposition by the Corporation of all or substantially all of the
Corporation's assets to an entity, at least 50% of the combined voting power of
the voting securities of which are owned by stockholders of the Corporation in
substantially the same proportions as their ownership of the Corporation
immediately prior to such transaction or series of transactions.
(d) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(e) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (i) the Corporation or any of its Affiliates,
(ii) a trustee or other fiduciary holding securities under an employee benefit
plan of the Corporation or any of its Affiliates, (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities or
(iv) a corporation owned, directly or indirectly, by the stockholders of the
Corporation in substantially the same proportions as their ownership of stock of
the Corporation.
(f) A "Potential Change of Control" shall be deemed to have occurred if
the event set forth in any one of the following paragraphs shall have occurred:
(i) the Corporation enters into an agreement, the consummation of
which would result in the occurrence of a Change of Control;
(ii) the Corporation or any Person publicly announces an intention
to take or to consider taking actions which, if consummated, would constitute a
Change of Control;
(iii) any Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Corporation representing 15% or more of either
the then outstanding shares of common stock of the Corporation or the combined
voting power of the Corporation's then outstanding securities (not including in
the securities beneficially owned by such Person any securities acquired
directly from the Corporation or its Affiliates); or
(iv) the Board adopts a resolution to the effect that, for purposes
of this Agreement, a Potential Change of Control has occurred.
3. Termination After Change of Control.
(a) No benefits shall be payable under this Agreement except in the event
of a Termination. For purposes of this Agreement, a Termination shall be deemed
to have occurred if any of the following events occur within 18 months after a
Change of Control:
(i) The termination by the Corporation or a Subsidiary, as the case
may be, of the Executive's employment for any reason other than Cause (as
defined herein), death or Disability (as defined herein).
(ii) The termination by the Executive of the Executive's employment
for Good Reason. Good Reason shall be deemed to exist upon the occurrence,
without the Executive's express written consent, of any of the following events:
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<PAGE> 4
(A) A significant reduction or alteration in the duties and
responsibilities held by the Executive prior to the Change of Control, or a
change in the Executive's reporting responsibilities, titles or status in effect
immediately prior to the Change of Control, or any removal of the Executive from
or any failure to reelect the Executive to any positions held by the Executive
immediately prior to the Change of Control, except in connection with the
termination of the Executive's employment for Cause, Disability or death; or
(B) The reduction of the Executive's base salary and/or
incentive compensation opportunity from that in effect immediately prior to the
Change of Control or as the same may be increased thereafter from time to time,
which is not remedied within 30 days after receipt by the Corporation of written
notice from the Executive; or the Executive's being required to be based in any
location that is more than thirty (30) miles from the location at which the
Executive was based immediately prior to the Change of Control, except for
required travel on business to an extent substantially consistent with the
Executive's business travel obligations immediately prior to the Change of
Control; or
(C) The failure by the Corporation to continue in effect any
benefit or compensation plan in which the Executive is participating immediately
prior to the Change of Control, the taking of any action by the Corporation
which would adversely affect the Executive's participation in or materially
reduce the Executive's benefits under any of such plans, or deprive the
Executive of any material fringe benefit enjoyed by the Executive prior to the
Change of Control, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such plan and the
Executive's participation therein, or the failure by the Corporation to provide
the Executive with vacation time to which the Executive is then entitled in
accordance with the Corporation's normal vacation policy in effect on the date
hereof; or
(D) the failure by the Corporation to pay to the Executive any
portion of the Executive's current compensation, or to pay to the Executive any
portion of an installment of deferred compensation under any deferred
compensation program of the Corporation, within five (5) days of the date such
compensation is due; or
(E) any purported termination of the Executive's employment
which is not effected pursuant to a written notice of termination; or
(F) failure of the Corporation to obtain assumption of this
Agreement by any successor to the Corporation.
(b) A Termination also shall have occurred if the Executive's employment
with the Corporation or a Subsidiary, as the case may be, is terminated for any
reason other than Cause (as defined herein), death or Disability (as defined
herein) after a Potential Change of Control has occurred, provided the
Termination is at the direction of the acquiring entity or other third party
otherwise involved in the event causing the Potential Change of Control and the
Termination occurs within the six (6) month period preceding the actual
occurrence of a Change of Control.
(c) The termination of the Executive's employment shall be deemed to have
been for Cause only if the termination shall have been based on (i) the
Executive having willfully and continually failed to perform substantially his
or her duties with the Corporation (other than such
4
<PAGE> 5
failure resulting from incapacity due to physical or mental illness, death or
Disability) after not less than twenty (20) days have expired following a
written demand for substantial performance has been delivered to the Executive
by the Board or the President of the Corporation which specifically identifies
the manner in which the Executive is not substantially performing his or her
duties; or (ii) the Executive having willfully engaged in conduct which is
materially and demonstrably injurious to the Corporation. For purposes of this
section, no act, or failure to act, on the part of the Executive shall be
considered "willful" unless done, or omitted to be done, by the Executive in bad
faith and without reasonable belief that such action or omission was in, or not
opposed to, the best interests of the Corporation. Any act or failure to act
based upon authority given pursuant to a resolution duly adopted by the Board or
based upon the advice of counsel to the Corporation shall be conclusively
presumed to be done or omitted to be done by the Executive in good faith and in
the best interests of the Corporation. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause unless and until
there shall have been delivered to the Executive a copy of a written resolution
duly adopted by the affirmative vote of not less than three-quarters (3/4) of
the entire membership of the Board at a meeting called and held for that purpose
after reasonable notice to and opportunity for the Executive and the Executive's
counsel to be heard by the Board, finding that the Executive was guilty of the
conduct set forth above in (i) or (ii) and specifying the particulars thereof in
detail.
(d) Disability shall mean the Executive's absence from the performance of
duties on a full time basis for one hundred eighty (180) consecutive days as a
result of the Executive's incapacity due to physical or mental illness, unless,
within thirty (30) days after notice of termination due to disability is given
to the Executive following such absence, the Executive shall have returned to
the full time performance of duties.
4. Severance Benefits.
Upon Termination and upon the written demand of the Executive, the
Executive shall be entitled to, and the Corporation shall provide the Executive
immediately with, the following severance benefits (the "Severance Benefits"):
(a) Payment to the Executive as compensation for services rendered to the
Corporation of a lump sum cash amount (the "Lump Sum Amount") equal to three
times the sum of (a) the Executive's base salary as in effect immediately prior
to the date of termination or, if higher, in effect immediately prior to the
first occurrence of an event or circumstance constituting Good Reason, and (b)
the average annual bonus earned by the Executive pursuant to any annual bonus or
incentive plan maintained by the Corporation in respect of the three fiscal
years ending immediately prior to the fiscal year in which occurs the date of
termination or, if higher, immediately prior to the fiscal year in which occurs
the Change of Control (but excluding therefrom any amounts paid or accrued under
the Dover Corporation Cash Performance Program).
(b) The Executive's participation in the life, accident and health
insurance plans of the Corporation prior to the Change of Control shall be
continued without interruption, or equivalent benefits provided by the
Corporation, at no direct cost to the Executive, for a period of three years
from the date of Termination.
5. Stock Option and Other Plans.
5
<PAGE> 6
The rights of the Executive at the date of Termination under the
Corporation's stock option, savings, cash performance, deferred compensation,
retirement and other incentive and benefit plans or programs, including but not
limited to any terminating distributions and vesting of rights under such plans
or programs or awards or grants thereunder shall be governed by the terms of
those respective plans or programs and any agreements relating to such plans or
programs.
6. Term.
This Agreement shall commence on the date hereof and shall continue in
effect until the one year anniversary thereof; provided, however, that
commencing on the date of such anniversary, the term of this Agreement shall
automatically be extended for one additional year unless at least 180 days prior
to the last day of any term, the Corporation or the Executive shall have given
notice that this Agreement shall not be extended; and provided, further, that
this Agreement shall continue in effect for a period of eighteen months beyond
the term provided herein if a Change of Control of the Corporation shall have
occurred during such term.
7. Indemnification.
If litigation or arbitration shall be brought to enforce or interpret any
provision contained herein, whether by the Corporation, the Executive, or any
other person, the Corporation will indemnify the Executive for any reasonable
attorneys' fees and disbursements incurred by the Executive in such litigation
or arbitration, and hereby agrees to pay pre-judgment interest on any money
judgment obtained by the Executive in such litigation or arbitration calculated
at the prime interest rate charged by Chase Manhattan Bank, New York, New York
in effect from time to time from the date that payment to the Executive should
have been made under this Agreement.
8. Confidentiality.
The Executive shall retain in confidence any proprietary or confidential
information known to the Executive concerning the Corporation and its
subsidiaries and their respective businesses so long as such information is not
publicly available, except as shall be required by law or as shall be reasonably
necessary for disclosure to the Executive's legal advisors.
9. Taxes.
If any payments or benefits received or to be received by the Executive in
connection with a Change of Control or the Executive's termination of employment
(whether pursuant to the terms of this Agreement or any other plan, arrangement
or agreement with the Corporation or any Subsidiary or affiliate of the
Corporation or any successor to any of them, any Person whose actions result in
a Change of Control or any Person affiliated with the Corporation or such
Person) (such payments or benefits, excluding the Gross-Up Payment (as defined
below) being hereinafter referred to as the "Total Payments") shall be subject
to the Excise Tax (as defined below) on such Total Payments, then the
Corporation shall pay to the Executive an additional amount (the "Gross-Up
Payment") such that the portion of the Gross-Up Payment retained by the
Executive, after the deduction of all taxes payable by the Executive on the
Gross-Up Payment and interest and penalties on such taxes, including, without
limitation, any income and employment taxes and the Excise Tax imposed on the
Gross-Up Payment (and any interest and penalties imposed with respect thereto),
shall be equal to the Reimbursable Excise Tax (as defined below) (and any
interest and penalties imposed with
6
<PAGE> 7
respect thereto).
As used herein, (i) Excise Tax shall mean the tax imposed by Section 4999
of the Internal Revenue Code of 1986, as amended ("Code") or any successor
provision of the Code, together with any interest and penalties with respect
thereto; (ii) Reimbursable Excise Tax shall be the amount of the Excise Tax on
the Taxable Amount (as defined below) determined as if the Taxable Amount were
the only portion of the Total Payments on which the Excise Tax is imposed; and
(iii) Taxable Amount shall be the Lump Sum Amount as reduced by the "base
amount" determined pursuant to Section 280G(b)(3) of the Code.
In the event that the Executive and the Corporation dispute whether there
should be any reduction in payments pursuant to this Section 9, the
determination of whether such reduction is necessary shall be made by an
independent accounting firm or law firm mutually acceptable to the Executive and
the Corporation and such determination shall be conclusive and binding on the
Corporation and the Executive.
10. General.
(a) Obligations of the Corporation. In the event that the Executive is
employed by a Subsidiary, the Corporation, while remaining as primary obligor,
may cause such Subsidiary to perform the Corporation's obligations hereunder.
(b) Payment Obligations Absolute. The Corporation's obligation to pay the
Executive the amounts due hereunder and to make the arrangements provided for
herein shall be absolute and unconditional and shall not be affected by any
circumstances, including without limitation, any set-off, counterclaim,
recoupment, defense or other right which the Corporation may have against him or
anyone else under this Agreement or otherwise. Each and every payment made
hereunder by the Corporation shall be final and the Corporation will not seek to
recover all or any part of such payment from the Executive or from whomsoever
may be entitled thereto for any reason whatsoever. In no event shall the
Executive be obligated to seek other employment in mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement, and the
obtaining of any such other employment shall in no event effect any reduction of
the Corporation's obligation to make the payments and arrangements required to
be made under this Agreement.
(c) Successors; Binding Agreement.
(i) As used in this Agreement, the Corporation refers not only to
itself but also to its successors by merger or otherwise. The Corporation will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of its business and/or
assets, by written agreement in binding form and substance, expressly to assume
and agree to perform this Agreement in the same manner and to the same extent
that the Corporation would be required to perform it if no such succession had
occurred. Failure of the Corporation to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement, and
shall entitle the Executive to make demand upon and require the Corporation, if
it is not already required to do so, to provide the Severance Benefits required
by Section 4 above.
(ii) This Agreement shall be binding upon and inure to the benefit
of the Executive and his or her estate and to the benefit of the Corporation and
any successor to the
7
<PAGE> 8
Corporation, but neither this Agreement nor any rights arising hereunder may be
assigned or pledged by the Executive.
(d) Severability. Any provision in this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective, and then only to the extent of such prohibition or unenforceability
without affecting the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(e) Controlling Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York without reference to
the principles of conflict of laws, except insofar as it may require application
of the corporation law of the State of Delaware.
(f) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when delivered by hand to
the other party, or sent by registered or certified mail, return receipt
requested, postage prepaid, addressed to the respective party at the address
stated below or to such other address as the addressee may have given by a
similar notice:
If to the Executive:
________________________
________________________
________________________
If to the Corporation:
Dover Corporation
280 Park Avenue
New York, New York 10017
Attention: Chief Executive Officer
(g) Amendment. This Agreement may be modified or amended only by an
agreement in writing executed by both of the parties hereto.
(h) No Employment. Except as otherwise expressly provided in this
Agreement, this Agreement shall not confer any right or impose any obligation on
the Executive to continue in the employ of the Corporation nor shall it limit
the right of the Corporation or the Executive to terminate the Executive's
employment at any time prior to a Change of Control.
(i) Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in New York, New
York by three arbitrators, of which each party shall appoint one, in accordance
with the Center for Public Resources Rules for Non-Administered Arbitration of
Business Disputes then in effect. Any arbitrator not appointed by a party shall
be selected from the CPR Panels of Distinguished Neutrals. The arbitration shall
be governed by the United States Arbitration Act, 9 U.S.C. ss.ss.1 to 16.
Judgment may be entered on the arbitrators' award in any court having
jurisdiction. The Corporation shall bear all costs and expenses arising in
connection with any arbitration proceeding pursuant hereto. The arbitrators are
not empowered to award damages in excess of actual damages. Notwithstanding
anything to the
8
<PAGE> 9
contrary herein, in any dispute involving whether a Termination was for Good
Reason or for Cause, as the case may be, the Corporation shall have the
obligation to present its case by establishing, and shall prevail in the
proceeding only if and to the extent it establishes, with clear and convincing
evidence that the Termination was in fact not as the result of Good Reason or
was for Cause, as the case may be.
(j) Conflict in Benefits. This Agreement is not intended to and shall not
repeal or terminate any other written agreement between the Executive and the
Corporation presently in effect or hereafter executed. Any benefits provided
hereunder and not provided under any other written agreement shall be in
addition to the benefits provided by any other written agreement. In the event
that the same type of benefits are covered under this Agreement and under any
other written agreement, the Executive shall have the right to elect which
benefits the Executive shall receive. Such election shall be made in writing at
the same time that the Executive makes written demand under Section 4 of this
Agreement.
(k) Entire Agreement. This Agreement contains the entire agreement between
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements, understandings and arrangements, whether written or oral,
between the parties hereto with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
--------------------------------
EXECUTIVE
DOVER CORPORATION
By:
----------------------------
9
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF DOVER
Domestic Subsidiaries
State of
Name Incorporation
- ---- -------------
A-C Compressor Corporation Delaware
Arizona Elevator, Inc. Delaware
Avtec Industries, Inc. Delaware
Belvac Production Machinery, Inc. Virginia
Chief Automotive Systems, Inc. Delaware
Communications Techniques, Inc. Delaware
Conmec, Inc. Delaware
Davenport Machine, Inc. Delaware
DEK U.S.A., Inc. Delaware
Delaware Capital Formation, Inc. Delaware
Delaware Capital Holdings, Inc. Delaware
Dielectric Laboratories, Inc. Delaware
Dover Diversified, Inc. Delaware
Dover Elevator Company Delaware
Dover Elevator International, Inc. Delaware
Dover Elevator Systems, Inc. Delaware
Dover Europe Corporation Delaware
Dover France Holdings Corp. Delaware
Dover Industries, Inc. Delaware
Dover Resources Inc. Delaware
Dover Technologies International, Inc. Delaware
Dow-Key Microwave, Inc. Delaware
Duncan Industries Parking Control Systems Corp. Delaware
Everett Charles Technologies, Inc. Delaware
General Elevator Company, Inc. Maryland
Groen, Inc. Delaware
Hill Phoenix Inc. Delaware
Hydro Systems Company Delaware
K&L Microwave, Inc. Delaware
Marathon Equipment Company Delaware
Mark Andy, Inc. Missouri
Miami Elevator Company Delaware
Midland Manufacturing Company Delaware
Pathway Bellows, Inc. Delaware
Petro Vend, Inc. Delaware
PDQ Manufacturing, Inc. Delaware
PRC Corporation Delaware
Preco Turbine and Compressor Services, Inc. Texas
Quartzdyne, Inc. Delaware
Randell Manufacturing, Inc. Delaware
Refrigeration Systems, Inc. Delaware
Revod Corporation Delaware
Robohand, Inc. Delaware
Ronningen-Petter Delaware
Security Elevator Company, Inc. Delaware
Sonic Industries, Inc. California
Sound Elevator Co. Delaware
Sanger Works Factory Holdings, Inc. California
<PAGE> 2
State of
Name Incorporation
- ---- -------------
Texas Hydraulics, Inc. Delaware
The Heil Company Delaware
The Wittemann Company, Inc. Delaware
Thermal Equipment Corporation California
Tipper Tie, Inc. Delaware
TNI, Inc. Delaware
Tranter, Inc. Michigan
Tulsa-Winch, Inc. Delaware
Universal Instruments Corporation Delaware
Vectron Laboratories, Inc. Delaware
Vectron Technologies, Inc. Delaware
Vitronics Corporation Delaware
Waukesha Bearings Corporation Wisconsin
Weldcraft Products, Inc. Delaware
Wilden Pump and Engineering Company, Inc. Delaware
Wiseco Piston Company, Inc. Delaware
Foreign Subsidiaries
Name Jurisdiction
- ---- ------------
atg test systems GmbH Germany
DEK Printing Machines Ltd. United Kingdom
Dover Corporation (Canada) Ltd. Canada
Dover Europe Afzug GmbH Germany
Dover Europe GmbH Germany
Dover Exports, Ltd. Barbados
Dover France Holdings SARL France
Dover International Finance Services Ltd. United Kingdom
Dover UK Holdings Ltd. United Kingdom
HTT Heat Transfer Technologies, S.A. Switzerland
Imaje S.A. France
Imaje GmbH Germany
Langbein & Engelbracht, GmbH Germany
Luther & Maezler GmbH Germany
Soltec International, B.V. Netherlands
SWEP International AB Sweden
SWEP Technologies AB Sweden
Universal Electronics Systems H.K. Ltd. Hong Kong
Other subsidiaries of the Registrant have been omitted from this listing since,
considered in the aggregate as a single subsidiary, they would not constitute a
"significant subsidiary".
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in (a) the Registratioin Statement
of Dover Corporation on Form S-8 (File No. 33-45661), (b) the Registration
Statement of Dover Corporation on Form S-8 (File No. 33-11229), and (c) the
Registration Statement of Dover Corporation on Form S-8 (File No. 33-1419), of
our report dated February 5, 1999, on our audits of the consolidated financial
statements and financial statement schedule of Dover Corporation and
subsidiaries as of December 31, 1998 and 1997, and for the years ended December
31, 1998, 1997 and 1996, which report is included in this Annual Report on Form
10-K.
PricewaterhouseCoopers LLP
New York, New York
March 26, 1999
<PAGE> 1
EXHIBIT 24
P O W E R O F A T T O R N E Y
KNOW ALL MEN BY THESE PRESENTS that, a director of Dover
Corporation, a Delaware corporation (the "Company"), hereby constitutes and
appoints Thomas L. Reece, John F. McNiff and Robert G. Kuhbach, and each of them
(with full power to each of them to act alone), his true and lawful
attorney-in-fact and agent, for him/her on his/her behalf and in his/her name,
place and stead, to sign, execute and affix his/her name thereto and file the
Corporation's Annual Report on Form 10-K for the fiscal year ended December 31,
1998, with the Securities and Exchange Commission and any other appropriate
authority, granting unto said attorneys and each of them, full power and
authority to do and perform each and every act and thing required and necessary
to be done in and about the premises in order to effectuate the same as fully to
all intents and purposes as he/she himself might or could do if personally
present, hereby ratifying and confirming all that said attorneys-in-fact and
agents, of any of them may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his/her hand
this 29th day of January, 1999.
/s/ David H. Benson
------------------------
David H. Benson
/s/ Magalen O. Bryant
------------------------
Magalen O. Bryant
/s/ John-Pierre M. Ergas
------------------------
John-Pierre M. Ergas
/s/ Roderick J. Fleming
------------------------
John-Pierre Ergas
/s/ James L. Koley
------------------------
James L. Koley
/s/ John F. McNiff
------------------------
John F. McNiff
/s/ John E. Pomeroy
------------------------
John E. Pomeroy
/s/ Thomas L. Reece
------------------------
Thomas L. Reece
/s/ Gary L. Roubos
------------------------
Gary L. Roubos
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the Dover
Corporation Annual Report to stockholders for the fiscal year ended December 31,
1998, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 96,774
<SECURITIES> 0
<RECEIVABLES> 596,585
<ALLOWANCES> 20,955
<INVENTORY> 559,267
<CURRENT-ASSETS> 1,304,524
<PP&E> 1,282,436
<DEPRECIATION> 710,473
<TOTAL-ASSETS> 3,627,276
<CURRENT-LIABILITIES> 989,747
<BONDS> 610,090
0
0
<COMMON> 235,571
<OTHER-SE> 1,675,313
<TOTAL-LIABILITY-AND-EQUITY> 3,627,276
<SALES> 3,977,666
<TOTAL-REVENUES> 3,977,666
<CGS> 2,551,381
<TOTAL-COSTS> 3,445,706
<OTHER-EXPENSES> (3,124)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 60,746
<INCOME-PRETAX> 488,646
<INCOME-TAX> 162,249
<INCOME-CONTINUING> 326,397
<DISCONTINUED> 52,448
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 378,845
<EPS-PRIMARY> 1.70
<EPS-DILUTED> 1.69
</TABLE>
