<PAGE>
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 September 30, 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 number 1-278
EMERSON ELECTRIC CO.
(Exact name of registrant as specified in its charter)
Missouri 43-0259330
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8000 W. Florissant Ave.
P.O. Box 4100
St. Louis, Missouri 63136
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (314) 553-2000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock of $.50 par value per share New York Stock Exchange
Chicago Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Chicago Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months, and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
<PAGE>
Aggregate market value of the voting stock held by nonaffiliates of the
registrant as of close of business on October 30, 1998: $28,692 million.
Common stock outstanding at October 31, 1998: 438,098,038 shares.
Documents Incorporated by Reference
1. Portions of Emerson Electric Co. 1998 Annual Report to Stockholders
(Parts I and II).
2. Portions of Emerson Electric Co. Notice of 1999 Annual Meeting of
the Stockholders and Proxy Statement (Part III).
<PAGE>
PART I
Item 1. Business
-----------------
Emerson was incorporated in Missouri in 1890. Originally engaged in
the manufacture and sale of electric motors and fans, Emerson subsequently
expanded its product lines through internal growth and acquisitions.
Emerson is now engaged principally in the worldwide design, manufacture
and sale of a broad range of electrical, electromechanical and electronic
products and systems.
------------------------------------------------------
The products manufactured by the Company are classified into the
following industry segments: Commercial and Industrial Components and
Systems, and Appliance and Construction-Related Components. Net sales,
income before income taxes and total assets attributable to each industry
segment for the three years ended September 30, 1998, are set forth
in Note 13 of Notes to Consolidated Financial Statements on page 39
of the 1998 Annual Report, which note is hereby incorporated by reference.
Information with respect to acquisition and divestiture activities by Emerson
is set forth in Note 2 of Notes to Consolidated Financial Statements on
page 33 of the 1998 Annual Report, which note is hereby incorporated by
reference.
COMMERCIAL AND INDUSTRIAL COMPONENTS AND SYSTEMS
------------------------------------------------
The Commercial and Industrial segment includes process control
instrumentation, valves and systems; industrial motors and drives;
industrial machinery, equipment and components; and electronics. These
products are generally highly engineered, both in product design
and manufacturing process. Products of this segment are sold to commercial
and industrial distributors and end-users for manufacturing and commercial
applications.
Products used in process industries include various types of
instrumentation, valves and control systems for measurement and
control of fluid flow. Included are various types of meters such as
rotameters, positive displacement meters, magnetic flow meters,
turbine meters, direct mass flow meters and instruments to measure water
quality. Other products include solid state telemetering equipment, various
types of pressure and vacuum relief valves and personal computer-based
software used for industrial automation applications. In addition, Emerson
manufactures and sells temperature sensors, pressure sensors and transmitters
used to measure and/or control temperature, pressure, level and rate and
amount of flow. Also produced are process gas chromatographs, in-situ oxygen
analyzers, infrared gas and process fluid analyzers, combustion analyzers and
systems, and other analyzers which measure pH and conductivity. The Company
also manufactures and sells sliding stem valves, rotary valves, plastic-lined
plug valves, butterfly valves, pressure regulators, and related actuators and
controllers. In addition, Emerson provides repair services for many of these
products, as well as engineered solutions and consulting services.
2
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Emerson also manufactures electronic measurement, data acquisition
and condition monitoring equipment for use in industrial processing. In
addition, Emerson produces vibratory separating equipment used primarily in
the chemical, mining, pharmaceutical, food processing, pulp and paper, ceramic
and metal-working markets.
Beginning with a line of electric motors for industrial and heavy
commercial applications, Emerson's products for industrial automation
include certain kinds of integral horsepower motors, gear drives, pump
motors, alternators, electronic variable speed drives and diesel generator
sets. Emerson also produces and services electronic uninterruptible and
primary power supplies, power conditioning, conversion and distribution
equipment, modular power systems, electrical testing equipment and
environmental control systems and electronic components used in communications
and information processing applications.
Emerson manufactures and sells components for the transmission and regulation
of mechanical power, such as certain kinds of chains, sprockets, sheaves,
gears, bearings, couplings and speed reducers, and a line of cam-operated
index drives, programmable motion controllers and automation accessories.
These products are used primarily in industrial and commercial applications
requiring the transmission of mechanical motion or drive systems of various
types.
Emerson also manufactures a line of multi-purpose pressure and solenoid
valves, pressure, vacuum and temperature switches, automatic transfer
switches, remote control switches and electric power and pump control systems.
These products are widely used in the automation of equipment and industrial
processes and for the control of emergency electric power.
Emerson also produces a variety of industrial and commercial ultrasonic
products for applications such as cleaning, sealing, welding and flaw
detection. Other products include material preparation and microstructure
analysis equipment. Emerson also manufactures electric circulation heaters,
fluid heat transfer systems and component heating elements.
Emerson manufactures a broad line of components for current- and noncurrent-
carrying electrical distribution devices such as panelboards, receptacles,
fittings, cable handling reels and lighting products for use in hazardous and
nonhazardous environments.
APPLIANCE AND CONSTRUCTION-RELATED COMPONENTS
---------------------------------------------
The Appliance and Construction-Related segment consists of fractional motors
and appliance components; heating, ventilating and air conditioning
components; and tools. This segment includes components sold to distributors
and original equipment manufacturers for inclusion in end products and systems
(ultimately sold through commercial and residential building construction
channels), and construction-related products which retain their identity and
are sold through distributors to consumers and the professional trades.
3
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Emerson manufactures and sells a variety of components and systems for
refrigeration and comfort control applications, including hermetic and semi-
hermetic compressors; hermetic motors and terminals for hermetically sealed
compressors; and fractional and sub-fractional horsepower motors for selected
appliance, office equipment, ventilating equipment, pump, heater and other
motor-driven machine applications. Automatic temperature controls, timers,
switches, electronics, thermo-protective devices and pumps are manufactured
for gas and electric heating systems, refrigeration and air conditioning
equipment and various large and small appliances. Emerson also manufactures
and sells a variety of electric heating elements and electrostatic air
cleaners.
Emerson manufactures and sells a line of electrical products primarily for the
residential markets, including electric waste disposers, hot water dispensers,
ventilating equipment and exhaust fans.
Emerson is a producer of selected professional and hardware tools and
accessories, and service equipment. These products include certain kinds of
wrenches, thread cutters, pipe cutters, reamers, vises, pipe and bolt
threading machines and sewer and drain cleaning equipment. Emerson also
manufactures power tool accessories such as drill, router and screwdriver
bits, and saw blades. The principal markets for these professional tools and
service equipment include plumbing, heating and air conditioning contractors,
construction and maintenance companies, petroleum and gas producers, refiners
and processors, and farm and home consumers.
Emerson produces ladders, scaffolding and related accessories, free-standing
and wall-mounted ventilated shelving and specialty storage products. Also
produced by Emerson for marketing by a major retailer are shop vacuum
cleaners, a line of bench power tools for home workshop use and a
line of hand tools including adjustable wrenches, screwdrivers, pliers and
chisels.
PRODUCTION
----------
Emerson utilizes various production operations and methods. The principal
production operations are metal stamping, forming, casting, machining,
welding, plating, heat treating, painting and assembly. In addition,
Emerson also uses specialized production operations, including automatic
and semiautomatic testing, automated material handling and storage, ferrous
and nonferrous machining and special furnaces for heat treating and foundry
applications. Management believes the equipment, machinery and tooling used
in these processes are of modern design and are well maintained.
RAW MATERIALS AND ENERGY
------------------------
Emerson's major requirements for basic raw materials include steel, copper,
cast iron, aluminum and brass and, to a lesser extent, plastics and other
petroleum-based chemicals. Emerson has multiple sources of supply for each
of its major requirements and is not significantly dependent on any one
supplier. The raw materials and various purchased components required for
its products have generally been available in sufficient quantities.
4
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Emerson uses various forms of energy, principally natural gas and electricity,
obtained from public utilities. A majority of the plants have the capability
of being converted to use alternative sources of energy.
PATENTS, TRADEMARKS, LICENSES AND FRANCHISES
--------------------------------------------
The Company has a number of patents, trademarks, licenses and franchises, none
of which is considered material to any segment of its consolidated operations.
BACKLOG
-------
The estimated consolidated order backlog of the Company was $2,084 million
and $1,989 million at September 30, 1998 and 1997, respectively. Nearly all
of the September 30, 1998 consolidated backlog amount is expected to be
shipped within one year. The estimated backlog by industry segment at
September 30, 1998 and 1997, follows (dollars in millions):
1998 1997
------- -------
Commercial and Industrial $ 1,361 1,331
Appliance and Construction-Related 723 658
------- -------
Consolidated Order Backlog $ 2,084 1,989
======= =======
COMPETITION
-----------
Emerson's businesses are highly competitive, and Emerson competes on product
performance, quality, service or price across the industries and markets
served. A significant element of the Company's competitive strategy is its
objective to manufacture high quality products at the lowest relevant global
cost. Although no single company competes directly with Emerson in all of the
Company's product lines, various companies compete in one or more product
lines. Some of these companies have substantially greater sales and assets
than Emerson, and Emerson also competes with many smaller companies. The
number of Emerson's competitors varies by product line, and management
believes that Emerson has a market leadership position in many of these
product lines.
RESEARCH AND DEVELOPMENT
------------------------
Costs associated with Company-sponsored research, new product development
and product improvement were $491.3 million in 1998, $445.1 million in 1997
and $398.7 million in 1996.
5
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ENVIRONMENT
-----------
The Company's manufacturing locations generate waste, the treatment, storage,
transportation and disposal of which are subject to federal, state and/or
local laws and regulations relating to the protection of the environment.
Compliance with laws regulating the discharge of materials into the
environment or otherwise relating to the protection of the environment has not
had a material effect upon Emerson's capital expenditures, earnings or
competitive position. It is not anticipated that Emerson will have material
capital expenditures for environmental control facilities during the next
fiscal year.
EMPLOYEES
---------
Emerson and its subsidiaries had an average of approximately 111,800 employees
during 1998. Management believes that the Company's employee relations are
favorable. Some of the Company's employees are represented by collective
bargaining agreements, but none of these is considered significant.
DOMESTIC AND FOREIGN OPERATIONS
-------------------------------
International sales were $5,387 million in 1998, $5,245 million in 1997 and
$4,867 million in 1996, including U.S. exports of $968 million, $1,054 million
and $885 million in 1998, 1997 and 1996, respectively. Although there are
additional risks attendant to foreign operations, such as nationalization of
facilities, currency fluctuations and restrictions on the movement of funds,
Emerson's financial position has not been materially affected thereby to date.
See Note 13 of Notes to Consolidated Financial Statements on page 39 of the
1998 Annual Report for further information with respect to foreign operations.
Item 2. Properties
-------------------
At September 30, 1998, Emerson had approximately 370 manufacturing locations
worldwide, of which approximately 190 were located outside the United States,
primarily in Europe and to a lesser extent in Asia-Pacific, Canada and Latin
America. Approximately 240 locations are occupied by the Commercial and
Industrial segment, and approximately 130 are occupied by the Appliance and
Construction-Related segment. The majority of the locations are owned or
occupied under capital lease obligations, with the remainder occupied under
operating leases. The Company considers its facilities suitable and adequate
for the purposes for which they are used.
Item 3. Legal Proceedings
--------------------------
Emerson is a party to a number of pending legal proceedings, several of which
claim substantial amounts of damages. There are no pending legal proceedings
that management believes will be material in relation to the Company's
business or financial position.
6
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
------------------------------------------------------------
There were no matters submitted to a vote of security holders during the
quarter ended September 30, 1998.
-------------------------------------------
Executive Officers of the Registrant
The following sets forth certain information as of December 1998 with respect
to Emerson's executive officers. These officers have been elected or
appointed to terms which will expire February 2, 1999:
First
Served as
Name Position Age Officer
---- -------- --- ----------
C. F. Knight* Chairman of the Board
and Chief Executive Officer 62 1972
G. W. Tamke* President and Chief Operating
Officer 51 1989
A. E. Suter* Senior Vice Chairman and
Chief Administrative Officer 63 1979
R. W. Staley* Vice Chairman
63 1975
J. G. Berges* Vice Chairman 51 1989
W. J. Galvin Senior Vice President - Finance
and Chief Financial Officer 52 1984
W. W. Withers Senior Vice President, Secretary
and General Counsel 58 1989
*Also chairman and/or member of certain committees of the Board of
Directors.
There are no family relationships among any of the executive officers
and directors.
Each of the above has served as an officer or in a supervisory
capacity with Emerson for the last five years.
7
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
----------------------------------------------------------------------
Matters
-------
The information regarding the market for the Company's common stock, quarterly
market price ranges and dividend payments set forth in Note 14 of Notes to
Consolidated Financial Statements on page 40 of the 1998 Annual Report is
hereby incorporated by reference. There were approximately 37,200
stockholders at September 30, 1998. In 1998, the Company issued
122,097 shares of common stock in connection with the acquisition of all of
the stock from the five shareholders of a process control consulting company
with some of the shares subject to forfeiture over a three-year period. The
shares were not registered under the Securities Act of 1933 in reliance on the
exemption provided by Section 4(2) of the Act.
Item 6. Selected Financial Data
--------------------------------
Years ended September 30
(Dollars in millions except per share amounts)
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
Net sales $ 13,447.2 12,298.6 11,149.9 10,012.9 8,607.2
Net earnings $ 1,228.6 1,121.9 1,018.5 907.7 788.5
Basic earnings
per common share $ 2.80 2.52 2.27 2.03 1.76
Diluted earnings
per common share $ 2.77 2.50 2.25 2.01 1.75
Cash dividends
per common share $ 1.18 1.08 .98 .89 .78
Long-term debt $ 1,056.6 570.7 772.6 208.6 279.9
Total assets $ 12,659.8 11,463.3 10,481.0 9,399.0 8,215.0
Income before cumulative effect of change in accounting for postemployment
benefits ($21.3 million, $.05 per share) was $929.0 million in 1995.
Income before cumulative effect of change in accounting for postretirement
benefits ($115.9 million, $.26 per share) was $904.4 million in 1994. Net
earnings in 1995 and 1994 include non-recurring items which were substantially
offset by the accounting change.
See Note 2 of Notes to Consolidated Financial Statements on page 33
of the 1998 Annual Report for information regarding the Company's acquisition
and divestiture activities.
8
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition
--------------------------------------------------------------------
and Results of Operations
-------------------------
Narrative discussion appearing under "Results of Operations" and "Financial
Position, Capital Resources and Liquidity" on pages 22 through 26, and the
"Safe Harbor Statement" on page 48 of the 1998 Annual Report are hereby
incorporated by reference.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
---------------------------------------------------------------------
Narrative discussion appearing under "Financial Instruments" on page 26 of the
1998 Annual Report is hereby incorporated by reference.
Item 8. Financial Statements and Supplementary Data
----------------------------------------------------
The consolidated financial statements of the Company and its subsidiaries
on pages 27 through 40 and the report thereon of KPMG Peat Marwick LLP
appearing on page 41 of the 1998 Annual Report are hereby incorporated
by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting
--------------------------------------------------------------------
and Financial Disclosure
------------------------
None.
9
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
------------------------------------------------------------
Information regarding nominees and directors appearing under "Nominees and
Continuing Directors" in the Emerson Electric Co. Notice of Annual Meeting
of the Stockholders and Proxy Statement for the February 1999 annual
stockholders' meeting (the "1999 Proxy Statement") is hereby incorporated
by reference. Information regarding executive officers is set forth in
Part I of this report.
Item 11. Executive Compensation
--------------------------------
Information appearing under "Director Compensation" and "Executive
Compensation" in the 1999 Proxy Statement is hereby incorporated by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
-------------------------------------------------------------
Management
----------
The information regarding beneficial ownership of shares by nominees and
continuing directors and by all directors and executive officers as a group
appearing under "Nominees and Continuing Directors" in the 1999 Proxy
Statement is hereby incorporated by reference.
Item 13. Certain Relationships and Related Transactions
--------------------------------------------------------
Information appearing under "Certain Business Relationships" in the 1999
Proxy Statement is hereby incorporated by reference.
10
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
-----------------------------------------------------------------
Form 8-K
---------
A) Documents filed as a part of this report:
1. The consolidated financial statements of the Company and its
subsidiaries on pages 27 through 40 and the report
thereon of KPMG Peat Marwick LLP appearing on page 41 of
the 1998 Annual Report.
2. Financial Statement Schedules
All schedules are omitted because they are not required, not
applicable or the information is given in the financial
statements or notes thereto contained in the 1998 Annual Report.
3. Exhibits (Listed by numbers corresponding to the Exhibit Table
of Item 601 in Regulation S-K).
3(a) Restated Articles of Incorporation of Emerson
Electric Co., incorporated by reference to Emerson
Electric Co. Form 10-Q for the quarter ended
March 31, 1997, Exhibit 3(a); Termination of
Designated Shares of Stock and Certificate of
Designation, Preferences and Rights of Series B
Junior Participating Preferred Stock, filed
herewith.
3(b) Bylaws of Emerson Electric Co., as amended through
November 3, 1998, filed herewith.
4(a) Indenture dated as of April 17, 1991, between Emerson
Electric Co. and The Boatmen's National Bank of
St. Louis, Trustee, incorporated by reference to Emerson
Electric Co. Registration Statement on Form S-3, File
No. 33-62545, Exhibit 4.1.
4(b) Indenture dated as of December 10, 1998, between
Emerson Electric Co. and The Bank of New York,
Trustee, filed herewith.
No other long-term debt instruments are filed since
the total amount of securities authorized under any
such instrument does not exceed 10 percent of the
total assets of Emerson Electric Co. and its
subsidiaries on a consolidated basis. Emerson
Electric Co. agrees to furnish a copy of such
instruments to the Securities and Exchange
Commission upon request.
11
<PAGE>
4(c) Rights Agreement dated as of November 1, 1998,
between Emerson Electric Co. and ChaseMellon Shareholder
Services, L.L.C. incorporated by reference to
Emerson Electric Co. Form 8-A, dated October 6, 1998,
Exhibit 1.
10(a)* 1982 Incentive Stock Option Plan, as amended,
incorporated by reference to Emerson Electric Co.
1992 Form 10-K, Exhibit 10(b).
10(b)* Employment Agreement made as of October 1, 1975, as
amended January 9, 1987, and as further amended
October 22, 1997, between Emerson Electric Co. and
C. F. Knight, incorporated by reference to Emerson
Electric Co. 1997 Form 10-K, Exhibit 10(c).
10(c)* 1986 Stock Option Plan, as amended, incorporated by
reference to Emerson Electric Co. 1992 Form 10-K,
Exhibit 10(e) and Form 10-Q for the quarter ended
December 31, 1992, Exhibit 10(b).
10(d)* 1991 Stock Option Plan, as amended and restated effective
October 1, 1997, incorporated by reference to Emerson
Electric Co. 1997 Form 10-K, Exhibit 10(e).
10(e)* 1988 Incentive Shares plan, incorporated by
reference to Emerson Electric Co. 1988 Proxy
Statement dated December 18, 1987, Exhibit A, and
Form 10-Q for the quarter ended December 31, 1992,
Exhibits 10(d) and 10(e), and Amendments No. 3 and
No. 4 thereto, incorporated by reference to Emerson
Electric Co. 1993 Form 10-K, Exhibit 10(g).
10(f)* Third Amendment to the Emerson Electric Co. 1993
Incentive Shares Plan, as restated, incorporated by
reference to Emerson Electric Co. 1996 Form 10-K,
Exhibit 10(g).
10(g)* Emerson Electric Co. Directors' Continuing
Compensation Plan, incorporated by reference to
Emerson Electric Co. 1987 Form 10-K, Exhibit 10(g),
and Amendment incorporated by reference to Emerson
Electric Co. 1996 Form 10-K, Exhibit 10(i).
10(h)* Deferred Compensation Plan for Non-Employee Directors,
as amended, incorporated by reference to Emerson
Electric. Co. 1994 Form 10-K, Exhibit 10(k).
10(i)* Emerson Electric Co. Supplemental Executive
Retirement Plan, incorporated by reference to
Emerson Electric Co. 1989 Form 10-K, Exhibit 10(i).
10(j)* Fourth Amendment to the Supplemental Executive
Savings Investment Plan, incorporated by reference
to Emerson Electric Co. Form 10-Q for the quarter ended
March 31, 1998, Exhibit 10(l).
12
<PAGE>
10(k)* Annual Incentive Plan incorporated by reference to
Emerson Electric Co. 1995 Proxy Statement dated
December 14, 1994, Appendix A.
10(l)* 1997 Incentive Shares Plan, incorporated by reference to
Emerson Electric Co. 1997 Proxy Statement dated
December 6, 1996, Exhibit A.
10(m)* 1998 Stock Option Plan, incorporated by reference to Emerson
Electric Co. 1998 Proxy Statement dated December 12, 1997,
Appendix A.
13 Portions of Emerson Electric Co. Annual Report to
Stockholders for the year ended September 30, 1998,
incorporated by reference herein.
21 Subsidiaries of Emerson Electric Co.
23 Independent Auditors' Consent.
24 Power of Attorney.
27 Financial Data Schedule.
* Management contract or compensatory plan.
B) No reports on Form 8-K were filed during the quarter ended
September 30, 1998.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
EMERSON ELECTRIC CO.
By /s/ W. J. Galvin
-------------------------
W. J. Galvin
Senior Vice President -
Finance and Chief Financial
Officer (and Principal Accounting
Officer)
Date: December 22, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below on December 22, 1998, by the
following persons on behalf of the registrant and in the capacities
indicated.
Signature Title
--------- -----
*
---------------------------------------- Chairman of the Board
C. F. Knight and Chief Executive Officer
and Director
/s/ W. J. Galvin
---------------------------------------- Senior Vice President -
W. J. Galvin Finance and Chief Financial
Officer (and Principal Accounting
Officer)
*
---------------------------------------- Director
J. G. Berges
*
---------------------------------------- Director
L. L. Browning, Jr.
*
---------------------------------------- Director
A. A. Busch, III
*
---------------------------------------- Director
D. C. Farrell
14
<PAGE>
*
---------------------------------------- Director
J. A. Frates
*
---------------------------------------- Director
R. B. Horton
*
---------------------------------------- Director
G. A. Lodge
*
---------------------------------------- Director
V. R. Loucks, Jr.
*
---------------------------------------- Director
R. B. Loynd
*
---------------------------------------- Director
R. L. Ridgway
*
---------------------------------------- Director
R. W. Staley
*
---------------------------------------- Director
A. E. Suter
*
---------------------------------------- Director
G. W. Tamke
*
---------------------------------------- Director
W. M. Van Cleve
*
---------------------------------------- Director
E. E. Whitacre, Jr.
* By /s/ W. J. Galvin
--------------------------------
W. J. Galvin
Attorney-in-fact
15
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibits are listed by numbers corresponding to the Exhibit Table of
Item 601 in Regulation S-K.
Exhibit No. Exhibit
- ----------- -------
3(a)(i) Termination of Designated Shares of Stock
3(a)(ii) Certificate of Designation, Preferences and
Rights of Series B Junior Participating
Preferred Stock
3(b) Bylaws of Emerson Electric Co.
4(b) Indenture dated as of December 10, 1998
13 Portions of Annual Report to Stockholders for
the year ended September 30, 1998, incorporated
by reference herein
21 Subsidiaries of Emerson Electric Co.
23 Independent Auditors' Consent
24 Power of Attorney
27 Financial Data Schedule
See Item 14(A)(3) for a list of exhibits incorporated by reference.
16
<PAGE> EXHIBIT 3(a)(i)
TERMINATION OF DESIGNATED SHARES OF STOCK
PURSUANT TO SECTION 351.180 (7)
2,500,000 SHARES OF SERIES A JUNIOR
PARTICIPATING PREFERRED STOCK, $2.50 PAR VALUE
Pursuant to Section 351.180(7) of the General and Business
Corporation Law of the State of Missouri, the undersigned hereby certifies as
follows:
1. The name of the corporation is: Emerson Electric Co., a Missouri
corporation (the "Company").
2. On November 3, 1988, a Certificate of Designation of Series A
Junior Participating Preferred Stock (the "Series A Preferred Stock") was filed
with the Missouri Secretary of State. A copy of the Certificate of Designation
issued by the Secretary of State is attached.
3. No shares of Series A Preferred Stock are outstanding and none
have been or will be issued subject to the Certificate of Designations
previously filed.
4. On October 6, 1998, the Board of Directors of the Company adopted
the following resolution, approving the termination of the Series A Preferred
Stock:
RESOLVED FURTHER, that provided the 1988 Rights are not then
exercisable, effective November 1, 1998, no shares of Series A Preferred Stock
will be outstanding and none of such shares will be issued pursuant to the
Certificate of Designation designating the number of shares Series A Preferred
Stock, and fixing the powers, preferences and relative, participating, optional
and other special rights of the shares of Series A Preferred Stock, so that
such Certificate of Designation will be terminated, and the reservation of
shares of the Company's capital stock for issuance upon exercise of the 1988
Rights, will be canceled, and such shares of the Company's capital stock be
eligible to be issued or reserved for other proper purposes.
IN WITNESS WHEREOF, this Termination of Designated Shares is executed
on behalf of the Company by its Senior Vice President and attested by its
Assistant Secretary on this 1st day of November, 1998.
/s/ W. Wayne Withers
-----------------------------
W. Wayne Withers
Senior Vice President,
Secretary and General Counsel
/s/ Harley M. Smith
- ---------------------------
Harley M. Smith
Assistant Secretary
<PAGE> EXHIBIT 3(a)(ii)
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF SERIES B
JUNIOR PARTICIPATING PREFERRED STOCK
OF
EMERSON ELECTRIC CO.
Pursuant to Section 351.180 of
The General and Business Corporation Law of Missouri
We, W. Wayne Withers, Senior Vice President, Secretary and General
Counsel, and Harley M. Smith, Assistant Secretary, of Emerson Electric Co., a
corporation organized and existing under The General and Business Corporation
Law of the State of Missouri, in accordance with the provisions of Section
351.180 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors
by the Restated Articles of Incorporation, as amended, of the Company, the said
Board of Directors on October 6, 1998, adopted the following resolution
creating a series of One Million Two Hundred Thousand (1,200,000) shares of
Preferred Stock designated as Series B Junior Participating Preferred Stock par
value $2.50 per share:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Company in accordance with the provisions of its Restated
Articles of Incorporation, as amended, a series of Preferred Stock of the
company be and it hereby is created, and that the designation and amount
thereof and the powers, preferences and relative, participating, optional and
other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series
shall be designated as "Series B Junior Participating Preferred Stock" (the
"Series B Preferred Stock") and the number of shares constituting the Series B
Preferred Stock shall be One Million Two Hundred Thousand (1,200,000). Such
number of shares may be increased or decreased by resolution of the Board of
Directors; provided that no decrease shall reduce the number of shares of
Series B Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise
of outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Company convertible into Series B
Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any series
of preferred stock (or any similar stock) ranking prior and superior to the
Series B Preferred Stock with respect to dividends, the holders of shares of
Series B Preferred Stock, in preference to the holders of shares of Common
Stock, par value $0.50 per share (the "Common Stock"), of the Company, and of
any other junior stock, shall be entitled to receive, when, as and if declared
by the Board of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on any regular quarterly dividend payment
date as shall be established by the Board of Directors (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series B Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $1.00 or (b) subject
to the provision for adjustment hereinafter set forth, 1,000 times the
aggregate per share amount of all cash dividends, and 1,000 times the aggregate
<PAGE>
per share amount(payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series B Preferred Stock. In the event the Company shall at any time
after October 6, 1998 (the "Rights Declaration Date") declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the amount to which holders of shares of Series B
Preferred Stock were entitled immediately prior to such event under clause (b)
of the preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) The Company shall declare a dividend or distribution on the
Series B Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in
the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share
on the Series B Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series B Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to accrue from
the date of issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the determination
of holders of shares of Series B Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in either
of which events such dividends shall begin to accrue and be cumulative from
such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not
bear interest. Dividends paid on the shares of Series B Preferred Stock in an
amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may, in
accordance with applicable law, fix a record date for the determination of
holders of shares of Series B Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be not more
than such number of days prior to the date fixed for the payment thereof as may
be allowed by applicable law.
Section 3. Voting Rights. The holders of shares of Series B
Preferred Stock shall have the following voting rights:
(A) Each share of Series B Preferred Stock shall entitle the holder
thereof to one vote on all matters submitted to a vote of the stockholders of
the Company.
<PAGE>
(B) Except as otherwise provided herein, in the Company's Restated
Articles of Incorporation, or by law, the holders of shares of Series B
Preferred Stock, the holders of shares of Common Stock, and the holders of
shares of any other capital stock of the Company having general voting rights,
shall vote together as one class on all matters submitted to a vote of
stockholders of the Company.
(C) Except as set forth herein or in the Company's Restated Articles
of Incorporation, and except as otherwise provided by law, holders of Series B
Preferred Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series B Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series B Preferred Stock
outstanding shall have been paid in full, the Company shall not:
(i) declare or pay dividends, or make any other distributions,
on any shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series B Preferred Stock;
(ii) declare or pay dividends, or make any other distributions,
on any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series B Preferred Stock,
except dividends paid ratably on the Series B Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series B Preferred Stock, provided that the
Company may at any time redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock of the Company ranking
junior (either as to dividends or upon dissolution, liquidation or winding up)
to the Series B Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series B Preferred Stock, or any shares of stock ranking on a
parity with the Series B Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable treatment among
the respective series or classes.
(B) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series B Preferred
Stock purchased or otherwise acquired by the Company in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
<PAGE>
subject to the conditions and restrictions on issuance set forth herein, in the
Restated Articles of Incorporation of the Company, or in any other Certificate
of Designations creating a series of Preferred Stock or any similar stock or as
otherwise required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Company, no distribution shall be
made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series B
Preferred Stock unless, prior thereto, the holders of shares of Series B
Preferred Stock shall have received $1,000.00 per share, plus an amount equal
to accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, provided that the holders of shares of
Series B Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
1,000 times the aggregate amount to be distributed per share to holders of
shares of Common Stock, or (2) to the holders of shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series B Preferred Stock, except distributions made ratably on the
Series B Preferred Stock and all such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. In the event the Company shall at any
time after the Rights Declaration Date declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of Series B Preferred
Stock were entitled immediately prior to such event under the proviso in clause
(1) of the preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
Section 7. Consolidation, Merger, etc. In case the Company shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Series B Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Company shall at any time after the Rights Declaration Date
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount set forth
in the preceding sentence with respect to the exchange or change of shares of
Series B Preferred Stock shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that are outstanding immediately prior to such
event.
Section 8. No Redemption. The shares of Series B Preferred Stock
shall not be redeemable.
<PAGE>
Section 9. Rank. The Series B Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets, junior to
all series of any other class of the Company's Preferred Stock.
Section 10. Amendment. The Restated Articles of Incorporation of
the Company shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Series B Preferred
Stock so as to affect them adversely without the affirmative vote of the
holders of at least two-thirds of the outstanding shares of Series B Preferred
Stock, voting together as a single class.
Section 11. Fractional Shares. Series B Preferred Stock may be
issued in fractions of a share which shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series B Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
and do affirm the foregoing as true under the penalties of perjury this 1st day
of November, 1998.
By: /s/ W. Wayne Withers
-------------------------------
Name: W. Wayne Withers
Title: Senior Vice President,
Secretary and General Counsel
Attest
By: /s/ Harley M. Smith
-------------------
Name: Harley M. Smith
Title: Assistant Secretary
<PAGE>
EXHIBIT 3(b)
EMERSON ELECTRIC CO.
--------------------
BYLAWS
------
As Amended through November 3, 1998
<PAGE>
EMERSON ELECTRIC CO.
BYLAWS
INDEX
-----
ARTICLE I - OFFICES; DEFINITIONS Page
Section 1. Registered Office........................ 1
Section 2. Other Offices............................ 1
Section 3. Definitions.............................. 1
ARTICLE II - MEETINGS OF SHAREHOLDERS
Section 1. Place of Meetings........................ 1
Section 2. Annual Meeting........................... 1
Section 3. Special Meetings......................... 2
Section 4. Notice of Meetings....................... 3
Section 5. List of Shareholders Entitled to Vote.... 3
Section 6. Quorum................................... 4
Section 7. Requisite Vote........................... 4
Section 8. Voting................................... 5
Section 9. Notice of Shareholder Business at Annual
Meetings.............................. 5
ARTICLE III - DIRECTORS
Section 1. Number; Classification; Nominations;
Election; Term of Office.............. 7
Section 2. Filling of Vacancies..................... 11
Section 3. Qualifications........................... 11
Section 4. Removal.................................. 12
Section 5. General Powers........................... 12
Section 6. Place of Meetings........................ 12
Section 7. Regular Annual Meeting................... 12
Section 8. Additional Regular Meetings.............. 13
Section 9. Special Meetings......................... 14
Section 10. Place of Meetings........................ 14
Section 11. Notices.................................. 14
Section 12. Quorum................................... 14
Section 13. Compensation of Directors................ 15
Section 14. Executive Committee...................... 15
Section 15. Finance Committee........................ 16
Section 16. Other Committees of the Board............ 16
Section 17. Committees - General Rules............... 16
Section 18. Directors Emeritus and Advisory Directors 17
ARTICLE IV - NOTICES
Section 1. Service of Notice........................ 18
Section 2. Waiver of Notices........................ 18
<PAGE>
ARTICLE V - OFFICERS Page
Section 1. Titles................................... 18
Section 2. Election................................. 19
Section 3. Term..................................... 20
Section 4. Chairman of the Board.................... 20
Section 5. President................................ 21
Section 6. Vice Chairmen of the Board............... 21
Section 7. Vice Presidents.......................... 21
Section 8. Secretary and Assistant Secretaries...... 21
Section 9. Treasurer and Assistant Treasurers....... 22
Section 10. Controller and Assistant Controllers..... 23
Section 11. Appointed Officers....................... 23
ARTICLE VI - CERTIFICATES OF SHARES
Section 1. Certificates............................. 24
Section 2. Signatures on Certificates............... 24
Section 3. Transfer Agents and Registrars;
Facsimile Signatures.................. 24
Section 4. Lost Certificates........................ 25
Section 5. Transfer of Shares....................... 26
Section 6. Registered Shareholders.................. 26
Section 7. Interested Shareholders.................. 26
ARTICLE VII - INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS
Section 1. Actions Involving Directors, Officers
or Employees.......................... 27
Section 2. Actions Involving Agents................. 28
Section 3. Determination of Right to Indemnification
in Certain Instances.................. 29
Section 4. Advance Payment of Expenses.............. 30
Section 5. Successful Defense....................... 30
Section 6. Not Exclusive Right...................... 30
Section 7. Insurance................................ 31
Section 8. Subsidiaries of Corporation.............. 31
Section 9. Spousal Indemnification.................. 33
ARTICLE VIII - GENERAL PROVISIONS
Section 1. Dividends................................ 33
Section 2. Checks................................... 33
Section 3. Fiscal Year.............................. 34
Section 4. Seal..................................... 34
Section 5. Closing of Transfer Books and Fixing of
Record Dates.......................... 34
ARTICLE IX - AMENDMENTS
Section 1. ......................................... 35
<PAGE>
EMERSON ELECTRIC CO.
* * * * *
BYLAWS
* * * * *
ARTICLE I
OFFICES; DEFINITIONS
Section 1. Registered Office. The registered office of Emerson
Electric Co. (the "Corporation") shall be located in the County of St. Louis,
State of Missouri.
Section 2. Other Offices. The Corporation may also have offices at
such other places both within and without the State of Missouri as the Board
may, from time to time, determine or the business of the Corporation may
require.
Section 3. Definitions. Unless the context otherwise requires,
defined terms herein shall have the meaning ascribed thereto in the Articles
of Incorporation (the "Articles").
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. Place of Meeting. All meetings of the shareholders shall
be held at such place within or without the State of Missouri as may be, from
time to time, fixed or determined by the Board.
Section 2. Annual Meeting. The annual meeting of the shareholders
shall be held on the first Tuesday in February of each year if not a legal
holiday, or, if a legal holiday, then on the next business day following, at
such hour as may be specified in the notice of the meeting; provided, however,
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<PAGE>
that the day fixed for such meeting in any year may be changed by resolution
of the Board to such other day in February, March, April, May or June not a
legal holiday as the Board may deem desirable or appropriate. At the annual
meeting the shareholders shall elect Directors in accordance with Article 5 of
the Articles of Incorporation and Article III of these Bylaws, and shall
transact such other business as may properly be brought before the meeting.
If no other place for the annual meeting is determined by the Board of
Directors and specified in the notice of such meeting, the annual meeting
shall be held at the principal offices of the Corporation at 8000 West
Florissant Avenue, St. Louis, Missouri.
Section 3. Special Meetings.
(a) Unless otherwise limited by statute or by the
Articles, special meetings of the shareholders, for any purpose or purposes,
may be called at any time by the Chairman of the Board, any Vice Chairman of
the Board, the President, the Secretary, or a majority of the Board.
(b) A special meeting may also be called by the holders of
not less than 85% of all of the outstanding shares entitled to vote at such
meeting, upon written request delivered to the Secretary of the Corporation.
Such request shall state the purpose or purposes of the proposed meeting.
Upon receipt of any such request, it shall be the duty of the Secretary to
call a special meeting of the shareholders to be held at any time, not less
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<PAGE>
than ten (10) nor more than seventy (70) days thereafter, as the Secretary may
fix. If the Secretary shall neglect to issue such call, the person or persons
making the request may issue the call.
Section 4. Notice of Meetings. Written notice of every meeting of the
shareholders, specifying the place, date and hour of the meeting, and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called shall be delivered or mailed, postage prepaid, by or at the direction
of the Secretary, not less than ten (10) nor more than seventy (70) days
before the date of the meeting to each shareholder of record entitled to vote
at such meeting.
Section 5. List of Shareholders Entitled to Vote. At least ten (10)
days before each meeting of the shareholders, a complete list of the
shareholders entitled to vote at such meeting shall be prepared and arranged
in alphabetical order with the address of each shareholder and the number of
shares held by each, which list, for a period of ten (10) days prior to such
meeting, shall be kept on file at the registered office of the Corporation and
shall be subject to inspection by any shareholder at any time during usual
business hours. Such list shall also be produced and kept open at the time
and place of the meeting, and shall be subject to the inspection of any
shareholder during the whole time of the meeting. The original share ledger
or transfer book, or a duplicate thereof kept in the State of Missouri, shall
be prima facie evidence as to who are the shareholders entitled to examine
-3-
<PAGE>
such list or share ledger or transfer book or to vote at any meeting of the
shareholders. Failure to comply with the above requirements in respect of
lists of shareholders shall not affect the validity of any action taken at
such meeting.
Section 6. Quorum. The holders of a majority of the issued and
outstanding shares entitled to vote, present in person or represented by
proxy, shall be requisite and shall constitute a quorum at all meetings of the
shareholders for the transaction of business, except as otherwise provided by
law, the Articles or by these Bylaws. The shareholders present at a meeting
at which a quorum is present may continue to transact business until
adjournment, notwithstanding the withdrawal of such number of shareholders as
to reduce the remaining shareholders to less than a quorum. Whether or not a
quorum is present, the chairman of the meeting or a majority of the
shareholders entitled to vote thereat, present in person or by proxy, shall
have power, except as otherwise provided by statute, successively to adjourn
the meeting to such time and place as they may determine, to a date not longer
than ninety (90) days after each such adjournment, and no notice of any such
adjournment need be given to shareholders other than the announcement of the
adjournment at the meeting. At any adjourned meeting at which a quorum shall
be present or represented, any business may be transacted which might have
been transacted at the meeting as originally called.
Section 7. Requisite Vote. When a quorum is present or represented at
any meeting, the vote of the holders of a majority of the shares entitled to
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<PAGE>
vote which are present in person or represented by proxy shall decide any
questions brought before such meeting, unless the question is one upon which,
by express provision of law, the Articles or by these Bylaws, a different vote
is required, in which case such express provisions shall govern and control
the decision of such question.
Section 8. Voting. Each shareholder shall, at every meeting of the
shareholders, be entitled to one vote in person or by proxy for each share
having voting power held by such shareholder, but no proxy shall be voted
after eleven (11) months from the date of its execution unless otherwise
provided in the proxy. In each election for Directors, no shareholder shall
be entitled to vote cumulatively or to cumulate his votes.
Section 9. Notice of Shareholder Business at Annual Meetings. At any
annual meeting of shareholders, only such business shall be conducted as shall
have been properly brought before the meeting. In addition to any other
requirements imposed by or pursuant to law, the Articles or these Bylaws, each
item of business to be properly brought before an annual meeting must (a) be
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board or the persons calling the meeting pursuant to the
Articles; (b) be otherwise properly brought before the meeting by or at the
direction of the Board; or (c) be otherwise properly brought before the
meeting by a shareholder. For business to be properly brought before an
annual meeting by a shareholder, the shareholder must have given timely notice
-5-
<PAGE>
thereof in writing to the Secretary of the Corporation. To be timely, a
shareholder's notice must be delivered to or mailed and received at the
principal executive offices of the Corporation not less than 90 days nor more
than 120 days prior to the annual meeting; provided, however, that in the
event less than 100 days' notice or prior public disclosure of the date of the
annual meeting is given or made to shareholders, notice by the shareholder to
be timely must be so received not later than the close of business on the 10th
day following the day on which such notice of the date of the annual meeting
was mailed or such public disclosure was made. For purposes of these Bylaws
"public disclosure" shall mean disclosure in a press release reported by the
Dow Jones, Associated Press, Reuters or comparable national news service, or
in a document publicly filed by the Corporation with the Securities and
Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"). A shareholder's notice to
the Secretary shall set forth as to each matter he or she proposes to bring
before the annual meeting (a) a brief description of the business desired to be
brought before the meeting and the reasons for conducting such business at the
annual meeting, (b) the name and address, as they appear on the Corporation's
books, of the shareholder(s) proposing such business, (c) the class and number
of shares of the Corporation which are beneficially owned by the proposing
shareholder(s), and (d) any material interest of the proposing
shareholder(s) in such business. Notwithstanding anything in these Bylaws
-6-
<PAGE>
to the contrary, but subject to Article III, Section 1(c) hereof, no
business shall be conducted at an annual meeting except in accordance with
the procedures set forth in this Section. The Chairman of the annual
meeting shall, if the facts warrant, determine and declare to the annual
meeting that business was not properly brought before the annual meeting in
accordance with the provisions of this Section; and if he or she should so
determine, shall so declare to the meeting and any such business not
properly brought before the annual meeting shall not be transacted. The
Chairman of the meeting shall have absolute authority to decide questions
of compliance with the foregoing procedures, and his or her ruling thereon
shall be final and conclusive. The provisions of this Section 9 shall also
govern what constitutes timely notice for purposes of Rule 14a-4(c) under
the 1934 Act.
ARTICLE III
DIRECTORS
Section 1. Number; Classification; Nominations; Election; Term of
Office.
(a) The Board shall consist of such number of
Directors as the Board may from time to time determine, provided that in no
event shall the number of Directors be less than three (3), and provided
further that no reduction in the number of Directors shall have the effect
of shortening the term of any incumbent Director. In addition, the Board may,
-7-
<PAGE>
from time to time, appoint such number of "Advisory Directors" and "Directors
Emeritus" as it may deem advisable.
(b) The Board of Directors (herein the "Board") shall be
divided into three classes, as nearly equal in number as possible. In the
event of any increase in the number of Directors, the additional Director(s)
shall be added to such class(es) as may be necessary so that all classes shall
be as nearly equal in number as possible. In the event of any decrease in the
number of Directors, all classes of Directors shall be decreased as nearly
equally as may be possible. Subject to the foregoing, the Board shall
determine the class(es) to which any additional Director(s) shall be added and
the class(es) which shall be decreased in the event of any decrease in the
number of Directors.
At each annual meeting of shareholders the successors
to the class of Directors whose term shall then expire shall be elected for a
term expiring at the third succeeding annual meeting after such election.
(c) In addition to the qualifications set out in Section 3
of this Article III, in order to be qualified for election as a Director,
persons must be nominated in accordance with the following procedure:
Nominations of persons for election to the Board of
the Corporation may be made at a meeting of shareholders by or at the
direction of the Board or by any shareholder of the Corporation entitled to
-8-
<PAGE>
vote for the election of Directors at the meeting who complies with the
procedures set forth in this Section 1(c). In order for persons nominated to
the Board, other than those persons nominated by or at the direction of the
Board, to be qualified to serve on the Board, such nominations shall be made
pursuant to timely notice in writing to the Secretary of the Corporation. To
be timely, a shareholder's notice shall be delivered to or mailed and received
by the Secretary of the Corporation not less than 90 days nor more than 120
days prior to the meeting; provided, however, that in the event less than 100
days' notice or prior public disclosure of the date of the meeting is given or
made to shareholders, notice by the shareholder to be timely must be so
received not later than the close of business on the 10th day following the
day on which such notice of the date of the meeting was mailed or such public
disclosure was made. Such shareholder's notice shall set forth (i) as to each
person whom the shareholder proposes to nominate for election or re-election
as a Director, (A) the name, age, business address and residence address of
such person, (B) the principal occupation or employment of such person, (C)
the class and number of shares of the Corporation which are beneficially owned
by such person, (D) any other information relating to such person that is
required to be disclosed in solicitations of proxies for election of
Directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended, (including without
limitation such person's written consent to being named in the proxy statement
-9-
<PAGE>
as a nominee and to serving as a Director if elected) and (E) if the
shareholder(s) making the nomination is an Interested Person, details of any
relationship, agreement or understanding between the shareholder(s) and the
nominee; and (ii) as to the shareholder(s) making the nomination (A) the name
and address, as they appear on the Corporation's books, of such shareholder(s)
and (B) the class and number of shares of the Corporation which are
beneficially owned by such shareholder(s). At the request of the Board,
any person nominated by the Board for election as a Director shall furnish
to the Secretary of the Corporation that information required to be set forth
in a shareholder's notice of nomination which pertains to the nominee. No
person shall be qualified for election as a Director of the Corporation unless
nominated in accordance with the procedures set forth in this Section 1(c).
The Chairman of a meeting shall, if the facts warrant, determine and declare
to the meeting that a nomination was not made in accordance with the procedures
prescribed by the Bylaws, and if he or she should so determine, shall so
declare to the meeting, and the defective nomination shall be disregarded.
The Chairman of a meeting shall have absolute authority to decide questions
of compliance with the foregoing procedures, and his or her ruling thereon
shall be final and conclusive.
(d) Directors shall be elected at annual meetings of the
shareholders, except as provided in Section 2 of this Article III, and each
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<PAGE>
Director shall hold office until his or her successor is elected and
qualified.
Section 2. Filling of Vacancies. Vacancies and newly created
directorships shall be filled only by a majority of the remaining Directors,
though less than a quorum, and each person so elected shall be a Director
until his or her successor is elected by the shareholders, who may make such
election at the next annual meeting of the shareholders at which Directors of
his or her class are elected or at any special meeting of shareholders duly
called for that purpose and held prior thereto.
Section 3. Qualifications. Directors must be nominated in accordance
with the procedure set out in Section 1(c) of this Article III. Directors
need not be shareholders. No person shall be eligible for election as a
Director, either under Section 1 or Section 2 of this Article III, if such
person's seventy-second (72d) birthday shall fall on a date prior to the
commencement of the Term for which such Director is to be elected or
appointed; provided, however, that this limitation shall not apply to persons
who were Directors of the Corporation on April 4, 1967. No person shall be
qualified to be elected and to hold office as a Director if such person is
determined by a majority of the whole Board to have acted in a manner contrary
to the best interests of the Corporation, including, but not limited to,
violation of either State or Federal law, maintenance of interests not
properly authorized and in conflict with the interests of the Corporation, or
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breach of any agreement between such Director and the Corporation relating to
such Director's services as a Director, employee or agent of the Corporation.
Section 4. Removal. By action of a majority of the whole Board, any
Director may be removed from office for cause if such Director shall at the
time of such removal fail to meet the qualifications for election as a
Director as set forth under Article III, Section 3 hereof. Notice of the
proposed removal shall be given to all Directors of the Corporation prior to
action thereon. Directors may be otherwise removed only in the manner
prescribed in the Articles.
Section 5. General Powers. The property and business of the
Corporation shall be controlled and managed by its Board of Directors which
may exercise all such powers of the Corporation and do all such lawful acts
and things as are not, by law, the Articles or by these Bylaws, directed or
required to be exercised and done by the shareholders or the Continuing
Directors.
Section 6. Place of Meetings. The Board may hold meetings, both
regular and special, either within or without the State of Missouri.
Section 7. Regular Annual Meeting. A regular annual meeting of the
Board, including newly elected Directors, shall be held immediately following
the annual meeting of the shareholders and shall be held at the principal
offices of the Corporation at 8000 West Florissant Avenue, St. Louis,
Missouri, unless another time or place shall be fixed therefor by the
Directors. No notice of such meeting shall be necessary to the Directors in
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order, legally, to constitute the meeting, provided a majority of the whole
Board shall be present. In the event such annual meeting of the Board is not
held at the time and place specified herein, or at such other time and place
as may be fixed by the Directors, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
meetings of the Board, or as shall be specified in a written waiver signed by
all of the Directors.
Section 8. Additional Regular Meetings. Additional regular meetings
of the Board shall be held once each month on the first Tuesday thereof, or on
such other day thereof as the Board may, by resolution, prescribe, and at such
hour of such day as shall be stated in the notice of the meeting; provided
that the Chairman, in his or her discretion, may dispense with any one or more
of such meetings, by having notice of the intention so to do given, by letter
or telegram, to each Director not less than ten (10) days prior to the
regularly scheduled date of each meeting so to be dispensed with. If the
first Tuesday of any month shall be a legal holiday, the regular meeting for
such month shall be held on the Thursday following, and if the Monday
preceding the first Tuesday of any month shall be a legal holiday, the regular
meeting for such month shall be held on the Wednesday following, in each case
unless the Board shall otherwise prescribe by resolution. Notice of any
regular meeting shall be given to each Director at least forty-eight (48)
hours in advance thereof, either personally, by mail or by telegram.
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Section 9. Special Meetings. Special meetings of the Board may be
called by the Chairman, any Vice Chairman, the President, any Vice President or
the Secretary, on notice given personally, by mail, by telephone, by telegram
or by facsimile to each Director given twenty-four (24) hours in advance of
such meeting. Special meetings shall be called by the Chairman, any Vice
Chairman, the President or Secretary in like manner and on like notice on the
written request of any two Directors.
Section 10. Place of Meetings. Special meetings and regular meetings
of the Board, other than the regular annual meeting, shall be held at such
place within the City or County of St. Louis, Missouri, as may be specified in
the notice of such meeting; provided that any meeting may be held elsewhere,
within or without the State of Missouri, pursuant to resolution of the Board
or pursuant to the call of the Chairman, any Vice Chairman or the President.
Members of the Board and its Committees may participate in meetings by means
of conference telephone or similar communications equipment whereby all
persons participating in the meeting can hear each other, and such
participation shall constitute presence at the meeting.
Section 11. Notices. Notice of any meeting may be given by the
Chairman, any Vice Chairman, the President, any Vice President or the
Secretary and shall specify the time and place of the meeting.
Section 12. Quorum. At all meetings of the Board a majority of
Directors in office (the "whole Board") shall be necessary to constitute a
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quorum for the transaction of business, and the acts of a majority of the
Directors present at a meeting at which a quorum is present shall be the acts
of the Board, except as otherwise may be specifically provided by law or by
the Articles. If a quorum shall not be present at any meeting of the Board,
the Directors present thereat may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present. So long as the whole Board shall consist of sixteen (16) or more
members, a Director who may be disqualified, by reason of personal interest,
from voting on any particular matter before a meeting of the Board may
nevertheless be counted for the purpose of constituting a quorum of the Board.
Section 13. Compensation of Directors. Directors, as such, shall
receive for their services such compensation as may be fixed, from time to
time, by resolution of the Board, together with a stipend for attendance, and
expenses of attendance, if any, for each meeting of the Board or meetings of
any committee on which the Directors may serve; provided that nothing herein
contained shall be construed to preclude any Director from serving the
Corporation in any other capacity and receiving compensation therefor.
Section 14. Executive Committee. The Board may, by resolution passed
by a majority of the whole Board, designate two or more of its number to
constitute an Executive Committee which, to the extent provided in such
resolution, shall have and exercise the authority of the Board in the
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management and business of the Corporation.
Section 15. Finance Committee. The Board may, by resolution passed by
a majority of the whole Board, designate two or more of its number, one of
whom shall be the Committee Chairman, as the Finance Committee of the Board,
which to the extent provided in such resolution shall have and exercise the
authority of the Board in the management and business of the Corporation. The
Committee shall study and consider financial matters affecting the operations
of the Corporation, including its long range financial requirements, shall
advise the Board in respect thereto, and shall have such other duties as shall
be specified by resolution of the Board.
Section 16. Other Committees of the Board. The Board may, by
resolution passed by a majority of the whole Board, designate two or more of
its members to constitute such other Committees of the Board as the Board by
such resolution or resolutions may determine. To the extent provided in such
resolution or resolutions, such Committees shall have and exercise the
authority of the Board in the management and business of the Corporation.
Section 17. Committees-General Rules. Each Committee of the Board
shall keep regular minutes of its proceedings and report the same to the Board
when required. Vacancies in the membership of each Committee shall be filled
by the Board at any regular or special meeting of the Board. A Director who
may be disqualified, by reason of personal interest, from voting on any
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particular matter before a meeting of a Committee may nevertheless be counted
for the purpose of constituting a quorum of the Committee. At all meetings of
a Committee, a majority of the Committee members then in office shall
constitute a quorum for the purpose of transacting business, and the acts of a
majority of the Committee members present at any meeting at which there is a
quorum shall be the acts of the Committee.
Section 18. Directors Emeritus and Advisory Directors. The Board may
from time to time create one or more positions of Director Emeritus and
Advisory Director, and may fill such position or positions for such term as
the Board deems proper. Each Director Emeritus and Advisory Director shall
have the privilege of attending meetings of the Board but shall do so solely
as an observer. Notice of such meetings to a Director Emeritus or Advisory
Director shall not be required under any applicable law, the Articles, or
these Bylaws. Each Director Emeritus and Advisory Director shall be entitled
to receive such compensation as may be fixed from time to time by the Board.
No Director Emeritus or Advisory Director shall be entitled to vote on any
business coming before the Board, nor shall they be counted as members of the
Board for the purpose of determining the number of Directors necessary to
constitute a quorum, for the purpose of determining whether a quorum is
present, or for any other purpose whatsoever. In the case of a Director
Emeritus or Advisory Director, the occurrence of any event which in the case
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of a Director would create a vacancy on the Board, shall be deemed to create a
vacancy in such position; but the Board may declare the position terminated
until such time as the Board shall again deem it proper to create and to fill
the position.
ARTICLE IV
NOTICES
Section 1. Service of Notice. Notices to Directors and shareholders
shall be in writing and delivered personally or mailed or sent by telegram,
telex or facsimile transmission to the Directors or shareholders at their
addresses appearing on the books of the Corporation, except that notice to
Directors of a special meeting of the Board may be given orally. Notice by
mail shall be deemed to be given at the time when the same shall be mailed;
notice by telegram when such notice is delivered to the telegraph company;
notice by facsimile transmission when transmitted.
Section 2. Waiver of Notices. Whenever any notice is required to be
given under the provisions of law, the Articles, or of these Bylaws, a waiver
thereof in writing, signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed equivalent
thereto.
ARTICLE V
OFFICERS
Section 1. Titles. The Officers of the Corporation shall be chosen by
the Board of Directors and shall be a Chairman of the Board (herein the
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"Chairman"), a President, at least one Vice President, a Secretary and a
Treasurer. The Board may also elect one or more Vice Chairmen of the Board
(herein "Vice Chairmen"), additional Vice Presidents, a Controller, one or
more Assistant Controllers, and such other officers as the Board may deem
appropriate. Any two of the aforesaid offices, except those of President and
Vice President or President and Secretary, may be held by the same person.
Vice Presidents of the Corporation may be given distinctive designations such
as Executive Vice President, Group Vice President, Senior Vice President and
the like.
Section 2. Election. The Board, at its annual meeting immediately
following each annual meeting of the shareholders, shall elect a Chairman and a
President, and may elect one or more Vice Chairmen, all of whom shall be
Directors or Advisory Directors; and the Board shall also at such annual
meeting elect one or more Vice Presidents, a Secretary and a Treasurer, who
may, but need not, be Directors or Advisory Directors. The Board may elect
such other officers and agents as it shall determine necessary who shall hold
their offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the Board. In connection
with the election of any officer of the Corporation, the Board may determine
that such officer, in addition to the title of the office to which he is
elected, shall have a further title such as Chief Administrative Officer,
Chief Operating Officer or such other title as the Board may designate, and
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the Board may prescribe powers to be exercised and duties to be performed by
any such officer to whom any such additional title of office is given in
addition to those powers and duties provided for by these Bylaws for such
office.
Section 3. Term. The officers of the Corporation shall hold office
until their respective successors are elected and qualify. Any officer
elected or appointed by the Board may be removed by the Board at any time with
or without cause by the affirmative vote of a majority of the whole Board.
Any vacancy occurring in any such office may be filled only by the Board.
Section 4. Chairman of the Board. The Chairman shall be the Chief
Executive Officer of the Corporation. In addition to his or her duties as
Chairman and Chief Executive Officer, the Chairman shall be responsible for
the general and active management of the business and affairs of the
Corporation, subject only to the control of the Board; shall have full
authority in respect to the signing and execution of deeds, bonds, mortgages,
contracts and other instruments of the Corporation; and, in the absence or
disability of a Vice Chairman or the President, shall exercise all of the
powers and discharge all of the duties of such Vice Chairman or the President.
The Chairman shall also be, ex officio, a member of all standing Board
Committees, shall preside at all meetings of shareholders and Directors, and
shall perform such other duties as the Board may prescribe.
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Section 5. President. The President shall be an executive Officer of
the Corporation, shall preside at all meetings of the shareholders and
Directors in the absence of the Chairman and the Senior Vice Chairman, and
shall perform such other duties as the Chairman or the Board shall prescribe.
The President shall have equal authority with the Chairman and the Vice
Chairmen, if any, to sign and execute deeds, bonds, mortgages, contracts and
other instruments of the Corporation.
Section 6. Vice Chairmen of the Board. Vice Chairmen, if any, may but
need not be executive officers of the Corporation. The Vice Chairmen shall
perform such other duties, and have such other powers as the Chairman or the
Board may, from time to time, prescribe. Each Vice Chairman shall have equal
authority with the Chairman and the President with respect to the signing and
execution of deeds, bonds, mortgages, contracts and other instruments of the
Corporation.
Section 7. Vice Presidents. The Vice President, or if there shall be
more than one, the Vice Presidents shall, in the absence or disability of the
Chairman, the President and all Vice Chairmen, perform the duties and exercise
the powers of the President. Each Vice President shall perform such other
duties and have such other powers as the Chairman and the Board may, from time
to time, prescribe.
Section 8. Secretary and Assistant Secretaries. The Secretary shall
attend all meetings of the Board and all meetings of the shareholders and
record all the proceedings of the meetings of the Corporation and of the Board
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in books to be kept for that purpose, shall perform like duties for Committees
of the Board when required, and shall perform such other duties as may be
prescribed by the Board, the Chairman, any Vice Chairman, or the President.
The Secretary shall keep in safe custody the seal of the Corporation and affix
the same to any instrument requiring it, and, when so affixed, it shall be
attested by his or her signature or by the signature of an Assistant
Secretary. The Assistant Secretary, or, if there be more than one, the
Assistant Secretaries, in the order determined by the Board, shall, in the
absence or disability of the Secretary, perform the duties and exercise the
powers of the Secretary and shall perform such other duties and have such
other powers as the Board may, from time to time, prescribe.
Section 9. Treasurer and Assistant Treasurers. The Treasurer shall
have charge of the funds of the Corporation; shall keep the same in
depositories designated by the Board or by officers of the Corporation
authorized by the Board to make such designation; shall cause said funds to
be disbursed upon checks, drafts, bills of exchange or orders for the payment
of money signed in such manner as the Board or authorized officers of the
Corporation may, from time to time, direct; shall perform such other duties
as directed by the Board, the Chairman or other senior officers; and, if
required by the Board, shall give bond for the faithful performance of his or
her duties in such form and amount as may be determined by the Board. The
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Assistant Treasurer, or, if there be more than one, the Assistant Treasurers,
in the order determined by the Board, shall, in the absence or disability of
the Treasurer, perform the duties and exercise the powers of the Treasurer,
and shall have such other duties and powers as the Board may prescribe.
Section 10. Controller and Assistant Controllers. The Controller, if
one is elected by the Board, shall have charge of the accounting records of
the Corporation; shall keep full and accurate accounts of all receipts and
disbursements in books and records belonging to the Corporation; shall
maintain appropriate internal control and auditing of the Corporation; and
shall perform such other duties as directed by the Board, the Chairman or
other senior officers. The Assistant Controller or, if there be more than
one, the Assistant Controllers, in the order determined by the Board, shall,
in the absence or disability of the Controller, perform the duties and
exercise the powers of the Controller and shall have such other duties and
powers as the Board may prescribe.
Section 11. Appointed Officers. In addition to the corporate officers
elected by the Board as hereinabove in this Article V provided, the Chairman
may, from time to time, appoint one or more other persons as appointed
officers who shall not be deemed to be corporate officers, but may,
respectively, be designated with such titles as the Chairman may deem
appropriate. The Chairman may prescribe the powers to be exercised and the
duties to be performed by each such appointed officer, may designate the term
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for which each such appointment is made, and may, from time to time, terminate
any or all of such appointments with or without cause. Such appointments and
termination of appointments shall be reported periodically to the Board.
ARTICLE VI
CERTIFICATES OF SHARES
Section 1. Certificates. The certificates of shares of the
Corporation shall be numbered and registered in a share register as they are
issued. They shall exhibit the name of the registered holder and the number
and class of shares and the series, if any, represented thereby and the par
value of each share or a statement that such shares are without par value as
the case may be.
Section 2. Signatures on Certificates. Every share certificate shall
be signed by the Chairman of the Board, the President or a Vice President;
and by the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer; and shall be sealed with the Corporation's seal which
may be facsimile, engraved or printed.
Section 3. Transfer Agents and Registrars; Facsimile Signatures. The
Board may appoint one or more transfer agents or transfer clerks and one or
more registrars and may require all certificates for shares to bear the
signature or signatures of any of them. Where a certificate is signed (a) by
a transfer agent or an assistant or co-transfer agent, or (b) by a transfer
clerk or (c) by a registrar or co-registrar, the signature of any officer
thereon may be facsimile. Where a certificate is signed by a registrar or co-
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registrar the certificate of any transfer agent or co-transfer agent thereon
may be by facsimile signature of the authorized signatory of such transfer
agent or co-transfer agent. In case any officer or officers of the
Corporation who have signed, or whose facsimile signature or signatures have
been used on, any such certificate or certificates shall cease to be such
officer or officers, whether because of death, resignation or otherwise,
before such certificate or certificates have been delivered by the
Corporation, such certificate or certificates may, nevertheless, be issued and
delivered as though the person or persons who signed such certificate or
certificates or whose facsimile signature or signatures have been used thereon
had not ceased to be such officer or officers of the Corporation.
Section 4. Lost Certificates. In case of loss or destruction of any
certificate of stock or other security of the Corporation, another may be
issued in its place upon satisfactory proof of such loss or destruction and
upon the giving of a satisfactory bond of indemnity to the Corporation and to
the transfer agents and registrars, if any, of such stock or other security,
in such sum as the Board may provide. The Board may delegate to any officer
or officers of the Corporation the authorization of the issue of such new
certificate or certificates and the approval of the form and amount of such
indemnity bond and the surety thereon.
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Section 5. Transfer of Shares. Upon surrender to the Corporation or a
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, the Corporation may issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Section 6. Registered Shareholders. The Corporation and its transfer
agents shall be entitled to treat the holder of record of any share or shares
as the holder in fact thereof and shall not be bound to recognize any
equitable or other claims to, or interest in, such shares on the part of any
other person and shall not be liable for any registration or transfer of
shares which are registered, or to be registered, in the name of a fiduciary
or the nominee of a fiduciary unless made with actual knowledge that a
fiduciary, or nominee of a fiduciary, is committing a breach of trust in
requesting such registration or transfer, or with knowledge of such facts that
its participation therein amounts to bad faith.
Section 7. Interested Shareholders. The provisions of these Bylaws,
including without limitation the provisions of this Article VI as they apply
to any Interested Person or shares beneficially owned by such Interested
Person, are subject to the provisions of Article 9 of the Articles.
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ARTICLE VII
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
Section 1. Actions Involving Directors, Officers or Employees. The
Corporation shall indemnify any person who was or is a party (other than a
party plaintiff suing on his own behalf or in the right of the Corporation),
or who is threatened to be made such a party, to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (including, but not limited to, an action by or in the right
of the Corporation) by reason of the fact that he or she is or was a Director,
officer or employee of the Corporation, or is or was serving at the request of
the Corporation as a director, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such action,
suit or proceeding; provided, that no such person shall be indemnified
(a) except to the extent that the aggregate of losses to be indemnified under
the provisions of this Article VII exceeds the amount of such losses for which
the Director, officer or employee is insured pursuant to any directors and
officers liability insurance policy maintained by the Corporation; (b) in
respect to remuneration paid to such person if it shall be finally adjudged
that such remuneration was in violation of law; (c) on account of any suit in
which judgment is rendered against such person for an accounting of profits
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made from the purchase or sale by such person of securities of the Corporation
pursuant to the provisions of Section 16(b) of the 1934 Act and amendments
thereto or similar provisions of any federal, state or local statutory law;
(d) on account of such person's conduct which is finally adjudged to have been
knowingly fraudulent, deliberately dishonest or willful misconduct; and (e)
if it shall be finally adjudged that such indemnification is not lawful.
Section 2. Actions Involving Agents. The Corporation may indemnify
any person who was or is a party (other than a party plaintiff suing on his
own behalf or in the right of the Corporation), or who is threatened to be
made such a party, to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative
(including, but not limited to, an action by or in the right of the
Corporation) by reason of the fact that he or she is an agent of the
Corporation, or is or was serving at the request of the Corporation as an
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding, all to the full extent
permitted by law.
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Section 3. Determination of Right to Indemnification in Certain
Instances.
(a) Any indemnification under Section 1 of this Article VII
(unless ordered by a court) shall be made by the Corporation unless a
determination is reasonably and promptly made that indemnification of the
director, officer or employee is not proper in the circumstances because he or
she has not satisfied the conditions set forth in such Section 1. Such
determination shall be made (1) by the Board by a majority vote of a quorum
consisting of Directors who were not parties to such action, suit or
proceeding, or (2) if such a quorum is not obtainable, or, even if obtainable,
a quorum of disinterested Directors so directs, by independent legal counsel
in a written opinion, or (3) by the shareholders; provided, that no such
determination shall preclude an action brought in an appropriate court to
challenge such determination.
(b) Any indemnification under Section 2 of this Article
VII (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of
the agent is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in such Section 2. Such determination
shall be made (1) by the Board by a majority vote of a quorum consisting of
Directors who were not parties to such action, suit or proceeding, or (2) if
such a quorum is not obtainable, or, even if obtainable, a quorum of
disinterested Directors so directs, by independent legal counsel in a written
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opinion, or (3) by the shareholders.
Section 4. Advance Payment of Expenses. Expenses incurred by
defending a civil or criminal action, suit or proceeding may be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amounts unless it shall ultimately be
determined that he or she is entitled to be indemnified by the Corporation as
authorized in this Article.
Section 5. Successful Defense. Notwithstanding any other provision of
this Article VII, to the extent that a director, officer, employee or agent of
the Corporation has been successful on the merits or otherwise (including the
dismissal of an action without prejudice or the settlement of an action
without admission of liability) in defense of any action, suit or proceeding
referred to in Sections 1 or 2 of this Article VII, or in defense of any
claim, issue or matter therein, he or she shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred in
connection therewith.
Section 6. Not Exclusive Right. The indemnification provided by this
Article VII shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any statute, bylaw, agreement,
vote of shareholders or disinterested directors or otherwise, both as to
action in an official capacity and as to action in another capacity while
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holding such office. Without limiting the generality of the foregoing, in
the event of conflict between the provisions of this Article VII and the
provisions of any agreement adopted by the shareholders between the
Corporation on the one hand, and any director, officer, employee or agent of
the Corporation on the other, providing for indemnification, the terms of such
agreement shall prevail. Any indemnification, whether required under this
Bylaw or permitted by statute or otherwise, shall continue as to a person who
has ceased to be a director, officer or employee and shall inure to the
benefit of the heirs, executors and administrators of such person.
Section 7. Insurance. The Board shall have the power to cause the
Corporation to purchase and maintain insurance on behalf of any person who is
or was a Director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or her and incurred by
him or her in any such capacity, arising out of his or her status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Article.
Section 8. Subsidiaries of Corporation. For the purposes of this
Article VII, (a) any officer, Director, or employee of the Corporation who
shall serve as an officer, director, employee or agent of any other
corporation, joint venture, trust or other enterprise of which the
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Corporation, directly or indirectly, is or was a stockholder or creditor, or
in which the Corporation is or was in any way interested, or (b) any officer,
director, or employee of any subsidiary corporation, venture, trust or other
enterprise wholly owned by the Corporation, shall be deemed to be serving as
such director, officer, employee or agent at the request of the Corporation,
unless the Board shall determine otherwise. In all instances where any person
shall serve as a director, officer, employee or agent of another corporation,
joint venture, trust or other enterprise of which the Corporation is or was a
stockholder or creditor, or in which it is or was otherwise interested, if it
is not otherwise established that such person is or was serving as such
director, officer, employee or agent at the request of the Corporation, the
Board may determine whether such service is or was at the request of the
Corporation, and it shall not be necessary to show any actual or prior request
for such service.
_____________________
Note: The indemnification provided in the foregoing provisions of Article VII
(and related matters) was approved by the stockholders of the Corporation on
February 10, 1987.
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Section 9. Spousal Indemnification. The spouse of a person entitled
to indemnification under Section 1 hereof or who is granted indemnification
under Section 2 hereof, shall be entitled to be so indemnified; provided, that
the spouse was or is a party (other than a party plaintiff suing on his or her
own behalf or in the right of the Corporation), or was or is threatened to be
made a party, to any threatened, pending, or completed action, suit or
proceeding, whether civil, criminal, administrative, or investigative
(including, but not limited to, an action by or in the right of the
Corporation), solely by reason of the spousal relationship to the person
entitled to indemnification under Section 1 hereof or who is granted
indemnification under Section 2 hereof.
ARTICLE VIII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the shares of the Corporation,
subject to the provisions of the Articles, if any, may be declared by the
Board at any regular or special meeting, pursuant to law. Dividends may be
paid in cash, in property, or in shares of the capital stock or other
securities of the Corporation, in rights or warrants relating thereto, or in
any other form authorized by law.
Section 2. Checks. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person
or persons as the Board, or officers authorized by the Board, may, from time
to time, designate.
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Section 3. Fiscal Year. The fiscal year of the Corporation shall
commence on October 1, and close on September 30.
Section 4. Seal. The Corporation's seal shall have inscribed thereon
the name of the Corporation, the numeral "1890" being the year of the
incorporation of the Corporation, and the words "Corporate Seal, Missouri".
The seal may be used by causing it, or a facsimile thereof, to be impressed,
affixed, reproduced or otherwise.
Section 5. Closing of Transfer Books and Fixing of Record Dates. The
Board shall have power to close the share transfer books of the Corporation
for a period not exceeding seventy (70) days preceding the date of any meeting
of shareholders, or the date for the payment of any dividend, or the date for
the allotment of rights, or the date when any change, conversion or exchange
of shares shall go into effect; provided, however, that, in lieu of closing
the share transfer books as aforesaid, the Board may fix in advance a date,
not exceeding seventy (70) days preceding the date of any meeting of
shareholders, or the date for the payment any dividend, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
shares shall go into effect, as a record date for the determination of the
shareholders entitled to notice of, and to vote at, any such meeting, and any
adjournment thereof, or entitled to receive payment of any such dividend, or
-34-
<PAGE>
to any such allotment of rights, or to exercise rights in respect of any such
change, conversion or exchange of shares; and, in each such case, such
shareholders and only such shareholders as shall be shareholders of record on
the date of closing the share transfer books, or on the record date so fixed,
shall be entitled to notice of, and to vote at, such meeting and any
adjournment thereof, or to receive payment of such dividend, or to receive
such allotment of rights, or to exercise such rights, as the case may be,
notwithstanding any transfer of any shares after such date of closing of the
share transfer books or such record date fixed as aforesaid.
ARTICLE IX
AMENDMENTS
Section 1. These Bylaws may be altered, amended or repealed solely by
a majority vote of the members of the whole Board at any regular or special
meeting thereof duly called and convened.
-35-
<PAGE> Exhibit 4(b)
===============================================================================
Emerson Electric Co.
and
The Bank of New York, Trustee
-------------------------------------
Indenture
Dated as of December 10, 1998
-------------------------------------
================================================================================
<PAGE>
CROSS REFERENCE SHEET*
Between
Provisions of Trust Indenture Act of 1939, as amended, and the Indenture
dated as of December 10, 1998 between Emerson Electric Co., Issuer, and The Bank
of New York, Trustee:
Section of the Act Section of Indenture
310(a)(1) and (2) ........................... 6.9
310(a)(3) and (4) ........................... Inapplicable
310(b) ...................................... 6.8 and 6.10(a), (b) and (d)
310(c) ...................................... Inapplicable
311(a) ...................................... 6.13
311(b) ...................................... 6.13
311(c) ...................................... Inapplicable
312(a) ...................................... 4.1 and 4.2(a)
312(b) ...................................... 4.2(a) and (b)
312(c) ...................................... 4.2(c)
313(a) ...................................... 4.4(a)
313(b)(1) ................................... Inapplicable
313(b)(2) ................................... 4.4
313(c) ...................................... 4.4
313(d) ...................................... 4.4
314(a) ...................................... 4.3
314(b) ...................................... Inapplicable
314(c)(1) and (2) ........................... 13.5
314(c)(3) ................................... Inapplicable
314(d) ...................................... Inapplicable
314(e) ...................................... 13.5
314(f) ...................................... Inapplicable
315(a), (c) and (d) ......................... 6.1
315(b) ...................................... 5.11
315(e) ...................................... 5.12
316(a)(1) ................................... 5.9
316(a)(2) ................................... Not required
316(a) (last sentence) ...................... 7.4
316(b) ...................................... 5.7
316(c) ...................................... 7.1
317(a) ...................................... 5.2
317(b) ...................................... 3.4(a) and (b)
318(a) ...................................... 13.7
- ---------------------
*This Cross Reference Sheet is not part of the Indenture.
i
<PAGE>
TABLE OF CONTENTS
---------------------
Page
PARTIES........................................................................1
RECITALS.......................................................................1
Authorization of Indenture.....................................................1
Compliance with Legal Requirements.............................................1
Purpose of and Consideration for Indenture.....................................1
ARTICLE ONE DEFINITIONS.......................................................1
SECTION 1.1 Certain Terms Defined.....................................1
Board of Directors...........................................1
Business Day.................................................1
Commission...................................................1
Consolidated Net Tangible Assets.............................2
Corporate Trust Office.......................................2
Depositary...................................................2
Event of Default.............................................2
Exchange Rate Agent..........................................2
Global Security..............................................2
Holder.......................................................2
Indenture....................................................2
Interest.....................................................2
Issuer.......................................................2
Market Exchange Rate.........................................2
Officers' Certificate........................................3
Opinion of Counsel...........................................3
Original issue date..........................................3
Original Issue Discount Security.............................3
Outstanding..................................................3
Person.......................................................4
principal....................................................4
Principal Property...........................................4
record date..................................................4
Responsible Officer..........................................4
Restricted Subsidiary........................................4
Security.....................................................4
Subsidiary...................................................4
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Trustee......................................................5
Trust Indenture Act..........................................5
U.S. Government Obligations..................................5
vice president...............................................5
Yield to Maturity............................................5
ARTICLE TWO SECURITIES.........................................................5
SECTION 2.1 Forms Generally...........................................5
SECTION 2.2 Form of Trustee's Certificate of Authentication...........6
SECTION 2.3 Amount Unlimited; Issuable in Series......................6
SECTION 2.4 Authentication and Delivery of Securities.................8
SECTION 2.5 Execution of Securities...................................9
SECTION 2.6 Certificate of Authentication.............................9
SECTION 2.7 Denomination and Date of Securities; Payments
of Interest..............................................10
SECTION 2.8 Registration, Transfer and Exchange......................10
SECTION 2.9 Mutilated, Defaced, Destroyed, Lost and Stolen
Securities...............................................12
SECTION 2.10 Cancellation of Securities; Destruction Thereof.........13
SECTION 2.11 Temporary Securities....................................13
SECTION 2.12 CUSIP Numbers...........................................14
ARTICLE THREE COVENANTS OF THE ISSUER.........................................14
SECTION 3.1 Payment of Principal and Interest........................14
SECTION 3.2 Offices for Payments, etc................................14
SECTION 3.3 Appointment to Fill a Vacancy in Office of Trustee.......14
SECTION 3.4 Paying Agents............................................14
SECTION 3.5 Written Statement to Trustee.............................15
SECTION 3.6 Limitation on Liens......................................15
SECTION 3.7 Limitation on Sale and Lease-Back........................16
ARTICLE FOUR SECURITYHOLDERS' LISTS AND REPORTS BY THE ISSUER
AND THE TRUSTEE......................................................17
SECTION 4.1 Issuer to Furnish Trustee Information as to Names
and Addresses of Securityholders.........................17
SECTION 4.2 Preservation and Disclosure of Securityholders' Lists....17
SECTION 4.3 Reports by the Issuer....................................18
SECTION 4.4 Reports by the Trustee...................................18
ARTICLE FIVE REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON
EVENT OF DEFAULT....................................................18
SECTION 5.1 Event of Default Defined; Acceleration of Maturity;
Waiver of Default........................................18
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<PAGE>
SECTION 5.2 Collection of Indebtedness by Trustee; Trustee
May Prove Debt...........................................20
SECTION 5.3 Application of Proceeds..................................22
SECTION 5.4 Suits for Enforcement....................................23
SECTION 5.5 Restoration of Rights on Abandonment of Proceedings......23
SECTION 5.6 Limitations on Suits by Securityholders..................23
SECTION 5.7 Unconditional Right of Securityholders to Institute
Certain Suits............................................24
SECTION 5.8 Powers and Remedies Cumulative; Delay or Omission
Not Waiver of Default....................................24
SECTION 5.9 Control by Securityholders...............................24
SECTION 5.10 Waiver of Past Defaults.................................25
SECTION 5.11 Trustee to Give Notice of Default, But May Withhold
in Certain Circumstances................................25
SECTION 5.12 Right of Court to Require Filing of Undertaking
to Pay Costs............................................26
ARTICLE SIX CONCERNING THE TRUSTEE............................................26
SECTION 6.1 Duties and Responsibilities of the Trustee;
During Default; Prior to Default.........................26
SECTION 6.2 Certain Rights of the Trustee............................27
SECTION 6.3 Trustee Not Responsible for Recitals, Disposition
of Securities or Application of Proceeds Thereof.........28
SECTION 6.4 Trustee and Agents May Hold Securities;
Collections, etc.........................................28
SECTION 6.5 Moneys Held by Trustee...................................28
SECTION 6.6 Compensation and Indemnification of Trustee and
Its Prior Claim..........................................28
SECTION 6.7 Right of Trustee to Rely on Officers'
Certificate, etc.........................................29
SECTION 6.8 Conflicting Interests....................................29
SECTION 6.9 Persons Eligible for Appointment as Trustee..............29
SECTION 6.10 Resignation and Removal; Appointment of
Successor Trustee.......................................29
SECTION 6.11 Acceptance of Appointment by Successor Trustee..........30
SECTION 6.12 Merger, Conversion, Consolidation or Succession
to Business of Trustee..................................31
SECTION 6.13 Preferential Collection of Claims Against the Issuer....32
ARTICLE SEVEN CONCERNING THE SECURITYHOLDERS..................................32
SECTION 7.1 Evidence of Action Taken by Securityholders..............32
SECTION 7.2 Proof of Execution of Instruments and of Holding
of Securities............................................33
SECTION 7.3 Holders to be Treated as Owners..........................33
SECTION 7.4 Securities Owned by Issuer Deemed Not Outstanding........33
SECTION 7.5 Right of Revocation of Action Taken......................33
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<PAGE>
ARTICLE EIGHT SUPPLEMENTAL INDENTURES.........................................34
SECTION 8.1 Supplemental Indentures Without Consent
of Securityholders......................................34
SECTION 8.2 Supplemental Indentures With Consent
of Securityholders......................................35
SECTION 8.3 Effect of Supplemental Indenture........................36
SECTION 8.4 Documents to Be Given to Trustee........................36
SECTION 8.5 Notation on Securities in Respect of
Supplemental Indentures.................................36
ARTICLE NINE CONSOLIDATION, MERGER, SALE OR CONVEYANCE........................36
SECTION 9.1 Issuer May Consolidate, etc., on Certain Terms..........36
SECTION 9.2 Successor Corporation Substituted.......................37
SECTION 9.3 Opinion of Counsel to Trustee...........................37
ARTICLE TEN SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS.........37
SECTION 10.1 Satisfaction and Discharge of Indenture................37
SECTION 10.2 Application by Trustee of Funds Deposited for
Payment of Securities..................................38
SECTION 10.3 Repayment of Moneys Held by Paying Agent...............38
SECTION 10.4 Return of Moneys Held by Trustee and Paying
Agent Unclaimed for Three Years........................39
ARTICLE ELEVEN REDEMPTION OF SECURITIES AND SINKING FUNDS.....................39
SECTION 11.1 Applicability of Article...............................39
SECTION 11.2 Notice of Redemption; Partial Redemptions..............39
SECTION 11.3 Payment of Securities Called for Redemption............40
SECTION 11.4 Exclusion of Certain Securities from Eligibility
for Selection for Redemption...........................40
SECTION 11.5 Mandatory and Optional Sinking Funds...................41
ARTICLE TWELVE DEFEASANCE.....................................................43
SECTION 12.1 Applicability of Article: Issuer's Option to
Effect Defeasance.....................................43
SECTION 12.2 Defeasance and Discharge...............................43
SECTION 12.3 Covenant Defeasance....................................43
SECTION 12.4 Conditions to Defeasance...............................44
ARTICLE THIRTEEN MISCELLANEOUS PROVISIONS.....................................45
SECTION 13.1 Incorporators, Stockholders, Officers and Directors
of Issuer Exempt from Individual Liability.............45
SECTION 13.2 Provisions of Indenture for the Sole Benefit of
Parties and Securityholders............................45
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<PAGE>
SECTION 13.3 Successors and Assigns of Issuer Bound by Indenture....45
SECTION 13.4 Notices and Demands on Issuer, Trustee and
Securityholders........................................45
SECTION 13.5 Officers' Certificates and Opinions of Counsel;
Statements to Be Contained Therein.....................46
SECTION 13.6 Payments Due on Saturdays, Sundays and Holidays........47
SECTION 13.7 Conflict of Any Provision of Indenture with
Trust Indenture Act....................................47
SECTION 13.8 New York Law to Govern.................................47
SECTION 13.9 Counterparts...........................................47
SECTION 13.10 Effect of Headings....................................47
SECTION 13.11 Securities in a Foreign Currency......................47
SECTION 13.12 Judgment Currency.....................................48
TESTIMONIUM...................................................................48
SIGNATURES....................................................................48
v
<PAGE>
THIS INDENTURE, dated as of December 10, 1998 between EMERSON
ELECTRIC CO., a Missouri corporation (the "Issuer"), and THE BANK OF NEW YORK, a
New York banking corporation (the "Trustee"),
W I T N E S S E T H:
WHEREAS, the Issuer has duly authorized the issue from time to
time of its unsecured debentures, notes and other evidences of indebtedness to
be issued in one or more series (the "Securities") up to such principal amount
or amounts as may from time to time be authorized in accordance with the terms
of this Indenture and to provide, among other things, for the authentication,
delivery and administration thereof, the Issuer has duly authorized the
execution and delivery of this Indenture; and
WHEREAS, all things necessary to make this Indenture a valid
indenture and agreement according to its terms have been done;
NOW, THEREFORE:
In consideration of the premises and the purchases of the
Securities by the holders thereof, the receipt and sufficiency of which is
hereby acknowledged, the Issuer and the Trustee mutually covenant and agree for
the equal and proportionate benefit of the respective holders from time to time
of the Securities as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.1 Certain Terms Defined. The following terms (except as otherwise
expressly provided or unless the context otherwise clearly requires) for all
purposes of this Indenture and of any indenture supplemental hereto shall have
the respective meanings specified in this Section. All other terms used in this
Indenture that are defined in the Trust Indenture Act or the definitions of
which in the Securities Act of 1933 are referred to in the Trust Indenture Act,
including terms defined therein by reference to the Securities Act of 1933
(except as herein otherwise expressly provided or unless the context otherwise
clearly requires), shall have the meanings assigned to such terms in said Trust
Indenture Act and in said Securities Act as in force at the date of this
Indenture. All accounting terms used herein and not expressly defined shall have
the meanings assigned to such terms in accordance with generally accepted
accounting principles, and the term "generally accepted accounting principles"
means such accounting principles as are generally accepted at the time of any
computation. The words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision. The terms defined in this Article have
the meanings assigned to them in this Article and include the plural as well as
the singular.
"Board of Directors" means either the Board of Directors of the Issuer or
any committee of such Board duly authorized to act hereunder.
"Business Day" means, with respect to any Security, a day that in the city
(or in any of the cities, if more than one) in which amounts are payable, as
specified in the form of such Security, is not a day on which banking
institutions are authorized by law or regulation to close.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or if at
any time after the execution and delivery of this Indenture such Commission is
<PAGE>
not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties on such date.
"Consolidated Net Tangible Assets" means the aggregate amount of assets
after deducting therefrom (a) all current liabilities (excluding liabilities
which could be classified as long-term debt in conformity with generally
accepted accounting principles) and (b) all goodwill, trade names, trademarks,
patents, unamortized debt discount and expense and deferred charges (other than
prepaid items such as insurance, taxes, interest, commissions, rents and similar
items and tangible assets being amortized), all as set forth on the most recent
quarterly consolidated balance sheet of the Issuer and its consolidated
Subsidiaries and computed in accordance with generally accepted accounting
principles.
"Corporate Trust Office" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
administered, which office is, at the date as of which this Indenture is dated,
located at 101 Barclay Street, New York, New York 10286, Attention: Corporate
Trust Administration.
"Depositary" means, with respect to the Securities of any series issuable
or issued in whole or in part in the form of one or more Global Securities, the
Person designated as Depositary by the Issuer pursuant to Section 2.3 until a
successor Depositary shall have become such pursuant to the applicable
provisions hereof, and thereafter "Depositary" shall mean or include each Person
who is then a Depositary hereunder, and if at any time there is more than one
such Person, "Depositary" as used with respect to the Securities of any such
series shall mean the Depositary with respect to the Securities of that series.
"Event of Default" means any event or condition specified as such in
Section 5.1.
"Exchange Rate Agent" means the Trustee or other agent designated to make
calculations of the Market Exchange Rate in respect of the Securities of any
series, as specified pursuant to Section 2.3.
"Global Security" means a Security evidencing all or a part of a series of
Securities, issued to the Depositary for such series in accordance with Section
2.4, and bearing the legend prescribed in Section 2.4.
"Holder", "holder of securities", "Securityholder" or other similar terms
mean the registered holder of any Security.
"Indenture" means this instrument as originally executed and delivered or,
if amended or supplemented as herein provided, as so amended or supplemented or
both, and shall include the forms and terms of particular series of Securities
established as contemplated hereunder.
"Interest" means, when used with respect to non-interest bearing
Securities, interest payable after maturity.
"Issuer" means (except as otherwise provided in Article Six) Emerson
Electric Co., a Missouri corporation, and, subject to Article Nine, its
successors and assigns.
"Market Exchange Rate" means, for any amount in respect of Securities of
any series which is expressed in a currency other than U.S. dollars (unless
otherwise provided in respect of such series pursuant to Section 2.2), the
amount in U.S. dollars calculated by the Exchange Rate Agent on the basis of the
highest bid quotation in The City of New York received by the Exchange Rate
2
<PAGE>
Agent as of 11:00 a.m., New York time, on the Business Day as of which the
Market Exchange Rate is to be determined, from three recognized dealers (one of
which may be the Exchange Rate Agent) for the purchase by the quoting dealer of
such other currency for settlement on such date in the aggregate amount of such
other currency in respect of which the Market Exchange Rate is being determined,
and at which the applicable dealer commits to execute an exchange contract.
"Officers' Certificate" means a certificate signed by the chairman of the
Board of Directors or any vice chairman of the Board of Directors or the
president or any vice president and by the treasurer or the secretary or any
assistant secretary of the Issuer and delivered to the Trustee. Each such
certificate shall include the statements provided for in Section 13.5.
"Opinion of Counsel" means an opinion in writing signed by legal counsel
who may be an employee of or counsel to the Issuer and who shall be satisfactory
to the Trustee. Each such opinion shall include the statements provided for in
Section 13.5, if and to the extent required hereby.
"Original issue date" of any Security (or portion thereof) means the
earlier of (a) the date of such Security or (b) the date of any Security (or
portion thereof) for which such Security was issued (directly or indirectly) on
registration of transfer, exchange or substitution.
"Original Issue Discount Security" means any Security that provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the maturity thereof pursuant to Section 5.1.
"Outstanding" (except as otherwise provided in Section 6.8), when used with
reference to Securities, shall, subject to the provisions of Section 7.4, mean,
as of any particular time, all Securities authenticated and delivered by the
Trustee under this Indenture, except
(a) Securities theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation;
(b) Securities, or portions thereof, for the payment or redemption of which
moneys in the necessary amount shall have been deposited in trust with the
Trustee or with any paying agent (other than the Issuer) or shall have been set
aside, segregated and held in trust by the Issuer for the holders of such
Securities (if the Issuer shall act as its own paying agent); provided that if
such Securities, or portions thereof, are to be redeemed prior to the maturity
thereof, notice of such redemption shall have been given as herein provided, or
provision satisfactory to the Trustee shall have been made for giving such
notice;
(c) Securities in substitution for which other Securities shall have been
authenticated and delivered, or which shall have been paid, pursuant to the
terms of Section 2.9 (except with respect to any such Security as to which proof
satisfactory to the Trustee is presented that such Security is held by a Person
in whose hands such Security is a legal, valid and binding obligation of the
Issuer); and
(d) Except to the extent provided in Sections 12.2 and 12.3, Securities
with respect to which the Issuer has effected defeasance and/or covenant
defeasance as provided in Article Twelve.
In determining whether the holders of the requisite principal amount of
Outstanding Securities of any or all series have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, (i) the principal
3
<PAGE>
amount of an Original Issue Discount Security that shall be deemed to be
Outstanding for such purposes shall be the amount of the principal thereof that
would be due and payable as of the date of such determination upon a declaration
of acceleration of the maturity thereof pursuant to Section 5.1, (ii) the
principal amount of any Securities denominated in any currency other than U.S.
dollars shall be deemed to be the U.S. dollar equivalent amount calculated at
the Market Exchange Rate at the date of determination and (iii) the principal
amount of any Security the principal of which is determined with reference to an
index based on a currency other than that in which the Securities of the series
are denominated that shall be deemed to be the principal face amount of such
indexed Security as of its original issuance date.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"principal" whenever used with reference to the Securities or any Security
or any portion thereof, shall be deemed to include "and premium, if any".
"Principal Property" shall mean any manufacturing plant or manufacturing
facility owned by the Issuer or any Restricted Subsidiary which is located
within the continental United States and, in the opinion of the Board of
Directors, is of material importance to the total business conducted by the
Issuer and the Restricted Subsidiaries taken as a whole.
"record date" has the meaning given in Section 2.7.
"Responsible Officer" shall mean, when used with respect to the Trustee,
any officer within the corporate trust department of the Trustee, including any
vice president, assistant vice president, assistant secretary, assistant
treasurer, trust officer or any other officer of the Trustee who customarily
performs functions similar to those performed by the Persons who at the time
shall be such officers, respectively, or to whom any corporate trust matter is
referred because of such person's knowledge of and familiarity with the
particular subject and who shall have direct responsibility for the
administration of this Indenture.
"Restricted Subsidiary" shall mean any Subsidiary (i) substantially all the
property of which is located within the continental United States of America and
(ii) which owns any Principal Property; provided, however, that the term
"Restricted Subsidiary" shall not include any Subsidiary which is principally
engaged in leasing or in financing installment receivables or which is
principally engaged in financing the Issuer's operations outside the continental
United States of America.
"Security" or "Securities" (except as otherwise provided in Section 6.8)
has the meaning stated in the first recital of this Indenture, or, as the case
may be, Securities that have been authenticated and delivered under this
Indenture.
"Subsidiary" shall mean any corporation of which stock having by the terms
thereof ordinary voting power to elect at least a majority of the board of
directors of said corporation (irrespective of whether at the time stock of any
other class or classes of such corporation shall have or might have voting power
by reason of the happening of any contingency) is at the time directly or
indirectly owned by the Issuer or by the Issuer and one or more Subsidiaries or
by one or more Subsidiaries.
4
<PAGE>
"Trustee" means the Person identified as "Trustee" in the first paragraph
hereof and, subject to the provisions of Article Six, shall also include any
successor trustee.
"Trust Indenture Act" (except as otherwise provided in Sections 8.1 and
8.2) means the Trust Indenture Act of 1939 as amended by the Trust Indenture
Reform Act of 1990 and in force at the date as of which this Indenture was
originally executed.
"U.S. Government Obligations" means securities that are (x) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (y) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act of 1933, as amended) as custodian with respect to any such
U.S. Government Obligation or a specific payment of principal of or interest on
any such U.S. Government Obligation held by such custodian for the account of
the holder of such depository receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of principal of or interest on the U.S. Government Obligation evidenced by such
depository receipt.
"vice president" when used with respect to the Issuer or the Trustee, means
any vice president, whether or not designated by a number or a word or words
added before or after the title of "vice president".
"Yield to Maturity" means the yield to maturity on a series of Securities,
calculated at the time of issuance of such series, or, if applicable, at the
most recent redetermination of interest on such series, and calculated in
accordance with accepted financial practice.
ARTICLE TWO
SECURITIES
SECTION 2.1 Forms Generally. The Securities of each series shall be
substantially in such form (including global form) (not inconsistent with this
Indenture) as shall be established by or pursuant to a resolution of the Board
of Directors or in one or more indentures supplemental hereto, in each case with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture and may have imprinted or otherwise
reproduced thereon such legend or legends, not inconsistent with the provisions
of this Indenture, as may be required to comply with any law or with any rules
or regulations pursuant thereto, or with any rules of any securities exchange or
to conform to general usage, all as may be determined by the officers executing
such Securities, as evidenced by their execution of the Securities.
If any Security of a series is issuable in the form of a Global Security or
Securities, each such Global Security may provide that it shall represent the
aggregate amount of Outstanding Securities from time to time endorsed thereon
and may also provide that the aggregate amount of Outstanding Securities
represented thereby may from time to time be reduced to reflect exchanges. Any
endorsement of a Global Security to reflect the amount of Outstanding Securities
represented thereby shall be made by the Trustee and in such manner as shall be
5
<PAGE>
specified on such Global Security. Any instructions by the Issuer with respect
to a Global Security, after its initial issuance, shall be in writing but need
not comply with Section 13.5.
The definitive Securities shall be printed, lithographed or produced in any
other manner, all as determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
SECTION 2.2 Form of Trustee's Certificate of Authentication. The Trustee's
certificate of authentication on all Securities shall be in substantially the
following form:
This is one of the Securities of the Series described in the within-
mentioned Indenture of Trust.
Dated: The Bank of New York
as Trustee
By:
-----------------------------
Authorized Signatory
SECTION 2.3 Amount Unlimited; Issuable in Series. The aggregate principal
amount of securities which may be authenticated and delivered under this
Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a resolution of the Board of Directors and set
forth in an Officers' Certificate, or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of any series,
(1) the title of the Securities of the series (which shall
distinguish the Securities of the series from all other Securities);
(2) any limit upon the aggregate principal amount of the
Securities of the series that may be authenticated and delivered under
this Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities of the series pursuant to Section 2.8, 2.9, 2.11, 5.3, 8.5
or 12.3);
(3) if other than U.S. dollars, the currency, currencies or
currency units in which the principal of, premium, if any, and
interest on the Securities of the series is payable, and the Person
who shall serve as Exchange Rate Agent for purposes of making any
related calculations of the Market Exchange Rate;
(4) the date or dates on which the principal of the Securities of
the series is payable, or the method by which such date or dates will
be determined or extended;
(5) the rate or rates at which the Securities of the series shall
bear interest, if any, or the method by which such rate or rates shall
be determined, the date or dates from which such interest shall
accrue, or the method by which such date or dates shall be determined,
the interest payment dates on which such interest shall be payable and
the record dates for the determination of Holders to whom interest is
payable;
(6) the place or places where the principal and any interest on
Securities of the series shall be payable (if other than as provided
in Section 3.2);
(7) the price or prices at which, the period or periods within
which and the terms and conditions upon which Securities of the series
may be redeemed, in whole or in part, at the option of the Issuer,
pursuant to any sinking fund or otherwise;
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(8) the obligation, if any, of the Issuer to redeem, purchase or
repay Securities of the series pursuant to any sinking fund or
analogous provisions or at the option of a Holder thereof and the
price or prices at which and the period or periods within which and
the terms and conditions upon which Securities of the series shall be
redeemed, purchased or repaid, in whole or in part, pursuant to such
obligation;
(9) if other than denominations of $1,000 and any multiple
thereof, the denominations in which Securities of the series shall be
issuable;
(10) if other than the principal amount thereof, the portion of
the principal amount of Securities of the series which shall be
payable upon declaration of acceleration of the maturity thereof
pursuant to Section 5.1 or provable in bankruptcy pursuant to Section
5.2;
(11) any limitations on the applicability of Section 12.2 or 12.3
to the Securities of the series;
(12) any authenticating or paying agents, transfer agents or
registrars, if other than the Trustee, or any other agents with
respect to the Securities of such series;
(13) the coin or currency in which the Securities of that series
are denominated and, if other than the coin or currency in which the
Securities of that series are denominated, the coin or currency in
which payment of the principal of, premium, if any, and/or interest,
if any, on the Securities of such series shall be payable;
(14) if the amount of payments of principal of, premium, if any,
and interest, if any, on the Securities of the series may be
determined with reference to an index based on a coin or currency
other than that in which the Securities of the series are denominated,
the manner in which such amounts shall be determined;
(15) whether the Securities of such series shall be issued in
whole or in part in the form of one or more Global Securities and, in
such case, the Depositary for such Global Security or Securities and
whether beneficial owners of interests in any such Global Securities
may exchange such interests for other Securities of such series in the
manner provided in Section 2.8, and the manner and the circumstances
under which and the place or places where any such exchanges may occur
if other than in the manner provided in Section 2.8, and any other
terms of the series relating to the global nature of the Securities of
such series and the exchange, registration or transfer thereof and the
payment of any principal thereof, or interest or premium, if any,
thereon; and
(16) any Events of Default with respect to the Securities of such
Series which may be in addition to those provided herein, and any
covenants or obligations of the Issuer to the Holders of such
Securities in addition to those set forth herein;
(17) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially identical except as
to denomination and except as may otherwise be provided in or pursuant to such
resolution of the Board of Directors or in any such indenture supplemental
hereto. Except as provided in such resolution, the Securities of any one series
need not be issued at the same time and a series may be reopened without the
consent of the Holders, for issuances of additional Securities of such series.
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SECTION 2.4 Authentication and Delivery of Securities. At any time and from
time to time after the execution and delivery of this Indenture, the Issuer may
deliver Securities of any series executed by the Issuer to the Trustee for
authentication, and the Trustee shall thereupon authenticate and deliver such
Securities to or upon the written order of the Issuer, signed by both (a) the
chairman of its Board of Directors, or any vice chairman of its Board of
Directors, or its president or any vice president and (b) by its treasurer or
any assistant treasurer, without any further action by the Issuer. If any
Security of a series shall be represented by a Global Security, then, for
purposes of this Section and Section 2.11, the notation of the record owner's
interest therein upon original issuance of such Security shall be deemed to be
delivery in connection with the original issuance of each beneficial owner's
interest in such Global Security. In authenticating such Securities and
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive, and (subject to
Section 6.1) shall be fully protected in relying upon:
(a) a certified copy of any resolution or resolutions of the Board of
Directors authorizing the action taken pursuant to the resolution or
resolutions delivered under clause (2) below;
(b) a copy of any resolution or resolutions of the Board of Directors
relating to such series, in each case certified by the secretary or an
assistant secretary of the Issuer;
(c) an executed supplemental indenture, if any;
(d) an Officers' Certificate setting forth the form and terms of the
Securities as required pursuant to Section 2.1 and 2.3, respectively and
prepared in accordance with Section 13.5; and
(e) an Opinion of Counsel, prepared in accordance with Section 13.5,
which shall state
(i) if the form or forms of such Securities have been established by
or pursuant to a resolution or resolutions of the Board of Directors or
by a supplemental indenture as permitted by Section 2.1, that such form
or forms have been established in conformity with the provisions of
this Indenture;
(ii) if the terms of such Securities have been established by or
pursuant to a resolution or resolutions of the Board of Directors or by
a supplemental indenture as permitted by Section 2.3, that such terms
have been established in conformity with the provisions of this
Indenture;
(iii) that such Securities, when authenticated and delivered by the
Trustee and issued by the Issuer in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid
and legally binding obligations of the Issuer enforceable in
accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to
general equity principles; and
(iv) such other matters as the Trustee may reasonably request.
If the Issuer shall establish pursuant to Section 2.3 that the Securities
of a series are to be issued in whole or in part in the form of one or more
Global Securities, then the Issuer shall execute and the Trustee shall, in
accordance with this Section and the authentication order of the Issuer with
respect to such series, authenticate and deliver one or more Global Securities
in temporary or permanent form that shall (i) represent and be denominated in an
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aggregate amount equal to the aggregate principal amount of the Outstanding
Securities of such series to be represented by one or more Global Securities,
(ii) be registered in the name of the Depositary for such Global Security or
Securities or the nominee of such Depositary, (iii) be delivered by the Trustee
to such Depositary or pursuant to such Depositary's instruction; and (iv) bear a
legend substantially to the following effect or in other form satisfactory to
the Depositary: "Unless and until it is exchanged in whole or in part for
Securities in definitive form, this Security may not be transferred except as a
whole by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any nominee to a successor Depositary or a nominee of any
successor Depositary."
Each Depositary designated pursuant to Section 2.3 for a Global Security in
registered form must, at the time of its designation and at all times while it
serves as a Depositary, be a clearing agency registered under the Securities
Exchange Act of 1934, as amended, and shall be eligible to serve as such under
any other applicable statute or regulation.
The Trustee shall have the right to decline to authenticate and deliver any
Securities under this Section if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken by the Issuer or if the
Trustee in good faith by its board of directors or board of trustees, executive
committee, or a trust committee of directors or trustees or Responsible Officers
shall determine that such action would expose the Trustee to personal liability
to existing Holders or would affect the Trustee's rights, duties or immunities
under the Securities or this Indenture.
SECTION 2.5 Execution of Securities. The Securities shall be signed on
behalf of the Issuer by both (a) the chairman of its Board of Directors or any
vice chairman of its Board of Directors or its president or any vice president
and (b) by its treasurer or any assistant treasurer or its secretary or any
assistant secretary, under its corporate seal which may, but need not, be
attested. Such signatures may be manual or facsimile. The seal of the Issuer may
be in the form of a facsimile thereof and may be impressed, affixed, imprinted
or otherwise reproduced on the Securities. Typographical and other minor errors
or defects in any such reproduction of the seal or any such signature shall not
affect the validity or enforceability of any Security that has been duly
authenticated and delivered by the Trustee.
In case any officer of the Issuer who shall have signed any of the
Securities shall cease to be such officer before the Security so signed shall be
authenticated and delivered by the Trustee or disposed of by the Issuer, such
Security nevertheless may be authenticated and delivered or disposed of as
though the person who signed such Security had not ceased to be such officer of
the Issuer; and any Security may be signed on behalf of the Issuer by such
persons as, at the actual date of the execution of such Security, shall be the
proper officers of the Issuer, although at the date of the execution and
delivery of this Indenture any such person was not such an officer.
SECTION 2.6 Certificate of Authentication. Only such Securities as shall
bear thereon a certificate of authentication substantially in the form
hereinbefore recited, executed by the Trustee by the manual signature of one of
its authorized signatories, shall be entitled to the benefits of this Indenture
or be valid or obligatory for any purpose. Such certificate by the Trustee upon
any Security executed by the Issuer shall be conclusive evidence that the
Security so authenticated has been duly authenticated and delivered hereunder
and that the holder is entitled to the benefits of this Indenture.
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SECTION 2.7 Denomination and Date of Securities; Payments of Interest. The
Securities shall be issuable as registered securities without coupons and in
denominations as shall be specified as contemplated by Section 2.3. In the
absence of any such specification with respect to the Securities of any series,
the Securities of such series shall be issuable in denominations of $1,000 and
any multiple thereof. The Securities shall be numbered, lettered, or otherwise
distinguished in such manner or in accordance with such plan as the officers of
the Issuer executing the same may determine with the approval of the Trustee as
evidenced by the execution and authentication thereof.
Each Security shall be dated the date of its authentication, shall bear
interest, if any, from the date and shall be payable on the dates, in each case,
which shall be specified as contemplated by Section 2.3.
The Person in whose name any Security of any series is registered at the
close of business on any record date applicable to a particular series with
respect to any interest payment date for such series shall be entitled to
receive the interest, if any, payable on such interest payment date
notwithstanding any transfer or exchange of such Security subsequent to the
record date and prior to such interest payment date, except if and to the extent
the Issuer shall default in the payment of the interest due on such interest
payment date for such series, in which case such defaulted interest shall be
paid to the Persons in whose names Outstanding Securities for such series are
registered at the close of business on a subsequent record date (which shall be
not less than five Business Days prior to the date of payment of such defaulted
interest) established by notice given by mail by or on behalf of the Issuer to
the holders of Securities not less than 15 days preceding such subsequent record
date. The term "record date" as used with respect to any interest payment date
(except a date for payment of defaulted interest) shall mean the date specified
as such in the terms of the Securities of any particular series, or, if no such
date is so specified, if such interest payment date is the first day of a
calendar month, the fifteenth day of the next preceding calendar month or, if
such interest payment date is the fifteenth day of a calendar month, the first
day of such calendar month, whether or not such record date is a Business Day.
SECTION 2.8 Registration, Transfer and Exchange. With respect to each
series of Securities, the Issuer will cause to be kept at each office or agency
to be maintained for the purpose as provided in Section 3.2 a register or
registers in which, subject to such reasonable regulations as it may prescribe,
it will provide for the registration and transfer thereof as in this Article
provided. Such register shall be in written form in the English language or in
any other form capable of being converted into such form within a reasonable
time. In the event that such registers are not maintained by the Trustee, at all
reasonable times such register or registers shall be open for inspection by the
Trustee.
Upon due presentation for registration of transfer of any Security of any
series at any such office or agency to be maintained for the purpose as provided
in Section 3.2, the Issuer shall execute and the Trustee shall authenticate and
deliver in the name of the transferee or transferees a new Security or
Securities of the same series in authorized denominations for a like aggregate
principal amount.
Notwithstanding any other provision of this Section, unless and until it is
exchanged in whole or in part for Securities in definitive form, a Global
Security representing all or a portion of the Securities of a series may not be
transferred except as a whole by the Depositary for such series to a nominee of
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such Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by such Depositary or any such nominee to a
successor Depositary for such series or a nominee of such successor Depositary.
Any Security or Securities of any series (other than a Global Security,
except as set forth herein) may be exchanged for a Security or Securities of the
same series in other authorized denominations, in an equal aggregate principal
amount. Securities of any series to be exchanged shall be surrendered at any
office or agency to be maintained by the Issuer for the purpose as provided in
Section 3.2, and the Issuer shall execute and the Trustee shall authenticate and
deliver in exchange therefor the Security or Securities of the same series which
the Securityholder making the exchange shall be entitled to receive, bearing
numbers not contemporaneously outstanding.
If at any time the Depositary for the Securities of a series notifies the
Issuer that it is unwilling or unable to continue as Depositary for the
Securities of such series or if at any time the Depositary for the Securities of
such series shall no longer be eligible under Section 2.4, the Issuer shall
appoint a successor Depositary with respect to the Securities of such series. If
a successor Depositary for the Securities of such series is not appointed by the
Issuer within 90 days after the Issuer receives such notice or becomes aware of
such ineligibility, the Issuer's election pursuant to Section 2.3(15) shall no
longer be effective with respect to the Securities of such series and the Issuer
will execute, and the Trustee, upon receipt of an order of the Issuer for the
authentication and delivery of definitive Securities of such series, will
authenticate and deliver Securities of such series in definitive form in the
aggregate principal amount equal to the principal amount of the Global Security
or Securities representing such series in exchange for such Global Security or
Securities.
The Issuer may at any time and in its sole discretion determine that the
Securities of any series issued in the form of one or more Global Securities
shall no longer be represented by such Global Security or Securities. In the
event of such a determination by the Issuer or if an Event of Default has
occurred and is continuing and the beneficial owners representing a majority in
principal amount of the applicable series of Securities represented by one or
more Global Securities advise the Depositary to cease acting as depositary for
such Global Security or Securities, the Issuer will execute, and the Trustee,
upon receipt of an order of the Issuer for the authentication and delivery of
definitive Securities of such series, will authenticate and deliver Securities
of such series in definitive form in an aggregate principal amount equal to the
principal amount of the Global Security or Securities representing such series
in exchange for such Global Security or Securities.
If specified by the Issuer pursuant to Section 2.3 with respect to a series
of Securities, the Depositary for such series of Securities may surrender a
Global Security for such series of Securities in exchange in whole or in part
for the Securities of such series in definitive form on such terms as are
acceptable to Issuer and such Depositary. Thereupon, the Issuer shall execute,
and the Trustee shall authenticate and deliver, without service charge:
(1) to each Person specified by such Depositary a new Security or
Securities of the same series, of any authorized denomination as requested by
such Person in aggregate principal amount equal to and in exchange for such
Person's beneficial interest in the Global Security; and
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(2) to such Depositary a new Global Security in a denomination equal to the
difference, if any, between the principal amount of the surrendered Global
Security and the aggregate principal amount of Securities delivered to Holders
thereof.
Upon the exchange of the Global Security for Securities in definitive form,
such Global Security shall be cancelled by the Trustee. Securities issued in
exchange for a Global Security pursuant to this Section shall be registered in
such names and in such authorized denominations as the Depositary for such
Global Security, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall deliver
such Securities to the Persons in whose names such Securities are so registered.
All Securities presented for registration of transfer, exchange, redemption
or payment shall (if so required by the Issuer) be duly endorsed by, or be
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Issuer and the Security registrar duly executed by, the
holder or his attorney duly authorized in writing.
The Issuer may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any exchange or
registration of transfer of Securities. No service charge shall be made for any
such transaction.
The Issuer shall not be required to exchange or register a transfer of (a)
any Securities of any series for a period of 15 days next preceding the date of
selection of Securities of such series to be redeemed, or (b) any Securities
selected, called or being called for redemption except, in the case of any
Security where public notice has been given that such Security is to be redeemed
in part, the portion thereof not so to be redeemed.
All Securities issued upon any transfer or exchange of Securities shall be
valid obligations of the Issuer, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Securities surrendered upon such
transfer or exchange.
SECTION 2.9 Mutilated, Defaced, Destroyed, Lost and Stolen Securities. In
case any temporary or definitive Security shall become mutilated, defaced or be
destroyed, lost or stolen, the Issuer in its discretion may execute, and upon
the written request of any officer of the Issuer, the Trustee shall authenticate
and deliver, a new Security of the same series, bearing a number not
contemporaneously outstanding, in exchange and substitution for the mutilated or
defaced Security, or in lieu of and substitution for the Security so destroyed,
lost or stolen. In every case the applicant for a substitute Security shall
furnish to the Issuer and to the Trustee and any agent of the Issuer or the
Trustee such security or indemnity as may be required by them to indemnify and
defend and to save each of them harmless and, in every case of destruction, loss
or theft, evidence to their satisfaction of the destruction, loss or theft of
such Security and of the ownership thereof.
Upon the issuance of any substitute Security, the Issuer may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Trustee) connected therewith. In case any Security which has
matured or is about to mature or has been called for redemption in full shall
become mutilated or defaced or be destroyed, lost or stolen, the Issuer may,
instead of issuing a substitute Security, pay or authorize the payment of the
same (without surrender thereof except in the case of a mutilated or defaced
Security), if the applicant for such payment shall furnish to the Issuer and to
the Trustee and any agent of the Issuer or the Trustee such security or
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indemnity as any of them may require to save each of them harmless, and, in
every case of destruction, loss or theft, the applicant shall also furnish to
the Issuer and the Trustee and any agent of the Issuer or the Trustee evidence
to their satisfaction of the destruction, loss or theft of such Security and of
the ownership thereof.
Every substitute Security of any series issued pursuant to the provisions
of this Section by virtue of the fact that any such Security is destroyed, lost
or stolen shall constitute an additional contractual obligation of the Issuer,
whether or not the destroyed, lost or stolen Security shall be at any time
enforceable by anyone and shall be entitled to all the benefits of (but shall be
subject to all the limitations of rights set forth in) this Indenture equally
and proportionately with any and all other Securities of such series duly
authenticated and delivered hereunder. All Securities shall be held and owned
upon the express condition that, to the extent permitted by law, the foregoing
provisions are exclusive with respect to the replacement or payment of
mutilated, defaced or destroyed, lost or stolen Securities and shall preclude
any and all other rights or remedies notwithstanding any law or statute existing
or hereafter enacted to the contrary with respect to the replacement or payment
of negotiable instruments or other securities without their surrender.
SECTION 2.10 Cancellation of Securities; Destruction Thereof. Unless
otherwise provided with respect to any series of Securities, all Securities
surrendered for payment, redemption, registration of transfer or exchange, or
for credit against any payment in respect of a sinking or analogous fund, if
surrendered to the Issuer or any agent of the Issuer or the Trustee, shall be
delivered to the Trustee for cancellation or, if surrendered to the Trustee,
shall be cancelled by it; and no Securities shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Indenture. The
Trustee shall cancel Securities held by it and deliver a certificate of
cancellation to the Issuer at the Issuer's written direction. If the Issuer
shall acquire any of the Securities, such acquisition shall not operate as a
redemption or satisfaction of the indebtedness represented by such Securities
unless and until the same are delivered to the Trustee for cancellation.
SECTION 2.11 Temporary Securities. Pending the preparation of a permanent
Global Security or Securities or definitive Securities for any series, the
Issuer may execute and the Trustee shall authenticate and deliver temporary
Securities for such series or one or more temporary Global Securities (printed,
lithographed, typewritten or otherwise reproduced, in each case in form
satisfactory to the Trustee). Temporary Securities of any series shall be
issuable as registered Securities without coupons, of any authorized
denomination, and substantially in the form of the definitive Securities or
permanent Global Security, as the case may be, of such series but with such
omissions, insertions and variations as may be appropriate for temporary
Securities, all as may be determined by the Issuer with the concurrence of the
Trustee. Temporary Securities may contain such reference to any provisions of
this Indenture as may be appropriate. Every temporary Security shall be executed
by the Issuer and be authenticated by the Trustee upon the same conditions and
in substantially the same manner, and with like effect, as the definitive
Securities. Without unreasonable delay the issuer shall execute and shall
furnish a permanent Global Security or Securities or definitive Securities of
such series and thereupon temporary Securities of such series may be surrendered
in exchange therefor without charge at each office or agency to be maintained by
the Issuer for that purpose pursuant to Section 3.2, and the Trustee shall
authenticate and deliver in exchange for such temporary Securities of such
series a like aggregate principal amount of permanent global securities or
definitive Securities of the same series of authorized denominations. Until so
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exchanged, the temporary Securities of any series shall be entitled to the same
benefits under this Indenture as permanent global securities or definitive
Securities of such series.
SECTION 2.12 CUSIP Numbers. The Issuer in issuing the Securities may use
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Issuer will
promptly notify the Trustee of any change in the "CUSIP" numbers.
ARTICLE THREE
COVENANTS OF THE ISSUER
SECTION 3.1 Payment of Principal and Interest. The Issuer covenants and
agrees for the benefit of the Holders of each series of Securities that it will
duly and punctually pay or cause to be paid the principal of, and interest on,
each of the Securities of such series at the office or agency of the Issuer
maintained for such purpose pursuant to Section 3.2 or at such other place or
places, at the respective times and in the manner provided in such Securities.
Unless otherwise specified with respect to the Securities of any series in
accordance with Section 2.3, at the option of the Issuer, each installment on
any such series may be paid (i) by mailing a check for such interest, payable to
or upon the written order of the Person entitled thereto pursuant to Section
2.7, to the address of such Person as it appears on the Security register or
(ii) by wire transfer to an account maintained by the payee and located inside
the United States.
SECTION 3.2 Offices for Payments, etc. So long as any of the Securities
remain outstanding, the Issuer will maintain the following for each series: an
office or agency (a) where the Securities may be presented for payment, (b)
where the Securities may be presented for registration of transfer and for
exchange as in this Indenture provided and (c) where notices and demands to or
upon the Issuer in respect of the Securities or of this Indenture may be served.
The Issuer will give to the Trustee written notice of the location of any such
office or agency and of any change of location thereof. Unless otherwise
specified in accordance with Section 2.3, the Issuer hereby appoints the Trustee
as paying agent and registrar and designates the Corporate Trust Office of The
Bank of New York, 101 Barclay Street, New York, New York 10286, as the office to
be maintained by it for each such purpose. In case the Issuer shall fail to so
designate or maintain any such office or agency or shall fail to give such
notice of the location or any change in the location thereof, presentations and
demands may be made and notices may be served at the Corporate Trust Office.
SECTION 3.3 Appointment to Fill a Vacancy in Office of Trustee. The Issuer,
whenever necessary to avoid or fill a vacancy in the office of Trustee, will
appoint, in the manner provided in Section 6.10, a Trustee, so that there shall
at all times be a Trustee with respect to each series of Securities hereunder.
SECTION 3.4 Paying Agents. Whenever the Issuer shall appoint a paying agent
other than the Trustee with respect to the Securities of any series, it will
cause such paying agent to execute and deliver to the Trustee an instrument in
which such agent shall agree with the Trustee, subject to the provisions of this
Section,
(a) that it will hold all sums received by it as such agent for the payment
of the principal of or interest on the Securities of such series (whether such
sums have been paid to it by the Issuer or by any other obligor on the
Securities of such series) in trust for the benefit of the holders of the
Securities of such series or of the Trustee, and
(b) that it will give the Trustee notice of any failure by the Issuer (or
by any other obligor on the Securities of such series) to make any payment of
the principal of or interest on the Securities of such series when the same
shall be due and payable.
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The Issuer will, on or prior to each due date of the principal of or
interest on the Securities of such series, deposit with the paying agent a sum
sufficient to pay such principal or interest so becoming due, and (unless such
paying agent is the Trustee) the Issuer will promptly notify the Trustee of any
failure to take such action.
If the Issuer shall act as its own paying agent with respect to the
Securities of any series, it will, on or before each due date of the principal
of or interest on the Securities of such series, set aside, segregate and hold
in trust for the benefit of the holders of the Securities of such series a sum
sufficient to pay such principal or interest so becoming due. The Issuer will
promptly notify the Trustee of such action.
Anything in this Section to the contrary notwithstanding, the Issuer may at
any time, for the purpose of obtaining a satisfaction and discharge with respect
to one or more or all series of Securities hereunder, or for any other reason,
pay or cause to be paid to the Trustee all sums held in trust for any such
series by the Issuer or any paying agent hereunder, as required by this Section,
such sums to be held by the Trustee upon the trusts herein contained.
Anything in this Section to the contrary notwithstanding, the agreement to
hold sums in trust as provided in this Section is subject to the provisions of
Sections 10.3 and 10.4.
SECTION 3.5 Written Statement to Trustee. The Issuer will deliver to the
Trustee on or before May 1 in each year, a brief certificate from its principal
executive, accounting or financial officer (which need not comply with Section
13.5), as to his or her knowledge of the Issuer's compliance with all conditions
and covenants in this Indenture (without regard to any period of grace or
requirement of notice provided under this Indenture).
SECTION 3.6 Limitation on Liens. (a) So long as the Securities of any
series are outstanding, the Issuer will not, nor will it permit any Restricted
Subsidiary to, issue, assume or guarantee any debt for money borrowed
(hereinafter in this Article Three referred to as "Debt"), secured by a
mortgage, security interest, pledge, lien or other encumbrance (mortgages,
security interests, pledges, liens and other encumbrances being hereinafter
called "mortgage" or "mortgages") upon any Principal Property of the Issuer or
any Restricted Subsidiary or upon any shares of stock or indebtedness of any
Restricted Subsidiary (whether such Principal Property, shares of stock or
indebtedness are now owned or hereafter acquired) without in any such case
effectively providing concurrently with the issuance, assumption or guaranty of
any such Debt that the Securities (together with, if the Issuer shall so
determine, any other indebtedness of or guaranteed by the Issuer or such
Restricted Subsidiary ranking equally with the Securities and then existing or
thereafter created) shall be secured equally and ratably with such Debt;
provided, however, that the foregoing restrictions shall not apply to Debt
secured by
(i) mortgages on property, shares of stock or indebtedness
of any corporation existing at the time such corporation becomes a Restricted
Subsidiary;
(ii) mortgages on property existing at the time of acquisition of
such property by the Issuer or a Restricted Subsidiary, or mortgages to secure
the payment of all or any part of the purchase price of such property upon the
acquisition of such property by the Issuer or a Restricted Subsidiary or to
secure any Debt incurred prior to, at the time of, or within 120 days after, the
acquisition of such property for the purpose of financing all or any part of the
purchase price thereof, or mortgages to secure any Debt incurred for the purpose
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of financing all or any part of the cost to the Issuer or a Restricted
Subsidiary of improvements to such acquired property;
(iii) mortgages securing Debt of a Restricted Subsidiary owing to
the Issuer or to another Restricted Subsidiary;
(iv) mortgages existing at the date as of which this Indenture is
executed;
(v) mortgages on property of a corporation existing at the time
such corporation is merged into or consolidated with the Issuer or a Restricted
Subsidiary or at the time of a sale, lease or other disposition of the
properties of a corporation as an entirety or substantially as an entirety to
the Issuer or a Restricted Subsidiary;
(vi) mortgages on property owned by the Issuer or a Restricted
Subsidiary in favor of the United States of America or any State thereof, or any
department, agency or instrumentality or political subdivision of the United
States of America or any State thereof, or in favor of any other country, or any
political subdivision thereof, to secure partial, progress, advance or other
payments pursuant to any contract or statute or to secure any indebtedness
incurred for the purpose of financing all or any part of the purchase price or
the cost of construction of the property subject to such mortgages; or
(vii) any extension, renewal or replacement (or successive
extensions, renewals or replacements) in whole or in part of any mortgage
referred to in the foregoing clauses (i) to (vi), inclusive; provided, however,
that the principal amount of Debt secured thereby shall not exceed the principal
amount of Debt secured at the time of such extension, renewal or replacement,
and that such extension, renewal or replacement shall be limited to all or a
part of the property which secured the mortgage so extended, renewed or replaced
(plus improvements on such property).
(b) Notwithstanding the foregoing provisions of this Section 3.6
the Issuer and any one or more Restricted Subsidiaries may issue, assume or
guarantee Debt secured by a mortgage which would otherwise be subject to the
foregoing restrictions in an aggregate amount which, together with all other
Debt of the Issuer and its Restricted Subsidiaries which (if originally issued,
assumed or guaranteed at such time) would otherwise be subject to the foregoing
restrictions (not including Debt permitted to be secured under clauses (i)
through (vii) above), does not at the time exceed 10% of Consolidated Net
Tangible Assets.
SECTION 3.7 Limitation on Sale and Lease-Back. So long as the Securities of
any series are outstanding, the Issuer will not, nor will it permit any
Restricted Subsidiary to, enter into any arrangement with any Person providing
for the leasing by the Issuer or any Restricted Subsidiary of any Principal
Property owned by the Issuer or any Restricted Subsidiary whether such Principal
Property is now owned or hereafter acquired (except for temporary leases for a
term of not more than three years and except for leases between the Issuer and a
Restricted Subsidiary or between Restricted Subsidiaries), which property has
been or is to be sold or transferred by the Issuer or such Restricted Subsidiary
to such Person, unless
(a) the Issuer or such Restricted Subsidiary would be entitled,
pursuant to the provisions of Section 3.6, to issue, assume or guarantee
Debt secured by a mortgage upon such property at least equal in amount to
the Attributable Debt in respect of such arrangement without equally and
ratably securing the Securities; provided, however, that from and after the
date on which such arrangement becomes effective the Attributable Debt in
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respect of such arrangement shall be deemed for all purposes under Sections
3.6 and 3.7 to be Debt subject to the provisions of Section 3.6; or
(b) the Issuer shall apply an amount in cash equal to the Attributable
Debt in respect of such arrangement to the retirement (other than any
mandatory retirement or by way of payment at maturity), within 90 days of
the effective date of any such arrangement, of Debt (except as otherwise
provided by the terms of any series of Securities issued hereunder) of the
Issuer or any Restricted Subsidiary (other than Debt owned by the Issuer or
any Restricted Subsidiary) which by its terms matures at or is extendible
or renewable at the option of the obligor to a date more than twelve months
after the date of the creation of such Debt.
The term "Attributable Debt" shall mean, at the time of determination, the
present value (discounted at the interest rate, compounded semiannually, equal
to the weighted average Yield to Maturity of the Outstanding Securities, such
average being weighted by the principal amount of the Securities of each series
or, in the case of Original Issue Discount Securities, such amount to be
determined as provided in the definition of "Outstanding") of the obligation of
a lessee for net rental payments during the remaining term of any lease entered
into in connection with a transaction contemplated by this Section 3.7
(including any period for which such lease has been extended).
ARTICLE FOUR
SECURITYHOLDERS' LISTS AND REPORTS BY THE
ISSUER AND THE TRUSTEE
SECTION 4.1 Issuer to Furnish Trustee Information as to Names and
Addresses of Securityholders. The Issuer covenants and agrees that it will
furnish or cause to be furnished to the Trustee a list in such form as the
Trustee may reasonably require of the names and addresses of the holders of the
Securities of each series:
(a) semiannually and not more than 15 days after each record date for the
payment of interest on such Securities, as hereinabove specified, as of such
record date and on dates to be determined pursuant to Section 2.3 for
non-interest bearing securities in each year, and
(b) at such other times as the Trustee may request in writing, within 30
days after receipt by the Issuer of any such request as of a date not more than
15 days prior to the time such information is furnished,
provided that if and so long as the Trustee shall be the Security registrar
for such series, such list shall not be required to be furnished.
SECTION 4.2 Preservation and Disclosure of Securityholders' Lists. (a) The
Trustee shall preserve, in as current a form as is reasonably practicable, all
information as to the names and addresses of the holders of each series of
Securities contained in the most recent list furnished to it as provided in
Section 4.1 or maintained by the Trustee in its capacity as Security registrar
for such series, if so acting. The Trustee may destroy any list furnished to it
as provided in Section 4.1 upon receipt of a new list so furnished.
(b) The rights of Holders of Securities of any series to communicate with
other Holders of Securities of such series with respect to their rights under
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this Indenture or under the Securities, and the corresponding rights and duties
of the Trustee, shall be as provided by the Trust Indenture Act.
(c) Each and every holder of Securities, by receiving and holding the same,
agrees with the Issuer and the Trustee that neither the Issuer nor the Trustee
nor any agent of the Issuer or the Trustee shall be held accountable by reason
of the disclosure of any such information as to the names and addresses of the
holders of Securities made pursuant to the Trust Indenture Act.
SECTION 4.3 Reports by the Issuer. The Issuer shall file with the Trustee
and the Commission, and transmit to Holders, such information, documents and
other reports, and such summaries thereof, as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant to the
Trust Indenture Act; provided that any such information, documents or reports
required to be filed with the Commission pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 shall be filed with the Trustee within 15 days
after the same is so required to be filed with the Commission.
SECTION 4.4 Reports by the Trustee. (a) The Trustee shall transmit to
Holders and other persons such reports concerning the Trustee and its actions
under this Indenture as may be required pursuant to the Trust Indenture Act on
or before July 15 in each year that such report is required, such reports to be
dated as of the immediately preceding May 15.
(b) A copy of each such report shall, at the time of such transmission to
Securityholders, be furnished to the Issuer and be filed by the Trustee with
each stock exchange upon which the Securities of any applicable series are
listed and also with the Commission. The Issuer agrees to notify the Trustee
with respect any series when and as the Securities of such series become
admitted to trading on any national securities exchange.
ARTICLE FIVE
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.1 Event of Default Defined; Acceleration of Maturity; Waiver
of Default. "Event of Default" with respect to Securities of any series,
wherever used herein, means each one of the following events which shall have
occurred and be continuing (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) default in the payment of any installment of interest upon any of the
Securities of such series as and when the same shall become due and payable, and
continuance of such default for a period of 30 days; or
(b) default in the payment of all or any part of the principal of any of
the Securities of such series as and when the same shall become due and payable
either at maturity, upon redemption, by declaration or otherwise; or
(c) default in the payment of all or any part of any sinking fund
installment or other similar obligation as and when the same shall become due
and payable by the terms of the Securities of such series; or
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(d) default in the performance, or breach, of any covenant or warranty of
the Issuer in respect of the Securities of such series (other than a covenant or
warranty in respect of the Securities of such series a default in whose
performance or whose breach is elsewhere in this Section specifically dealt
with), and continuance of such default or breach for a period of 90 days after
there has been given, by registered or certified mail, to the Issuer by the
Trustee or to the Issuer and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Securities of all series affected thereby, a
written notice specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default" hereunder or, if there is
a judicial or administrative proceeding pending at any time during the
above-referenced 90 day period in which one of the disputed issues relates to
whether or not there was a default or breach, for a period of 90 days after the
final resolution of whether or not there was a default or breach; or
(e) a court having jurisdiction in the premises shall enter a decree or
order for relief in respect of the Issuer in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or appointing a receiver, liquidator, assignee, custodian, trustee or
sequestrator (or similar official) of the Issuer or for any substantial part of
its property or ordering the winding up or liquidation of its affairs, and such
decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or
(f) the Issuer shall commence a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
consent to the entry of an order for relief in an involuntary case under any
such law, or consent to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee or sequestrator (or similar official)
of the Issuer or for any substantial part of its property, or make any general
assignment for the benefit of creditors, or
(g) any other Event of Default provided in the supplemental indenture or
resolution of the Board of Directors under which such series of Securities is
issued or in the form of Security for such series.
If an Event of Default described in clauses (a), (b), (c) or (d) above (if
the Event of Default under clause (d) is with respect to less than all series of
Securities then Outstanding) occurs and is continuing, then, and in each and
every such case, unless the principal of all of the Securities of such series
shall have already become due and payable, either the Trustee or the holders of
not less than 25% in aggregate principal amount of the Securities of such series
then outstanding hereunder (each such series voting as a separate class) by
notice in writing to the Issuer (and to the Trustee if given by
Securityholders), may declare the entire principal (or, if the Securities of
such series are Original Issue Discount Securities, such portion of the
principal amount as may be specified in the terms of such series) of all
Securities of such series and the interest accrued thereon, if any, to be due
and payable immediately, and upon any such declaration the same shall become
immediately due and payable. If an Event of Default described in clause (d) (if
the Event of Default under clause (d) is with respect to all series of
Securities then Outstanding), (e) or (f) occurs and is continuing, then and in
each and every such case, unless the principal of all the Securities shall have
already become due and payable, either the Trustee or the Holders of not less
than 25% in aggregate principal amount of all the Securities then Outstanding
hereunder (treated as one class), by notice in writing to the Issuer (and to the
Trustee if given by Securityholders), may declare the entire principal (or, if
any Securities are Original Issue Discount Securities, such portion of the
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principal as may be specified in the terms thereof) of all the Securities then
outstanding and interest accrued thereon, if any, to be due and payable
immediately, and upon any such declaration the same shall become immediately due
and payable.
The foregoing provisions, however, are subject to the condition that if, at
any time after the principal (or, if the Securities are Original Issue Discount
Securities, such portion of the principal as may be specified in the terms
thereof) of the Securities of any series (or of all the Securities, as the case
may be) shall have been so declared due and payable, and before any judgment or
decree for the payment of the moneys due shall have been obtained or entered as
hereinafter provided, the Issuer shall pay or shall deposit with the Trustee a
sum sufficient to pay all matured installments of interest upon all the
Securities of such series (or of all the Securities, as the case may be) and the
principal of any and all Securities of such series (or of all the Securities, as
the case may be) which shall have become due otherwise than by acceleration
(with interest upon such principal and, to the extent that payment of such
interest is enforceable under applicable law, on overdue installments of
interest, at the same rate as the rate of interest or Yield to Maturity (in the
case of Original Issue Discount Securities) specified in the Securities of such
series (or at the respective rates of interest or Yields to Maturity of all the
Securities, as the case may be) to the date of such payment or deposit) and such
amount as shall be sufficient to cover reasonable compensation to the Trustee,
its agents, attorneys and counsel, and all other expenses and liabilities
incurred, and all advances made, by the Trustee except as a result of negligence
or bad faith, and if any and all Events of Default under the Indenture, other
than the non-payment of the principal of Securities which shall have become due
by acceleration, shall have been cured, waived or otherwise remedied as provided
herein--then and in every such case the holders of a majority in aggregate
principal amount of all the Securities of such series, each series voting as a
separate class (or of all the Securities, as the case may be, voting as a single
class) then Outstanding, by written notice to the Issuer and to the Trustee, may
waive all defaults with respect to such series (or with respect to all the
Securities, as the case may be) and rescind and annul such declaration and its
consequences, but no such waiver or rescission and annulment shall extend to or
shall affect any subsequent default or shall impair any right consequent
thereon.
For all purposes under this Indenture, if a portion of the principal of any
Original Issue Discount Securities shall have been accelerated and declared due
and payable pursuant to the provisions hereof, then, from and after such
declaration, unless such declaration has been rescinded and annulled, the
principal amount of such Original Issue Discount Securities shall be deemed, for
all purposes hereunder, to be such portion of the principal thereof as shall be
due and payable as a result of such acceleration, and payment of such portion of
the principal thereof as shall be due and payable as a result of such
acceleration, together with interest, if any, thereon and all other amounts
owing thereunder, shall constitute payment in full of such Original Issue
Discount Securities.
SECTION 5.2 Collection of Indebtedness by Trustee; Trustee May Prove Debt.
The Issuer covenants that (a) in case default shall be made in the payment of
any installment of interest on any of the securities of any series when such
interest shall have become due and payable, and such default shall have
continued for a period of 30 days or (b) in case default shall be made in the
payment of all or any part of the principal of any of the Securities of any
series when the same shall have become due and payable, whether upon maturity of
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the Securities of such series or upon any redemption or by declaration or
otherwise--then, upon demand of the Trustee, the Issuer will pay to the Trustee
for the benefit of the Holders of the Securities of such series the whole amount
that then shall have become due and payable on all Securities of such series for
principal or interest, as the case may be (with interest to the date of such
payment upon the overdue principal and, to the extent that payment of such
interest is enforceable under applicable law, on overdue installments of
interest at the same rate as the rate of interest or Yield to Maturity (in the
case of Original Issue Discount Securities) specified in the Securities of such
series); and in addition thereto, such further amount as shall be sufficient to
cover the costs and expenses of collection, including reasonable compensation to
the Trustee and each predecessor Trustee, their respective agents, attorneys and
counsel, and any expenses and liabilities incurred, and all advances made, by
the Trustee and each predecessor Trustee except as a result of its negligence or
bad faith.
Until such demand is made by the Trustee, the Issuer may pay the principal
of and interest on the Securities of any series to the registered holders,
whether or not the principal of and interest on the Securities of such series be
overdue.
In case the Issuer shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust, shall
be entitled and empowered to institute any action or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceedings to judgment or final decree, and may enforce any such
judgment or final decree against the Issuer or other obligor upon such
Securities and collect in the manner provided by law out of the property of the
Issuer or other obligor upon such Securities, wherever situated, the moneys
adjudged or decreed to be payable.
In case there shall be pending proceedings relative to the Issuer or any
other obligor upon the Securities under Title 11 of the United States Code or
any other applicable Federal or state bankruptcy, insolvency or other similar
law, or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor, or in case
of any other comparable judicial proceedings relative to the Issuer or other
obligor upon the Securities of any series, or to the creditors or property of
the Issuer or such other obligor, the Trustee, irrespective of whether the
principal of any Securities shall then be due and payable as therein expressed
or by declaration or otherwise and irrespective of whether the Trustee shall
have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount of principal
and interest (or, if the Securities of any series are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of such series) owing and unpaid in respect of the Securities of any
series, and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim for
reasonable compensation to the Trustee and each predecessor Trustee, and their
respective agents, attorneys and counsel, and for reimbursement of all expenses
and liabilities incurred, and all advances made, by the Trustee and each
predecessor Trustee, except as a result of negligence or bad faith) and of the
Securityholders allowed in any judicial proceedings relative to the Issuer or
other obligor upon the Securities of any series, or to the creditors or property
of the Issuer or such other obligor,
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(b) unless prohibited by applicable law and regulations, to vote on behalf
of the holders of the Securities of any series in any election of a trustee or a
standby trustee in arrangement, reorganization, liquidation or other bankruptcy
or insolvency proceedings or person performing similar functions in comparable
proceedings, and
(c) to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute all amounts received with
respect to the claims of the Securityholders and of the Trustee on their behalf;
and any trustee, receiver, or liquidator, custodian or other similar official is
hereby authorized by each of the Securityholders to make payments to the
Trustee, and, in the event that the Trustee shall consent to the making of
payments directly to the Securityholders, to pay to the Trustee such amounts as
shall be sufficient to cover reasonable compensation to the Trustee, each
predecessor Trustee and their respective agents, attorneys and counsel, and all
other expenses and liabilities incurred, and all advances made, by the Trustee
and each predecessor Trustee except as a result of negligence or bad faith and
all other amounts due to the Trustee or any predecessor Trustee pursuant to
Section 6.6.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any
Securityholder any plan or reorganization, arrangement, adjustment or
composition affecting the Securities of any series or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Securityholder in any such proceeding except, as aforesaid, to vote for the
election of a trustee in bankruptcy or similar person.
All rights of action and of asserting claims under this Indenture, or under
any of the Securities, may be enforced by the Trustee without the possession of
any of the Securities or the production thereof on any trial or other
proceedings relative thereto, and any such action or proceedings instituted by
the Trustee shall be brought in its own name as trustee of an express trust, and
any recovery of judgment, subject to the payment of the expenses, disbursements
and compensation of the Trustee, each predecessor Trustee and their respective
agents and attorneys, shall be for the ratable benefit of the holders of the
Securities in respect of which such action was taken.
In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the holders
of the Securities in respect to which such action was taken, and it shall not be
necessary to make any holders of such Securities parties to any such
proceedings.
SECTION 5.3 Application of Proceeds. Any moneys collected by the Trustee
pursuant to this Article in respect of any series shall be applied in the
following order at the date or dates fixed by the Trustee and, in case of the
distribution of such moneys on account of principal or interest, upon
presentation of the several Securities in respect of which monies have been
collected and stamping (or otherwise noting) thereon the payment, or issuing
Securities of such series in reduced principal amounts in exchange for the
presented Securities of like series if only partially paid, or upon surrender
thereof if fully paid:
FIRST: To the payment of costs and expenses applicable to such series in
respect of which monies have been collected, including reasonable compensation
to the Trustee and each predecessor Trustee and their respective agents and
attorneys and of all expenses and liabilities incurred, and all advances made,
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by the Trustee and each predecessor Trustee except as a result of negligence or
bad faith, and all other amounts due to the Trustee or any predecessor Trustee
pursuant to Section 6.6;
SECOND: In case the principal of the Securities of such series in respect
of which moneys have been collected shall not have become and be then due and
payable, to the payment of interest on the Securities of such series in default
in the order of the maturity of the installments of such interest, with interest
(to the extent that such interest has been collected by the Trustee) upon the
overdue installments of interest at the same rate as the rate of interest or
Yield to Maturity (in the case of Original Issue Discount Securities) specified
in such Securities, such payments to be made ratably to the persons entitled
thereto, without discrimination or preference;
THIRD: In case the principal of the Securities of such series in respect of
which moneys have been collected shall have become and shall be then due and
payable, to the payment of the whole amount then owing and unpaid upon all the
Securities of such series for principal and interest, with interest upon the
overdue principal, and (to the extent that such interest has been collected by
the Trustee) upon overdue installments of interest at the same rate as the rate
of interest or Yield to Maturity (in the case of Original Issue Discount
Securities) specified in the Securities of such series; and in case such moneys
shall be insufficient to pay in full the whole amount so due and unpaid upon the
Securities of such series, then to the payment of such principal and interest or
Yield to Maturity, without preference or priority of principal over interest or
Yield to Maturity, or of interest or Yield to Maturity over principal, or of any
installment of interest over any other installment of interest, or of any
Security of such series over any other Security of such series, ratably to the
aggregate of such principal and accrued and unpaid interest or Yield to
Maturity; and
FOURTH: To the payment of the remainder, if any, to the Issuer or any
other person lawfully entitled thereto.
SECTION 5.4 Suits for Enforcement. In case an Event of Default has
occurred, has not been waived and is continuing, the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either at law or in
equity or in bankruptcy or otherwise, whether for the specific enforcement of
any covenant or agreement contained in this Indenture or in aid of the exercise
of any power granted in this Indenture or to enforce any other legal or
equitable right vested in the Trustee by this Indenture or by law.
SECTION 5.5 Restoration of Rights on Abandonment of Proceedings. In case
the Trustee shall have proceeded to enforce any right under this Indenture and
such proceedings shall have been discontinued or abandoned for any reason, or
shall have been determined adversely to the Trustee, then and in every such case
the Issuer and the Trustee shall be restored respectively to their former
positions and rights hereunder, and all rights, remedies and powers of the
Issuer, the Trustee and the Securityholders shall continue as though no such
proceedings had been taken.
SECTION 5.6 Limitations on Suits by Securityholders. No holder of any
Security of any series shall have any right by virtue or by availing of any
provision of this Indenture to institute any action or proceeding at law or in
equity or in bankruptcy or otherwise upon or under or with respect to this
Indenture, or for the appointment of a trustee, receiver, liquidator, custodian
or other similar official or for any other remedy hereunder, unless such holder
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previously shall have given to the Trustee written notice of default and of the
continuance thereof, as hereinbefore provided, and unless also the holders of
not less than 25% in aggregate principal amount of the Securities of such series
then outstanding shall have made written request upon the Trustee to institute
such action or proceedings in its own name as trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby and the
Trustee for 60 days after its receipt of such notice, request and offer of
indemnity shall have failed to institute any such action or proceeding and no
direction inconsistent with such written request shall have been given to the
Trustee pursuant to Section 5.9; it being understood and intended, and being
expressly covenanted by the taker and Holder of every Security with every other
taker and Holder and the Trustee, that no one or more Holders of Securities of
any series shall have any right in any manner whatever by virtue or by availing
of any provision of this Indenture to affect, disturb or prejudice the rights of
any other such Holder of Securities, or to obtain or seek to obtain priority
over or preference to any other such Holder or to enforce any right under this
Indenture, except in the manner herein provided and for the equal, ratable and
common benefit of all Holders of Securities of the applicable series. For the
protection and enforcement of the provisions of this Section, each and every
Securityholder and the Trustee shall be entitled to such relief as can be given
either at law or in equity.
SECTION 5.7 Unconditional Right of Securityholders to Institute Certain
Suits. Notwithstanding any other provision in this Indenture and any provision
of any Security, the right of any Holder of any Security to receive payment of
the principal of and interest on such Security on or after the respective due
dates expressed in such Security, or to institute suit for the enforcement of
any such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder.
SECTION 5.8 Powers and Remedies Cumulative; Delay or Omission Not Waiver of
Default. Except as provided in Section 5.6, no right or remedy herein conferred
upon or reserved to the Trustee or to the Securityholders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
No delay or omission of the Trustee or of any Securityholder to exercise
any right or power accruing upon any Event of Default occurring and continuing
as aforesaid shall impair any such right or power or shall be construed to be a
waiver of any such Event of Default or an acquiescence therein; and, subject to
Section 5.6, every power and remedy given by this Indenture or by law to the
Trustee or to the Securityholders may be exercised from time to time, and as
often as shall be deemed expedient, by the Trustee or by the Securityholders.
SECTION 5.9 Control by Securityholders. The Holders of a majority in
aggregate principal amount of the Securities of each series affected (with each
series voting as a separate class) at the time Outstanding shall have the right
to direct the time, method, and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee with respect to the Securities of such series by this Indenture;
provided that such direction shall not be otherwise than in accordance with law
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and the provisions of this Indenture and provided further that (subject to the
provisions of Section 6.1) the Trustee shall have the right to decline to follow
any such direction if the Trustee, being advised by counsel, shall determine
that the action or proceeding so directed may not lawfully be taken or if the
Trustee in good faith by its board of directors, the executive committee, or a
trust committee of directors or Responsible Officers of the Trustee shall
determine that the action or proceedings so directed would involve the Trustee
in personal liability or if the Trustee in good faith shall so determine that
the actions or forebearances specified in or pursuant to such direction would be
unduly prejudicial to the interests of Holders of the Securities of all series
so affected not joining in the giving of said direction, it being understood
that (subject to Section 6.1) the Trustee shall have no duty to ascertain
whether or not such actions or forebearances are unduly prejudicial to such
Holders.
Nothing in this Indenture shall impair the right of the Trustee in its
discretion to take any action deemed proper by the Trustee and which is not
inconsistent with such direction or directions by Securityholders.
SECTION 5.10 Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Securities of any series as provided in
Section 5.1, the Holders of a majority in aggregate principal amount of the
Securities of such series at the time Outstanding may on behalf of the Holders
of all the Securities of such series waive any past default or Event of Default
described in clause (c) of Section 5.1 (or, in the case of an event specified in
clause (d) of Section 5.1 which relates to less than all series of Securities
then Outstanding, the Holders of a majority in aggregate principal amount of the
Securities then outstanding affected thereby (each series voting as a separate
class) may waive any such default or Event of Default, or, in the case of an
event specified in clause (d) (if the Event of Default under clause (d) relates
to all series of Securities then Outstanding), (e) or (f) of Section 5.1 the
Holders of Securities of a majority in principal amount of all the Securities
then Outstanding (voting as one class) may waive any such default or Event of
Default), and its consequences except a default in respect of a covenant or
provision hereof which cannot be modified or amended without the consent of the
Holder of each Security affected.
Upon any such waiver, such default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured, and not to have occurred for every
purpose of this Indenture, and the Issuer, the Trustee and the Holders of the
Securities of such series shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.
SECTION 5.11 Trustee to Give Notice of Default, But May Withhold in Certain
Circumstances. The Trustee shall transmit to the Securityholders of any series,
as the names and addresses of such Holders appear on the registry books, notice
by mail of all defaults which have occurred with respect to such series, such
notice to be transmitted within 90 days after the occurrence thereof, unless
such defaults shall have been cured before the giving of such notice (the term
"default" or "defaults" for the purposes of this Section being hereby defined to
mean any event or condition which is, or with notice or lapse of time or both
would become, an Event of Default); provided that, except in the case of default
in the payment of the principal of, interest on, or any sinking fund installment
or other similar obligation with respect to, any of the Securities of such
series, the Trustee shall be protected in withholding such notice if and so long
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as the board of directors, the executive committee, or a trust committee of
directors or trustees and/or Responsible Officers of the Trustee in good faith
determines that the withholding of such notice is in the interests of the
Securityholders of such series.
SECTION 5.12 Right of Court to Require Filing of Undertaking to Pay Costs.
All parties to this Indenture agree, and each Holder of any Security by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken, suffered
or omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Securities of
all series (or, if the matter in issue does not relate to all series of
Securities, then the Holders of 10% in principal amount of the Outstanding
Securities of all series to which such issue relates), treated as a single
class, or to any suit instituted by any Securityholder for the enforcement of
the payment of the principal of or interest on any Security on or after the due
date expressed in such Security.
ARTICLE SIX
CONCERNING THE TRUSTEE
SECTION 6.1 Duties and Responsibilities of the Trustee; During Default;
Prior to Default. With respect to the Holders of any series of Securities issued
hereunder, the Trustee, prior to the occurrence of an Event of Default with
respect to the Securities of a particular series and after the curing or waiving
of all Events of Default which may have occurred with respect to such series,
undertakes to perform such duties and only such duties as are specifically set
forth in this Indenture. In case an Event of Default with respect to the
Securities of a series has occurred (which has not been cured or waived) the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
No provision of this Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct, except that
(a) prior to the occurrence of an Event of Default with respect to the
Securities of any series and after the curing or waiving of all such Events of
Default with respect to such series which may have occurred:
(i) the duties and obligations of the Trustee with respect to the
Securities of any Series shall be determined solely by the express provisions of
this Indenture, and the Trustee shall not be liable except for the performance
of such duties and obligations as are specifically set forth in this Indenture,
and no implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any statements, certificates
or opinions furnished to the Trustee and conforming to the requirements of this
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Indenture; but in the case of any such statements, certificates or opinions
which by any provision hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer or Responsible Officers of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(c) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the
holders pursuant to Section 5.9 relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there shall be reasonable ground for believing that the
repayment of such funds or adequate indemnity against such liability is not
reasonably assured to it.
The provisions of this Section 6.1 are in furtherance of and subject to
Sections 315 and 316 of the Trust Indenture Act.
SECTION 6.2 Certain Rights of the Trustee. In furtherance of and subject to
the Trust Indenture Act and subject to Section 6.1:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, Officers' Certificate or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order, bond,
debenture, note, coupon, security or other paper or document believed by it to
be genuine and to have been signed or presented by the proper party or parties;
(b) any request, direction, order or demand of the Issuer mentioned herein
shall be sufficiently evidenced by an Officers' Certificate (unless other
evidence in respect thereof be herein specifically prescribed); and any
resolution of the Board of Directors may be evidenced to the Trustee by a copy
thereof certified by the secretary or an assistant secretary of the Issuer;
(c) the Trustee may consult with counsel of its selection and any advice or
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted to be taken by it hereunder in
good faith and in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the trusts
or powers vested in it by this Indenture with the request, order or direction of
any of the Securityholders pursuant to the provisions of this Indenture, unless
such Securityholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred
therein or thereby;
(e) the Trustee shall not be liable for any action taken or omitted by it
in good faith and believed by it to be authorized or within the discretion,
rights or powers conferred upon it by this Indenture;
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(f) prior to the occurrence of an Event of Default hereunder and after the
curing or waiving of all Events of Default, the Trustee shall not be bound to
make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, approval, appraisal, bond, debenture, note, coupon, security, or other
paper or document unless requested in writing so to do by the holders of not
less than a majority in aggregate principal amount of the Securities of all
series affected then outstanding; provided that, if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities likely to
be incurred by it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded to it by
the terms of this Indenture, the Trustee may require reasonable indemnity
against such expenses or liabilities as a condition to proceeding; the
reasonable expenses of every such investigation shall be paid by the Issuer or,
if paid by the Trustee or any predecessor trustee, shall be repaid by the Issuer
upon demand; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys not regularly in its employ and the Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent or attorney
appointed with due care by it hereunder.
SECTION 6.3 Trustee Not Responsible for Recitals, Disposition of Securities
or Application of Proceeds Thereof. The recitals contained herein and in the
Securities, except the Trustee's certificates of authentication, shall be taken
as the statements of the Issuer, and the Trustee assumes no responsibility for
the correctness of the same. The Trustee makes no representation as to the
validity or sufficiency of his Indenture or of the Securities. The Trustee shall
not be accountable for the use or application by the Issuer of any of the
Securities or of the proceeds thereof.
SECTION 6.4 Trustee and Agents May Hold Securities; Collections, etc. The
Trustee or any agent of the Issuer or the Trustee, in its individual or any
other capacity, may become the owner or pledgee of Securities with the same
rights it would have if it were not the Trustee or such agent and, subject to
Sections 6.8 and 6.13, if operative, may otherwise deal with the Issuer and
receive, collect, hold and retain collections from the Issuer with the same
rights it would have if it were not the Trustee or such agent.
SECTION 6.5 Moneys Held by Trustee. Subject to the provisions of Section
10.4 hereof, all moneys received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received,
but need not be segregated from other funds except to the extent required by
mandatory provisions of law. Neither the Trustee nor any agent of the Issuer or
the Trustee shall be under any liability for interest on any moneys received by
it hereunder.
SECTION 6.6 Compensation and Indemnification of Trustee and Its Prior
Claim. The Issuer covenants and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to, such compensation (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust) to be agreed to in writing by the Trustee and the Issuer, and the
Issuer covenants and agrees to pay or reimburse the Trustee and each predecessor
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by or on behalf of it in accordance with any of the provisions
of this Indenture (including (i) the reasonable compensation and the expenses
and disbursements of its counsel and of all agents and other persons not
regularly in its employ and (ii) interest at the prime rate on any disbursements
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and advances made by the Trustee and not paid by the Issuer within 60 days after
receipt of an invoice for such disbursement or advance) except any such expense,
disbursement or advance as may arise from its negligence or bad faith. The
Issuer also covenants to indemnify the Trustee and each predecessor Trustee for,
and to hold it harmless against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection with the
acceptance or administration of this Indenture or the trusts hereunder and its
duties hereunder, including the costs and expenses of defending itself against
or investigating any claim of liability in the premises. The obligations of the
Issuer under this Section to compensate and indemnify the Trustee and each
predecessor Trustee and to pay or reimburse the Trustee and each predecessor
Trustee for expenses, disbursements and advances shall constitute additional
indebtedness hereunder and shall survive the satisfaction and discharge of this
Indenture. Such additional indebtedness shall be a senior claim to that of the
Securities upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the benefit of the holders of particular
Securities, and the Securities are hereby subordinated to such senior claim. The
provisions of this Section shall survive the termination of this Indenture.
SECTION 6.7 Right of Trustee to Rely on Officers' Certificate, etc. Subject
to Sections 6.1 and 6.2, whenever in the administration of the trusts of this
Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or suffering or omitting any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of negligence or bad faith on the
part of the Trustee, be deemed to be conclusively proved and established by an
Officers' Certificate delivered to the Trustee, and such certificate, in the
absence of negligence or bad faith on the part of the Trustee, shall be full
warrant to the Trustee for any action taken, suffered or omitted by it under the
provisions of this Indenture upon the faith thereof.
SECTION 6.8 Conflicting Interests. If the Trustee has or shall acquire a
conflicting interest within the meaning of the Trust Indenture Act, the Trustee
shall either eliminate such interest or resign, to the extent and in the manner
provided by, and subject to the provisions of, the Trust Indenture Act.
SECTION 6.9 Persons Eligible for Appointment as Trustee. The Trustee for
each series of Securities hereunder shall at all times be a corporation having a
combined capital and surplus of at least $50,000,000. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. In case at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section, the
Trustee shall resign immediately in the manner and with the effect specified in
Section 6.10.
SECTION 6.10 Resignation and Removal; Appointment of Successor Trustee. (a)
The Trustee, or any trustee or trustees hereafter appointed, may at any time
resign with respect to one or more or all series of Securities by giving written
notice of resignation to the Issuer and by mailing notice thereof by first class
mail to Holders of the applicable series of Securities at their last addresses
as they shall appear on the Security register. Upon receiving such notice of
resignation, the Issuer shall promptly appoint a successor trustee or trustees
with respect to the applicable series by written instrument in duplicate,
executed by authority of the Board of Directors, one copy of which instrument
shall be delivered to the resigning Trustee and one copy to the successor
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trustee or trustees. If no successor trustee shall have been so appointed with
respect to any series and have accepted appointment within 30 days after the
mailing of such notice of resignation, the resigning trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee, or
any Securityholder who has been a bona fide Holder of a Security or Securities
of the applicable series for at least six months may, subject to the provisions
of Section 5.12, on behalf of himself and all others similarly situated,
petition any such court for the appointment of a successor trustee. Such court
may thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with the provisions of Section 6.8
with respect to any series of Securities after written request therefor by the
Issuer or by any Securityholder who has been a bona fide Holder of a Security or
Securities of such series for at least six months; or
(ii) the Trustee shall cease to be eligible in accordance with the
provisions of Section 6.9 and shall fail to resign after written request
therefor by the Issuer or by any Securityholder; or
(iii) the Trustee shall become incapable of acting with respect to any
series of Securities, or shall be adjudged a bankrupt or insolvent, or a
receiver or liquidator of the Trustee or of its property shall be appointed, or
any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation; or
(iv) the Issuer shall determine that the Trustee has failed to perform
its obligations under this Indenture in any material respect;
then, in any such case, the Issuer may remove the Trustee with respect to
the applicable series of Securities and appoint a successor trustee for such
series by written instrument, in duplicate, executed by order of the Board of
Directors of the Issuer, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee, or, subject to the
provisions of Section 5.12, any Securityholder who has been a bona fide Holder
of a Security or Securities of such series for at least six months may on behalf
of himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
trustee with respect to such series. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, remove the Trustee and
appoint a successor trustee. If no successor trustee shall have been appointed
with respect to any series and have accepted appointment within 30 days after a
notice of removal has been given, the removed trustee may petition a court of
competent jurisdiction for the appointment of a successor trustee.
(c) The Holders of a majority in aggregate principal amount of the
Securities of each series at the time outstanding may at any time remove the
Trustee with respect to Securities of such series and appoint a successor
trustee with respect to the Securities of such series by delivering to the
Trustee so removed, to the successor trustee so appointed and to the Issuer the
evidence provided for in Section 7.1 of the action in that regard taken by the
Securityholders.
(d) Any resignation or removal of the Trustee with respect to any series
and any appointment of a successor trustee with respect to such series pursuant
to any of the provisions of this Section 6.10 shall become effective upon
acceptance of appointment by the successor trustee as provided in Section 6.11.
SECTION 6.11 Acceptance of Appointment by Successor Trustee. Any successor
trustee appointed as provided in Section 6.10 shall execute and deliver to the
Issuer and to its predecessor trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor trustee
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with respect to all or any applicable series shall become effective and such
successor trustee, without any further act, deed or conveyance, shall become
vested with all rights, powers, duties and obligations with respect to such
series of its predecessor hereunder, with like effect as if originally named as
trustee for such series hereunder; but, nevertheless, on the written request of
the Issuer or of the successor trustee, upon payment of its charges then unpaid,
the trustee ceasing to act shall, subject to Section 10.4, pay over to the
successor trustee all moneys at the time held by it hereunder and shall execute
and deliver an instrument transferring to such successor trustee all such
rights, powers, duties and obligations. Upon request of any such successor
trustee, the Issuer shall execute any and all instruments in writing for more
fully and certainly vesting in and confirming to such successor trustee all such
rights and powers. Any trustee ceasing to act shall, nevertheless, retain a
prior claim upon all property or funds held or collected by such trustee to
secure any amounts then due it pursuant to the provisions of Section 6.6.
If a successor trustee is appointed with respect to the Securities of one
or more (but not all) series, the Issuer, the predecessor trustee and each
successor trustee with respect to the Securities of any applicable series shall
execute and deliver an indenture supplemental hereto which shall contain such
provisions as shall be deemed necessary or desirable to confirm that all the
rights, powers, trusts and duties of the predecessor trustee with respect to the
Securities of any series as to which the predecessor trustee is not retiring
shall continue to be vested in the predecessor trustee, and shall add to or
change any of the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by more than one
trustee, it being understood that nothing herein or in such supplemental
indenture shall constitute such trustees co-trustees of the same trust and that
each such trustee shall be trustee of a trust or trusts under separate
indentures.
No successor trustee with respect to any series of Securities shall accept
appointment as provided in this Section 6.11 unless at the time of such
acceptance such successor trustee shall be qualified under the provisions of
Section 6.8 and eligible under the provisions of Section 6.9.
Upon acceptance of appointment by any successor trustee as provided in this
Section 6.11, the Issuer shall mail notice thereof by first class mail to the
Holders of Securities of any series for which such successor trustee is acting
as trustee at their last addresses as they shall appear in the Security
register. If the acceptance of appointment is substantially contemporaneous with
the resignation, then the notice called for by the preceding sentence may be
combined with the notice called for by Section 6.10. If the Issuer fails to mail
such notice within ten days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Issuer.
SECTION 6.12 Merger, Conversion, Consolidation or Succession to Business of
Trustee. Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be qualified under the provisions of
Section 6.8 and eligible under the provisions of Section 6.9, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
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In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Securities of any series shall have
been authenticated but not delivered, any such successor to the Trustee may
adopt the certificate of authentication of any predecessor Trustee and deliver
such Securities so authenticated; and, in case at that time any of the
Securities of any series shall not have been authenticated, any successor to the
Trustee may authenticate such Securities either in the name of any predecessor
hereunder or in the name of the successor Trustee; and in all such cases such
certificate shall have the full force which it is anywhere in the Securities of
such series or in this Indenture provided that the certificate of the Trustee
shall have; provided, that the right to adopt the certificate of authentication
of any predecessor Trustee or to authenticate Securities of any series in the
name of any predecessor Trustee shall apply only to its successor or successors
by merger, conversion or consolidation.
SECTION 6.13 Preferential Collection of Claims Against the Issuer. The
Trustee shall comply with the provisions of Section 311 of the Trust Indenture
Act.
ARTICLE SEVEN
CONCERNING THE SECURITYHOLDERS
SECTION 7.1 Evidence of Action Taken by Securityholders. Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by a specified percentage in
principal amount of the Securityholders of any or all series may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed
by such specified percentage of Securityholders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee. Proof of execution of any instrument or of a writing appointing
any such agent shall be sufficient for any purpose of this Indenture and
(subject to Sections 6.1 and 6.2) conclusive in favor of the Trustee and the
Issuer, if made in the manner provided in this Article.
If the Issuer shall solicit from the Securityholders any request, demand,
authorization, direction, notice, consent, waiver or other act of the
Securityholders, the Issuer may, at its option, by a resolution of the Board of
Directors, fix in advance a record date for the determination of Securityholders
entitled to give such request, demand, authorization, direction, notice,
consent, waiver or other act, but the Issuer shall have no obligation to do so.
If such a record date is fixed, such request, demand, authorization, direction,
notice, consent, waiver or other act may be given before or after such record
date, but only the Securityholders of record at the close of business on such
record date shall be deemed to be Securityholders for the purposes of
determining whether Securityholders of the requisite proportion of Outstanding
Securities have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other act, and for that
purpose the Outstanding Securities shall be computed as of such record date;
provided that no such authorization, agreement or consent by the Securityholders
on such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than six months after the
record date.
If any Security of a series is issuable in the form of a Global Security or
Securities, the Depositary therefor may grant proxies and otherwise authorize
participants to give or take any request, demand, authorization, direction,
notice, consent, waiver or other action which the Holder of such Security is
entitled to grant or take under this Indenture.
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SECTION 7.2 Proof of Execution of Instruments and of Holding of Securities.
Subject to Sections 6.1 and 6.2, the execution of any instrument by a
Securityholder or his agent or proxy may be proved in accordance with such
reasonable rules and regulations as may be prescribed by the Trustee or in such
manner as shall be satisfactory to the Trustee. The holding of Securities shall
be proved by the Security register or by a certificate of the registrar thereof.
SECTION 7.3 Holders to be Treated as Owners. The Issuer, the Trustee and
any agent of the Issuer or the Trustee may deem and treat the Person in whose
name any Security shall be registered upon the Security register for such series
as the absolute owner of such Security (whether or not such Security shall be
overdue and notwithstanding any notation of ownership or other writing thereon)
for the purpose of receiving payment of or on account of the principal of and,
subject to the provisions of this Indenture, interest on such Security and for
all other purposes; and neither the Issuer nor the Trustee nor any agent of the
Issuer or the Trustee shall be affected by any notice to the contrary. All such
payments so made to any such Person, or upon his order, shall be valid, and, to
the extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for moneys payable upon any such Security.
None of the Issuer, the Trustee any paying agent, or the Security Registrar
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests of a Global
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
SECTION 7.4 Securities Owned by Issuer Deemed Not Outstanding. In
determining whether the Holders of the requisite aggregate principal amount of
Outstanding Securities of any or all series have concurred in any direction,
consent or waiver under this Indenture, Securities which are owned by the Issuer
or any other obligor on the Securities with respect to which such determination
is being made or by any Person directly or indirectly controlling or controlled
by or under direct or indirect common control with the Issuer or any other
obligor on the Securities with respect to which such determination is being made
shall be disregarded and deemed not to be Outstanding for the purpose of any
such determination, except that for the purpose of determining whether the
Trustee shall be protected in relying on any such direction, consent or waiver
only Securities which the Trustee knows are so owned shall be so disregarded.
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Securities and that the pledgee
is not the Issuer or any other obligor upon the Securities or any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Issuer or any other obligor on the Securities. In case
of a dispute as to such right, the advice of counsel shall be full protection in
respect of any decision made by the Trustee in accordance with such advice. Upon
request of the Trustee, the Issuer shall furnish to the Trustee promptly an
Officers' Certificate listing and identifying all Securities, if any, known by
the Issuer to be owned or held by or for the account of any of the
above-described Persons; and, subject to Sections 6.1 and 6.2, the Trustee shall
be entitled to accept such Officers' Certificate as conclusive evidence of the
facts therein set forth and of the fact that all Securities not listed therein
are Outstanding for the purpose of any such determination.
SECTION 7.5 Right of Revocation of Action Taken. At any time prior to (but
not after) the evidencing to the Trustee, as provided in Section 7.1, of the
taking of any action by the Holders of the percentage in aggregate principal
amount of the Securities of any or all series, as the case may be, specified in
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this Indenture in connection with such action, any Holder of a Security the
serial number of which is shown by the evidence to be included among the serial
numbers of the Securities the Holders of which have consented to such action
may, by filing written notice at the Corporate Trust Office and upon proof of
holding as provided in this Article, revoke such action so far as concerns such
Security. Except as aforesaid any such action taken by the Holder of any
Security shall be conclusive and binding upon such Holder and upon all future
Holders and owners of such Security and of any Securities issued in exchange or
substitution therefor, irrespective of whether or not any notation in regard
thereto is made upon any such Security. Any action taken by the Holders of the
percentage in aggregate principal amount of the Securities of any or all series,
as the case may be, specified in this Indenture in connection with such action
shall be conclusively binding upon the Issuer, the Trustee and the Holders of
all the Securities affected by such action.
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.1 Supplemental Indentures Without Consent of Securityholders.
The Issuer, when authorized by a resolution of its Board of Directors, and the
Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as in force at the date of the execution thereof) for one or
more of the following purposes:
(a) to convey, transfer, assign, mortgage or pledge to the Trustee as
security for the Securities of one or more series any property or assets;
(b) to evidence the succession of another corporation to the Issuer, or
successive successions, and the assumption by the successor corporation of the
covenants, agreements and obligations of the Issuer pursuant to Article Nine;
(c) to add to the covenants of the Issuer such further covenants,
restrictions, conditions or provisions as its Board of Directors and the Trustee
shall consider to be for the protection of the Holders of Securities, and to
make the occurrence, or the occurrence and continuance, of a default in any such
additional covenants, restrictions, conditions or provisions an Event of Default
permitting the enforcement of all or any of the several remedies provided in
this Indenture as herein set forth; provided, that in respect of any such
additional covenant, restriction, condition or provision such supplemental
indenture may provide for a particular period of grace after default (which
period may be shorter or longer than that allowed in the case of other defaults)
or may provide for an immediate enforcement upon such an Event of Default or may
limit the remedies available to the Trustee upon such an Event of Default or may
limit the right of the Holders of a majority in aggregate principal amount of
the Securities of such series to waive such an Event of Default;
(d) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any supplemental
indenture; or to make such other provisions in regard to matters or questions
arising under this Indenture or under any supplemental indenture as the Board of
Directors may deem necessary or desirable and which shall not adversely affect
the interests of the Holders of the Securities;
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(e) to establish the form or terms of Securities of any series as
permitted by Sections 2.1 and 2.3, including, without limitation, any terms
relating to the issuance, exchange, registration or transfer of Securities
issued in whole or in part in the form of one or more global Securities and the
payment of any principal thereof, or interest or premium, if any, thereon; and
(f) to evidence and provide for the acceptance of appointment hereunder
by a successor trustee with respect to the Securities of one or more series and
to add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one trustee, pursuant to the requirements of Section
6.11.
The Trustee is hereby authorized to join with the Issuer in the execution
of any such supplemental indenture, to make any further appropriate agreements
and stipulations which may be therein contained and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Trustee shall not be obligated to enter into any such supplemental indenture
which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section may
be executed without the consent of the Holders of any of the Securities at the
time outstanding, notwithstanding any of the provisions of Section 8.2.
SECTION 8.2 Supplemental Indentures With Consent of Securityholders. With
the consent (evidenced as provided in Article Seven) of the Holders of not less
than a majority in aggregate principal amount of the Securities at the time
outstanding of all series affected by such supplemental indenture (voting as one
class), the Issuer, when authorized by a resolution of its Board of Directors,
and the Trustee may, from time to time and at any time, enter into an indenture
or indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as in force at the date of execution thereof) for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Indenture or of any supplemental indenture or of
modifying in any manner the rights of the Holders of the Securities of each such
series; provided, that no such supplemental indenture shall (a) extend the final
maturity of any Security, or reduce the principal amount thereof, or reduce the
rate or extend the time of payment of interest thereon, or reduce any amount
payable on redemption thereof or reduce the amount of the principal of an
Original Issue Discount Security that could be due and payable upon an
acceleration of the maturity thereof pursuant to Section 5.1 or the amount
thereof provable in bankruptcy pursuant to Section 5.2, or impair or affect the
right of any Securityholder to institute suit for the payment thereof or, if the
Securities provide therefor, any right of repayment at the option of the
Securityholder without the consent of the Holder of each Security so affected,
or (b) reduce the aforesaid percentage of Securities of any series, the consent
of the Holders of which is required for any such supplemental indenture, without
the consent of the Holders of each Security so affected.
Upon the request of the Issuer, accompanied by a copy of a resolution of
the Board of Directors certified by the secretary or an assistant secretary of
the Issuer authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of Securityholders
as aforesaid and other documents, if any, required by Section 7.1, the Trustee
shall join with the Issuer in the execution of such supplemental indenture
unless such supplemental indenture affects the Trustee's own rights, duties or
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immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such supplemental
indenture.
It shall not be necessary for the consent of the Securityholders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such consent shall approve the substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Issuer
shall mail a notice thereof by first class mail to the Holders of Securities of
each series affected thereby at their addresses as they shall appear on the
registry books of the Issuer, setting forth in general terms the substance of
such supplemental indenture. Any failure of the Issuer to mail such notice, or
any defect therein, shall not, however, in any way impair or affect the validity
of any such supplemental indenture.
SECTION 8.3 Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith and the
respective rights, limitations of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Issuer and the Holders of Securities of
each series affected thereby shall thereafter be determined, exercised and
enforced hereunder subject in all respects to such modifications and amendments,
and all the terms and conditions of any such supplemental indenture shall be and
be deemed to be part of the terms and conditions of this Indenture for any and
all purposes.
SECTION 8.4 Documents to Be Given to Trustee. The Trustee, subject to the
provisions to Sections 6.1 and 6.2, may receive an Officers' Certificate and an
Opinion of Counsel as conclusive evidence that any supplemental indenture
executed pursuant to this Article 8 complies with the applicable provisions of
this Indenture.
SECTION 8.5 Notation on Securities in Respect of Supplemental Indentures.
Securities of any series authenticated and delivered after the execution of any
supplemental indenture pursuant to the provisions of this Article may bear a
notation in form approved by the Trustee for such series as to any matter
provided for by such supplemental indenture. If the Issuer or the Trustee shall
so determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Board of Directors, to any modification of this
Indenture contained in any such supplemental indenture may be prepared and
executed by the Issuer, authenticated by the Trustee and delivered in exchange
for the Securities of such series then outstanding.
ARTICLE NINE
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 9.1 Issuer May Consolidate, etc., on Certain Terms. The Issuer
covenants that it will not merge or consolidate with any other corporation or
sell or convey all or substantially all of its assets to any Person, unless (i)
either the Issuer shall be the continuing corporation, or the successor
corporation or the Person which acquires by sale or conveyance substantially all
the assets of the Issuer (if other than the Issuer) shall be a corporation
organized under the laws of the United States of America or any State thereof
and shall expressly assume the due and punctual payment of the principal of and
interest on all the Securities, according to their tenor, and the due and
punctual performance and observance of all of the covenants and conditions of
this Indenture to be performed or observed by the Issuer, by supplemental
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indenture satisfactory to the Trustee, executed and delivered to the Trustee by
such corporation, and (ii) the Issuer or such successor corporation, as the case
may be, shall not, immediately after such merger or consolidation, or such sale
or conveyance, be in default in the performance of any such covenant or
condition.
SECTION 9.2 Successor Corporation Substituted. In case of any such
consolidation, merger, sale or conveyance, and following such an assumption by
the successor corporation, such successor corporation shall succeed to and be
substituted for the Issuer, with the same effect as if it had been named herein.
Such successor corporation may cause to be signed, and may issue either in its
own name or in the name of the Issuer prior to such succession any or all of the
Securities issuable hereunder which theretofore shall not have been signed by
the Issuer and delivered to the Trustee; and, upon the order of such successor
corporation instead of the Issuer and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee shall authenticate and
shall deliver any Securities which previously shall have been signed and
delivered by the officers of the Issuer to the Trustee for authentication, and
any Securities which such successor corporation thereafter shall cause to be
signed and delivered to the Trustee for that purpose. All of the Securities so
issued shall in all respects have the same legal rank and benefit under this
Indenture as the Securities theretofore or thereafter issued in accordance with
the terms of this Indenture as though all of such Securities had been issued at
the date of the execution hereof.
In case of any such consolidation, merger, sale, lease or conveyance such
changes in phraseology and form (but not in substance) may be made in the
Securities thereafter to be issued as may be appropriate.
In the event of any such sale or conveyance (other than a conveyance by way
of lease) the Issuer or any successor corporation which shall theretofore have
become such in the manner described in this Article shall be discharged from all
obligations and covenants under this Indenture and the Securities and may be
liquidated and dissolved.
SECTION 9.3 Opinion of Counsel to Trustee. The Trustee, subject to the
provisions of Sections 6.1 and 6.2, may receive an Opinion of Counsel, prepared
in accordance with Section 13.5, as conclusive evidence that any such
consolidation, merger, sale, lease or conveyance, and any such assumption, and
any such liquidation or dissolution, complies with the applicable provisions of
this Indenture.
ARTICLE TEN
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
SECTION 10.1 Satisfaction and Discharge of Indenture. If at any time
(a) the Issuer shall have paid or caused to be paid the principal of and
interest on all the Securities of any series outstanding hereunder (other than
Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section 2.9) as and when the same shall have
become due and payable, or (b) the Issuer shall have delivered to the Trustee
for cancellation all Securities of any series theretofore authenticated (other
than any Securities of such series which shall have been destroyed, lost or
stolen and which shall have been replaced or paid as provided in Section 2.9) or
(c) (i) all the securities of such series not theretofore delivered to the
Trustee for cancellation shall have become due and payable, or are by their
terms to become due and payable within one year or are to be called for
redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption, and (ii) the Issuer shall have irrevocably
deposited or caused to be deposited with the Trustee as trust funds the entire
amount in cash (other than moneys repaid by the Trustee or any paying agent to
the Issuer in accordance with Section 10.4) sufficient to pay at maturity or
upon redemption all Securities of such series (other than any Securities of such
series which shall have been destroyed, lost or stolen and which shall have been
replaced or paid as provided in Section 2.9) not theretofore delivered to the
Trustee for cancellation, including principal and interest due or to become due
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to such date of maturity as the case may be, and if, in any such case, the
Issuer shall also pay or cause to be paid all other sums payable hereunder by
the Issuer with respect to Securities of such series, then this Indenture shall
cease to be of further effect with respect to Securities of such series (except
as to (i) rights of registration of transfer and exchange, and the Issuer's
right of optional redemption, (ii) substitution of mutilated, defaced,
destroyed, lost or stolen Securities, (iii) rights of holders to receive
payments of principal thereof and interest thereon and remaining rights of the
holders to receive mandatory sinking fund payments, if any, (iv) the rights,
obligations and immunities of the Trustee hereunder and (v) the rights of the
Securityholders of such series as beneficiaries hereof with respect to the
property so deposited with the Trustee payable to all or any of them), and the
Trustee, on demand of the Issuer accompanied by an Officers' Certificate and an
Opinion of Counsel and at the cost and expense of the Issuer, shall execute
proper instruments acknowledging such satisfaction of and discharging this
Indenture with respect to such series; provided, that the rights of Holders of
the Securities to receive amounts in respect of principal of and interest on the
Securities held by them shall not be delayed longer than required by
then-applicable mandatory rules or policies of any securities exchange upon
which the Securities are listed. The Issuer agrees to reimburse the Trustee for
any costs or expenses thereafter reasonably and properly incurred and to
compensate the Trustee for any services thereafter reasonably and properly
rendered by the Trustee in connection with this Indenture or the Securities of
such series.
SECTION 10.2 Application by Trustee of Funds Deposited for Payment of
Securities. Subject to Section 10.4, all moneys deposited with the Trustee
pursuant to Section 10.1, all money and U.S. Government Obligations deposited
with the Trustee pursuant to Section 12.4 and all money received by the Trustee
in respect of U.S. Government Obligations deposited with the Trustee pursuant to
Section 12.4 shall be held in trust and applied by it to the payment, either
directly or through any paying agent (including the Issuer acting as its own
paying agent), to the Holders of the particular Securities of such series for
the payment or redemption of which such moneys have been deposited with the
Trustee, of all sums due and to become due thereon for principal and interest or
to make mandatory sinking fund payments or analogous payments as contemplated by
Section 12.4; but such money need not be segregated from other funds except to
the extent required by law.
SECTION 10.3 Repayment of Moneys Held by Paying Agent. In connection with
the satisfaction and discharge of this Indenture with respect to Securities of
any series, all moneys then held by any paying agent under the provisions of
this Indenture with respect to such series of Securities shall, upon demand of
the Issuer, be repaid to it or paid to the Trustee and thereupon such paying
agent shall be released from all further liability with respect to such moneys.
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SECTION 10.4 Return of Moneys Held by Trustee and Paying Agent Unclaimed
for Three Years. Any moneys deposited with or paid to the Trustee or any paying
agent for the payment of the principal of or interest on any Security of any
series and not applied but remaining unclaimed for three years after the date
upon which such principal or interest shall have become due and payable, shall,
upon the written request of the Issuer and unless otherwise required by
mandatory provisions of applicable escheat or abandoned or unclaimed property
law, be repaid to the Issuer by the Trustee for such series or such paying
agent, and the Holder of the Security of such series shall, unless otherwise
required by mandatory provisions of applicable escheat or abandoned or unclaimed
property laws, thereafter look only to the Issuer for any payment which such
Holder may be entitled to collect, and all liability of the Trustee or any
paying agent with respect to such moneys shall thereupon cease.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES AND SINKING FUNDS
SECTION 11.1 Applicability of Article. The provisions of this Article shall
be applicable to the Securities of any series which are redeemable before their
maturity or to any sinking fund for the retirement of Securities of a series
except as otherwise specified as contemplated by Section 2.3 for Securities of
such series.
SECTION 11.2 Notice of Redemption; Partial Redemptions. Notice of
redemption to the Holders of Securities of any series to be redeemed as a whole
or in part at the option of the Issuer shall be given by mailing notice of such
redemption by first class mail, postage prepaid, at least 30 days and not more
than 60 days prior to the date fixed for redemption to such Holders of
Securities of such series at their last addresses as they shall appear upon the
registry books. Any notice which is mailed in the manner herein provided shall
be conclusively presumed to have been duly given, whether or not the Holder
receives the notice. Failure to give notice by mail, or any defect in the
notice, to the Holder of any Security of a series designated for redemption as a
whole or in part shall not affect the validity of the proceedings for the
redemption of any other Security of such series.
The notice of redemption to each such Holder shall specify the principal
amount of each Security of such series held by such Holder to be redeemed, the
date fixed for redemption, the redemption price, the place or places of payment,
that payment will be made upon presentation and surrender of such Securities,
that such redemption is pursuant to the mandatory or optional sinking fund, or
both, if such be the case, that interest accrued to the date fixed for
redemption will be paid as specified in such notice and that on and after said
date interest thereon or on the portions thereof to be redeemed will cease to
accrue. In case any Security of a series is to be redeemed in part only the
notice of redemption shall state the serial number of the Security and the
portion of the principal amount thereof to be redeemed and shall state that on
and after the date fixed for redemption, upon surrender of such Security, a new
Security or Securities of such series in principal amount equal to the
unredeemed portion thereof will be issued.
The notice of redemption of Securities of any series to be redeemed at the
option of the Issuer shall be given by the Issuer or, at the Issuer's request,
by the Trustee in the name and at the expense of the Issuer.
At least one Business Day prior to the redemption date specified in the
notice of redemption given as provided in this Section, the Issuer will deposit
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with the Trustee or with one or more paying agents (or, if the Issuer is acting
as its own paying agent, set aside, segregate and hold in trust as provided in
Section 3.4) an amount of money sufficient to redeem on the redemption date all
the Securities of such series so called for redemption at the appropriate
redemption price, together with accrued interest to the date fixed for
redemption. If less than all the outstanding Securities of a series are to be
redeemed, the Issuer will deliver to the Trustee at least 70 days (or shorter
period satisfactory to the Trustee) prior to the date fixed for redemption an
Officers' Certificate stating the aggregate principal amount of Securities to be
redeemed.
If less than all the Securities of a series are to be redeemed, the Trustee
shall select, in such manner as it shall deem appropriate and fair, Securities
of such series to be redeemed in whole or in part. Securities may be redeemed in
part in multiples equal to the minimum authorized denomination for Securities of
such series or any multiple thereof. The Trustee shall promptly notify the
Issuer in writing of the serial numbers of the Securities of such series
selected for redemption and, in the case of any Securities of such series
selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Securities of any series shall relate,
in the case of any Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Security which has been or is to be
redeemed.
SECTION 11.3 Payment of Securities Called for Redemption. If notice of
redemption had been given as above provided, the Securities or portions of
Securities specified in such notice shall become due and payable on the date and
at the place stated in such notice at the applicable redemption price, together
with interest accrued to the date fixed for redemption, and on and after said
date (unless the Issuer shall default in the payment of such Securities at the
redemption price, together with interest accrued to said date) interest on the
Securities or portions of Securities so called for redemption shall cease to
accrue and, except as provided in Sections 6.5 and 10.4, such Securities shall
cease from and after the date fixed for redemption to be entitled to any benefit
or security under this Indenture, and the Holders thereof shall have no right in
respect of such Securities except the right to receive the redemption price
thereof and unpaid interest to the date fixed for redemption. On presentation
and surrender of such Securities at a place of payment specified in said notice,
said Securities or the specified portions thereof shall be paid and redeemed by
the Issuer at the applicable redemption price, together with interest accrued
thereon to the date fixed for redemption; provided that any semiannual payment
of interest becoming due on the date fixed for redemption shall be payable to
the Holders of such Securities registered as such on the relevant record date
subject to the terms and provisions of Section 2.7 hereof.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal shall, until paid or duly provided for,
bear interest from the date fixed for redemption at the rate of interest or
Yield to Maturity (in the case of an Original Issue Discount Security) borne by
the Security.
Upon presentation of any Security redeemed in part only, the Issuer shall
execute and the Trustee shall authenticate and deliver to or on the order of the
Holder thereof, at the expense of the Issuer, a new Security or Securities of
such series, of authorized denominations, in principal amount equal to the
unredeemed portion of the Security so presented.
SECTION 11.4 Exclusion of Certain Securities from Eligibility for Selection
for Redemption. Securities shall be excluded from eligibility for selection for
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redemption if they are identified by registration and certificate number in a
written statement signed by an authorized officer of the Issuer and delivered to
the Trustee at least 40 days (or shorter period satisfactory to the Trustee)
prior to the last date on which notice of redemption may be given as being owned
of record and beneficially by, and not pledged or hypothecated by either (a) the
Issuer or (b) an entity specifically identified in such written statement
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Issuer.
SECTION 11.5 Mandatory and Optional Sinking Funds. The minimum amount of
any sinking fund payment provided for by the terms of Securities of any series
is herein referred to as a "mandatory sinking fund payment", and any payment in
excess of such minimum amount provided for by the terms of Securities of any
series is herein referred to as an "optional sinking fund payment". The date on
which a sinking fund payment is to be made is herein referred to as the "sinking
fund payment date".
In lieu of making all or any part of any mandatory sinking fund payment
with respect to any series of Securities in cash, the Issuer may at its option
(a) deliver to the Trustee Securities of such series theretofore purchased or
otherwise acquired (except upon redemption pursuant to the mandatory sinking
fund) by the Issuer or receive credit for Securities of such series (not
previously so credited) theretofore purchased or otherwise acquired (except as
aforesaid) by the Issuer and delivered to the Trustee for cancellation pursuant
to Section 2.10, (b) receive credit for optional sinking fund payments (not
previously so credited) made pursuant to this Section, or (c) receive credit for
Securities of such series (not previously so credited) redeemed by the Issuer
through any optional redemption provision contained in the terms of such series.
Securities so delivered or credited shall be received or credited by the Trustee
at the sinking fund redemption price specified in such Securities.
On or before the sixtieth day (or shorter period satisfactory to the
Trustee) next preceding each sinking fund payment date for any series, the
Issuer will deliver to the Trustee a written statement (which need not contain
the statements required by Section 13.5) signed by an authorized officer of the
Issuer (a) specifying the portion of the mandatory sinking fund payment to be
satisfied by payment of cash and the portion to be satisfied by credit of
Securities of such series, (b) stating that none of the Securities of such
series has theretofore been so credited, (c) stating that no defaults in the
payment of interest or Events of Default with respect to such series have
occurred (which have not been waived or cured) and are continuing and (d)
stating whether or not the Issuer intends to exercise its right to make an
optional sinking fund payment with respect to such series and, if so, specifying
the amount of such optional sinking fund payment which the Issuer intends to pay
on or before the next succeeding sinking fund payment date. Any Securities of
such series to be credited and required to be delivered to the Trustee in order
for the Issuer to be entitled to credit therefor as aforesaid which have not
theretofore been delivered to the Trustee shall be delivered for cancellation
pursuant to Section 2.10 to the Trustee with such written statement (or
reasonably promptly thereafter if acceptable to the Trustee). Such written
statement shall be irrevocable and upon its receipt by the Trustee the Issuer
shall become unconditionally obligated to make all the cash payments or payments
therein referred to, if any, on or before the next succeeding sinking fund
payment date. Failure of the Issuer, on or before any such sixtieth day, to
deliver such written statement and Securities specified in this paragraph, if
any, shall not constitute a default but shall constitute, on and as of such
date, the irrevocable election of the Issuer (i) that the mandatory sinking fund
payment for such series due on the next succeeding sinking fund payment date
shall be paid entirely in cash without the option to deliver or credit
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Securities of such series in respect thereof and (ii) that the Issuer will make
no optional sinking fund payment with respect to such series as provided in this
Section.
If the sinking fund payment or payments (mandatory or optional or both) to
be made in cash on the next succeeding sinking fund payment date plus any unused
balance of any preceding sinking fund payments made in cash shall exceed $50,000
(or a lesser sum if the Issuer shall so request) with respect to the Securities
of any particular series, such cash shall be applied on the next succeeding
sinking fund payment date to the redemption of Securities of such series at the
sinking fund redemption price together with accrued interest to the date fixed
for redemption. If such amount shall be $50,000 or less and the Issuer makes no
such request then it shall be carried over until a sum in excess of $50,000 is
available. The Trustee shall select, in the manner provided in Section 11.2, for
redemption on such sinking fund payment date a sufficient principal amount of
Securities of such series to absorb said cash, as nearly as may be, and shall
(if requested in writing by the Issuer) inform the Issuer of the serial numbers
of the Securities of such series (or portions thereof) so selected. Securities
of any series which are (a) owned by the Issuer or an entity known by the
Trustee to be directly or indirectly controlling or controlled by or under
direct or indirect common control with the Issuer, as shown by the Security
register, and not known to the Trustee to have been pledged or hypothecated by
the Issuer or any such entity or (b) identified in an Officers' Certificate
delivered to the Trustee at least 60 days prior to the sinking fund payment date
as being beneficially owned by, and not pledged or hypothecated by, the Issuer
or an entity directly or indirectly controlling or controlled by or under direct
or indirect common control with the Issuer shall be excluded from Securities of
such series eligible for selection for redemption. The Trustee, in the name and
at the expense of the Issuer (or the Issuer, if it shall so request the Trustee
in writing) shall cause notice of redemption of the Securities of such series to
be given in substantially the manner provided in Section 11.2 (and with the
effect provided in Section 11.3) for the redemption of Securities of such series
in part at the option of the Issuer. The amount of any sinking fund payments not
so applied or allocated to the redemption of Securities of such series shall be
added to the next cash sinking fund payment for such series and, together with
such payment, shall be applied in accordance with the provisions of this
Section. Any and all sinking fund moneys held on the stated maturity date of the
Securities of any particular series (or earlier, if such maturity is
accelerated), which are not held for the payment or redemption of particular
Securities of such series shall be applied, together with other moneys, if
necessary, sufficient for the purpose, to the payment of the principal of, and
interest on, the Securities of such series at maturity.
At least one Business Day before each sinking fund payment date, the Issuer
shall pay to the Trustee in cash or shall otherwise provide for the payment of
all interest accrued to the date fixed for redemption on Securities to be
redeemed on such sinking fund payment date.
The Trustee shall not redeem or cause to be redeemed any Securities of a
series with sinking fund moneys or mail any notice of redemption of Securities
for such series by operation of the sinking fund during the continuance of a
default in payment of interest on such Securities or of any Event of Default
except that, where the mailing of notice of redemption of any Securities shall
theretofore have been made, the Trustee shall redeem or cause to be redeemed
such Securities, provided that it shall have received from the Issuer a sum
sufficient for such redemption. Except as aforesaid, any moneys in the sinking
fund for such series at the time when any such default or Event of Default shall
occur, and any moneys thereafter paid into the sinking fund, shall, during the
continuance of such default or Event of Default, be deemed to have been
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collected under Article Five and held for the payment of all such Securities. In
case such Event of Default shall have been waived as provided in Section 5.10 or
the default cured on or before the sixtieth day preceding the sinking fund
payment date in any year, such moneys shall thereafter be applied on the next
succeeding sinking fund payment date in accordance with this Section to the
redemption of such Securities.
ARTICLE TWELVE
DEFEASANCE
SECTION 12.1. Applicability of Article: Issuer's Option to Effect
Defeasance. Except to the extent otherwise provided pursuant to Section 2.3 in
respect of either or both of (a) defeasance of the Securities of a series under
Section 12.2 or (b) covenant defeasance of the Securities of a series under
Section 12.3, then the provisions of such Section or Sections, as the case may
be, together with the other provisions of this Article Twelve, shall be
applicable to the Securities of such series, and the Issuer may at its option by
resolution of the Board of Directors, at any time, with respect to the
Securities of such series, elect to have either Section 12.2 (if applicable) or
Section 12.3 (if applicable) be applied to the Outstanding Securities of such
series upon compliance with the conditions set forth below in this Article
Twelve.
SECTION 12.2 Defeasance and Discharge. Upon the Issuer's exercise of the
above option applicable to this Section, the Issuer shall be deemed to have been
discharged from its obligations with respect to the Outstanding Securities of
such series on the date the conditions set forth below are satisfied
(hereinafter, "defeasance"). For this purpose, such defeasance means that the
Issuer shall be deemed to have paid and discharged the entire indebtedness
represented by the Outstanding Securities of such series and to have satisfied
all its other obligations under such Securities and this Indenture insofar as
such Securities are concerned (and the Trustee, at the expense of the Issuer,
shall execute proper instruments acknowledging the same), except for the
following which shall survive until otherwise terminated or discharged
hereunder: (A) the rights of Holders of Outstanding Securities of such series to
receive solely from the trust fund described in Section 12.4 and as more fully
set forth in such Section, payments in respect of the principal of and interest
on such Securities when such payments are due, (B) the Issuer's obligations with
respect to such Securities under Sections 2.8, 2.9, 2.11, 3.2 and 3.4, (C) the
rights, powers, trusts, duties, and immunities of the Trustee hereunder and (D)
this Article Twelve. Subject to compliance with this Article Twelve, the Issuer
may exercise its option under this Section 12.2 notwithstanding the prior
exercise of its options under Section 12.3 with respect to Securities of such
series.
SECTION 12.3 Covenant Defeasance. Upon the Issuer's exercise of the above
option applicable to this Section, the Issuer shall be released from its
obligations under Sections 3.6 and 3.7 (and under other covenants which may be
specified in respect of such Securities pursuant to Section 2.3(16)) with
respect to the Outstanding Securities of such series on and after the date the
conditions set forth below are satisfied (hereinafter, "covenant defeasance").
For this purpose, such covenant defeasance means that, with respect to the
Outstanding Securities of such series, the Issuer may omit to comply with and
shall have no liability in respect of any term, condition or limitation set
forth in any such Section, whether directly or indirectly by reason of any
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reference elsewhere herein to any such Section or by reason of any reference in
any such Section to any other provision herein or in any other document, but the
remainder of this Indenture and such Securities shall be unaffected thereby.
SECTION 12.4 Conditions to Defeasance. The following shall be the
conditions to application of either Section 12.2 or Section 12.3 to the
Outstanding Securities of such series:
(a) the Issuer shall irrevocably have deposited or caused to be deposited
with the Trustee (or another trustee satisfying the requirements of Section 6.9
who shall agree to comply with the provisions of this Article Twelve applicable
to it) as trust funds in trust for the purpose of making the following payments,
specifically pledged as security for, and dedicated solely to, the benefit of
the Holders of such Securities, (i) money in an amount, or (ii) U.S. Government
Obligations which through the scheduled payment of principal and interest in
respect thereof in accordance with their terms will provide, not later than one
day before the due date of any payment referred to in this subparagraph (a)
money in an amount, or (iii) a combination thereof, sufficient, in the opinion
of a nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay and discharge,
and which shall be applied by the Trustee (or other qualifying trustee) to pay
and discharge, (A) the principal of and each installment of principal of and
interest on the Outstanding Securities of such series on the date that such
principal or installment of principal or interest is due and payable and (B) any
mandatory sinking fund payments or analogous payments applicable to the
Outstanding Securities of such series on the day on which such payments are due
and payable in accordance with the terms of this Indenture and of such
Securities.
(b) No Event of Default or event with which notice or lapse of time or both
would become an Event of Default with respect to the Securities of such series
shall have occurred and be continuing on the date of such deposit or, at any
time during the period ending on the 91st day after the date of such deposit or,
if longer, ending on the day following the expiration of the longest preference
period applicable to the Issuer under any applicable bankruptcy, insolvency or
similar law in respect of such deposit (it being understood that this condition
shall not be deemed satisfied until the expiration of such period).
(c) Such defeasance or covenant defeasance shall not cause the Trustee for
the Securities of such series to have a conflicting interest as defined in
Section 6.8 and for purposes of the Trust Indenture Act with respect to any
securities of the Issuer.
(d) Such defeasance or covenant defeasance shall not result in a breach or
violation of, or constitute a default under, this Indenture or any other
agreement or instrument to which the Issuer is a party or by which it is bound.
(e) Such defeasance or covenant defeasance shall not cause any Securities
of such series then listed on any registered national securities exchange under
the Securities Exchange Act of 1934, as amended, to be delisted.
(f) In the case of an election under Section 12.2, the Issuer shall have
delivered to the Trustee an Opinion of Counsel stating that (x) the Issuer has
received from, or there has been published by, the Internal Revenue Service a
ruling, or (y) since the date of this Indenture there has been a change in the
applicable Federal income tax law, in either case to the effect that, and based
thereon such opinion shall confirm that, the Holders of the Outstanding
Securities of such series will not recognize income, gain or loss for Federal
income tax purposes as a result of such defeasance and will be subject to
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Federal income tax on the same amounts, in the same manner and at the same time
as would have been the case if such defeasance had not occurred.
(g) In the case of an election under Section 12.3, the Issuer shall have
delivered to the Trustee an Opinion of Counsel to the effect that the Holders of
the Outstanding Securities of such series will not recognize income, gain or
loss for Federal income tax purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such covenant defeasance
had not occurred.
(h) Such defeasance or covenant defeasance shall be effected in compliance
with any additional terms, conditions or limitations which may be imposed on the
Issuer in connection therewith pursuant to Section 2.3.
(i) The Issuer shall have delivered to the Trustee an Officers Certificate
and an Opinion of Counsel, each stating that all conditions precedent provided
for relating to either the defeasance under Section 12.2 or the covenant
defeasance under Section 12.3 (as the case may be) have been complied with.
ARTICLE THIRTEEN
MISCELLANEOUS PROVISIONS
SECTION 13.1 Incorporators, Stockholders, Officers and Directors of
Issuer Exempt from Individual Liability. No recourse under or upon any
obligation, covenant or agreement contained in this Indenture, or in any
Security, or because of any indebtedness evidenced thereby, shall be had against
any incorporator, as such, or against any past, present or future stockholder,
officer or director, as such, of the Issuer or of any successor, either directly
or through the Issuer or any successor, under any rule of law, statute or
constitutional provision or by the enforcement of any assessment or by any legal
or equitable proceeding or otherwise, all such liability being expressly waived
and released by the acceptance of the Securities by the holders thereof and as
part of the consideration for the issue of the Securities.
SECTION 13.2 Provisions of Indenture for the Sole Benefit of Parties and
Securityholders. Nothing in this Indenture or in the Securities, expressed or
implied, shall give or be construed to give to any person, firm or corporation,
other than the parties hereto and their successors and the Holders of the
Securities, any legal or equitable right, remedy or claim under this Indenture
or under any covenant or provision herein contained, all such covenants and
provisions being for the sole benefit of the parties hereto and their successors
and of the Holders of the Securities.
SECTION 13.3 Successors and Assigns of Issuer Bound by Indenture. All the
covenants, stipulations, promises and agreements in this Indenture contained by
or in behalf of the Issuer shall bind its successors and assigns, whether so
expressed or not.
SECTION 13.4 Notices and Demands on Issuer, Trustee and Securityholders.
Any notice or demand which any provision of this Indenture is required or
permitted to be given or served by the Trustee or by the Holders of Securities
to or on the Issuer may be given or served by being deposited postage prepaid,
first class mail (except as otherwise specifically provided herein) addressed
(until another address of the Issuer is filed by the Issuer with the Trustee) to
Emerson Electric Co., 8000 W. Florissant Ave., St. Louis, Missouri 63136
Attention: Secretary. Any notice, direction, request or demand by the Issuer or
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any Securityholder to or upon the Trustee shall be deemed to have been
sufficiently given or made, for all purposes, if given or made at the offices of
the Trustee, 101 Barclay Street, 21st Floor, New York, New York 10286 Attention:
Corporate Trust Administration Facsimile: (212) 815-5919.
Where this Indenture provides for notice to Holders, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first class postage prepaid, to each Holder entitled thereto, at his
last address as it appears in the Security register. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this Indenture
provides for notice in any manner, such notice may be waived in writing by the
person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
In case, by reason of the suspension of or irregularities in regular mail
service, it shall be impracticable to mail notice to the Issuer and
Securityholders when such notice is required to be given pursuant to any
provision of this Indenture, then any manner of giving such notice as shall be
satisfactory to the Trustee shall be deemed to be a sufficient giving of such
notice.
SECTION 13.5 Officers' Certificates and Opinions of Counsel; Statements to
Be Contained Therein. Upon any application or demand by the Issuer to the
Trustee to take any action under any of the provisions of this Indenture, the
Issuer shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent have been complied with,
except that in the case of any such application or demand as to which the
furnishing of such documents is specifically required by any provision of this
Indenture relating to such particular application or demand, no additional
certificate or opinion need be furnished.
Each certificate or opinion provided for in this Indenture and delivered to
the Trustee with respect to compliance with a condition or covenant provided for
in this Indenture shall include (a) a statement that the person making such
certificate or opinion has read such covenant or condition, (b) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based, (c) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with and (d) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
Any certificate, statement or opinion of an officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of
or representations by counsel, unless such officer knows that the certificate or
opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or in
the exercise of reasonable care should know that the same are erroneous. Any
certificate, statement or opinion of counsel may be based, insofar as it relates
to factual matters, information with respect to which is in the possession of
the Issuer, upon the certificate, statement or opinion of or representations by
an officer of officers of the Issuer, unless such counsel knows that the
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certificate, statement or opinion or representations with respect to the matters
upon which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous.
Any certificate, statement or opinion of an officer of the Issuer or of
counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Issuer, unless such officer or counsel, as the
case may be, knows that the certificate or opinion or representations with
respect to the accounting matters upon which his certificate, statement or
opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.
Any certificate or opinion of any independent firm of public accountants
filed with the Trustee shall contain a statement that such firm is independent.
SECTION 13.6 Payments Due on Saturdays, Sundays and Holidays. If the date
of maturity of interest on or principal of the Securities of any series or the
date fixed for redemption or repayment of any such Security shall not be a
Business Day, then payment of interest or principal need not be made on such
date, but may be made on the next succeeding Business Day, with the same force
and effect as if made on the date of maturity or the date fixed for redemption,
and no interest shall accrue for the period after such date.
SECTION 13.7 Conflict of Any Provision of Indenture with Trust Indenture
Act. If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act that is required under such Act to be a part of and
govern this Indenture without such limitation, qualification or conflict, the
latter provision shall control. If any provision of this Indenture modifies or
excludes any provision of the Trust Indenture Act that may be so modified or
excluded, the latter provision shall be deemed to apply to this Indenture as so
modified or excluded, as the case may be.
SECTION 13.8 New York Law to Govern. This Indenture and each Security shall
be deemed to be a contract under the laws of the State of New York, and for all
purposes shall be construed in accordance with the laws of such State, except as
may otherwise be required by mandatory provisions of law.
SECTION 13.9 Counterparts. This Indenture may be executed in any number of
counterparts, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
SECTION 13.10 Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
SECTION 13.11 Securities in a Foreign Currency. Unless otherwise specified
in an Officers' Certificate delivered pursuant to Section 2.3 of this Indenture
with respect to a particular series of Securities, whenever for purposes of this
Indenture any action may be taken by the holders of a specified percentage in
aggregate principal amount of Securities of all series at the time outstanding
and, at such time, there are outstanding Securities of any series which are
denominated in a coin or currency other than United States dollars, then the
principal amount of Securities of such series which shall be deemed to be
outstanding for the purpose of taking such action shall be that amount of United
States dollars that could be obtained for such amount at the Market Exchange
Rate.
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All decisions and determinations of the Exchange Rate Agent regarding the
Market Exchange Rate shall, in the absence of manifest error, be conclusive for
all purposes and irrevocably binding upon the Issuer and all Holders.
SECTION 13.12 Judgment Currency. The Issuer agrees, to the fullest extent
that it may effectively do so under applicable law, that (a) if for the purpose
of obtaining judgment in any court it is necessary to convert any sum due in
respect of the principal of, premium, if any, or interest on the Securities of
any series (the "Required Currency") into United States dollars, the rate of
exchange used shall be the rate at which in accordance with normal banking
procedures the Trustee could purchase in The City of New York the Required
Currency on the New York Banking Day preceding that on which final judgment is
giving and (b) its obligations under this Indenture to make payments in the
Required Currency (i) shall not be discharged or satisfied by any tender, or any
recovery pursuant to any judgment (whether or not entered in accordance with
subsection (a)), in any currency other than the Required Currency, except to the
extent that such tender or recovery shall result in the actual receipt by the
payee of the full amount of the Required Currency expressed to be payable in
respect of such payments, (ii) shall be enforceable as an alternative or
additional cause of action for the purpose of recovering in the Required
Currency the amount, if any, by which such actual receipt shall fall short of
the full amount of the Required Currency so expressed to be payable and (iii)
shall not be affected by judgment being obtained for any other sum due under
this Indenture. For purposes of the foregoing, "New York Banking Day" means any
day except a Saturday, Sunday or a legal holiday in The City of New York or a
day on which banking institutions in The City of New York are authorized by law
or required by executive order to close.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture, to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the date first above written.
EMERSON ELECTRIC CO.
By: /s/ Walter J. Galvin
----------------------------
[CORPORATE SEAL] Senior Vice President of Finance
and Chief Financial Officer
Attest: Walter J. Galvin
By: /s/ Harley M. Smith
--------------------------------
Assistant Secretary
THE BANK OF NEW YORK, as Trustee
By: /s/ Robert A. Massimillo
----------------------------
Name: Robert A. Massimillo
Title: Assistant Vice President
[CORPORATE SEAL]
Attest:
By: /s/ Michele L. Russo
--------------------------------
Michele L. Russo
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EXHIBIT 13
22
Financial Review
Results of Operations
Net Sales
Sales for 1998 were a record $13.4 billion, an increase of $1.1 billion or 9.3
percent from 1997. The strong sales growth reflected balanced performance
from the Company's segments and the contribution of acquisitions (see note
2). All businesses reported underlying sales growth in 1998. This growth was
achieved despite the impact of a stronger dollar that reduced reported sales
growth by more than 2 percent. Slightly more than half of the sales increase
was attributable to solid underlying domestic growth and modest international
demand. Domestic sales increased approximately $1.0 billion or 14 percent,
benefiting from very strong gains in the electronics business, strong growth
in the fractional motors and appliance business and acquisitions.
International sales increased approximately $140 million, or 3 percent.
Demand was solid throughout the year in the United States and Europe, which
account for more than three-quarters of consolidated revenue. New product
sales, from products introduced in the past five years, increased
approximately $490 million or 13 percent to a record $4.4 billion,
representing 33 percent of sales. Acquisitions completed throughout fiscal
1998 and the first quarter 1999 acquisition of the Westinghouse Process
Control Division are expected to have total sales of $1 billion in fiscal
1999.
In 1997, sales were $12.3 billion, up $1,149 million or 10.3 percent from
1996. Approximately half of the sales increase was attributable to solid
international demand and modest domestic growth with the remainder due to
acquisitions. All businesses reported sales growth in 1997. Domestic sales
increased approximately $770 million or 12 percent, benefiting from
acquisitions, solid gains in the tools business, very strong gains in the
electronics business and slight price increases. International sales
increased approximately $380 million, reflecting moderate growth in Europe,
continued strength in Asia-Pacific and Latin America, strong growth in Canada
and acquisitions, partially offset by unfavorable foreign currency translation
of approximately $235 million. New product sales increased approximately $520
million or 15 percent to $3.9 billion, representing 32 percent of sales.
International Sales
International sales, including U.S. exports, increased approximately 3 percent
to a record $5.4 billion in 1998, representing 40 percent of the Company's
total sales. Solid demand in Europe and the strong growth in other regions of
the world, led by Latin America, more than offset the impact of significant
weakness in Asian economies. Sales by non-U.S. subsidiaries were $4.4 billion
in 1998, up $228 million or 5 percent from 1997. U.S. exports decreased 8
percent to $968 million in 1998 compared to the record export sales in 1997,
reflecting weakness in Asia-Pacific. International subsidiary sales increased
approximately 6 percent excluding acquisitions and the unfavorable impact of
currency translation of approximately $250 million.
In 1997, international sales increased 8 percent to $5.2 billion, representing
43 percent of the Company's total sales. Sales by non-U.S. subsidiaries were
$4.2 billion in 1997, up $209 million or 5 percent from 1996. U.S. exports
exceeded $1 billion for the first time in 1997, increasing 19 percent to
$1,054 million, reflecting strong sales gains in the process and the heating,
ventilating and air conditioning businesses and acquisitions. International
sales increased approximately 7 percent excluding acquisitions and the
unfavorable impact of currency translation as all major geographic regions
achieved sales growth, with particular strength in Asia-Pacific, Latin America
and Canada.
<PAGE>
23
Industry Segment Sales
Sales in the Commercial and Industrial segment were $8.1 billion, up $737
million or 10.0 percent from 1997, reflecting moderate demand and
acquisitions, partially offset by the stronger dollar. The electronics
business continued its very strong underlying sales growth, reflecting broad
strength across product lines and service offerings. In addition, sales of
the business benefited from the acquisition of Hiross, an Italian manufacturer
of precision environmental control and site monitoring products. Sales of the
industrial motors and drives business grew solidly, excluding the negative
impact of foreign currency, as a result of strong international demand outside
of Asia and the contribution of the Computational Systems, Inc. acquisition.
The industrial components and equipment business reported modest underlying
sales growth on a fixed rate basis, and the majority-owned joint venture
formed with General Signal's Electrical Group in September 1997 further
enhanced sales growth. Excluding the effects of currency translation, the
process business reported moderate sales growth as demand was balanced across
the major geographic regions it serves.
Sales in the Appliance and Construction-Related segment were $5.3 billion, up
$411 million or 8.3 percent from 1997, reflecting solid domestic growth and
acquisitions, partially offset by weak Asian demand. Sales of the underlying
fractional motors and appliance components business grew solidly, benefiting
from robust demand in the United States. Strong gains in the tools business
reflect the 1997 acquisition of InterMetro Industries and modest underlying
growth. The heating, ventilating and air conditioning business reported
modest sales growth, as very strong demand in the U.S. and Europe was
partially offset by the impact of weak Asian economies on U.S. export sales.
In 1997, sales in the Commercial and Industrial segment were $7.4 billion, up
$730 million or 11.0 percent from 1996, reflecting solid international demand,
moderate domestic gains and acquisitions. The electronics business achieved
very strong underlying sales growth, reflecting broad strength across product
lines and service offerings. During the second quarter of 1997, the Company
increased its ownership and began consolidating the results of Astec (BSR)
Plc. The process business reported modest sales gains as solid international
demand was limited by the impact of the strengthening dollar. Sales of the
industrial motors and drives business increased moderately over a very strong
prior year, as the contribution of 1996 acquisitions helped offset the effects
of sluggish European economies and unfavorable currency translation. The
industrial components and equipment business reported modest sales gains, as
solid international demand was offset by unfavorable exchange rates.
In 1997, sales in the Appliance and Construction-Related segment were $4.9
billion, up $419 million or 9.3 percent from 1996, reflecting slight domestic
gains, strong international demand, the impact of the 1996 Vermont American
consolidation and other acquisitions. Sales of the underlying tools business
increased solidly, reflecting strong domestic demand and the success of new
products. The heating, ventilating and air conditioning business reported
slight sales gains as strong international demand offset the significant
impact of cool weather on U.S. markets. Sales of the fractional motors and
appliance components business increased slightly as the cool weather reduced
demand for motors used in room air-conditioners and fans.
Total Costs and Expenses
Cost of sales for 1998 was $8.6 billion, an increase of 9.3 percent, due
primarily to increased sales volume. In 1997, cost of sales was $7.9 billion,
compared to $7.2 billion in 1996, an increase of 9.8 percent. Cost of sales
as a percent of net sales was 63.9 percent in 1998 compared to 64.0 percent
and 64.3 percent in 1997 and 1996, respectively. Gross profit margins have
improved as a result of the Company's ongoing commitment to cost reduction and
containment efforts and productivity improvement programs.
<PAGE> 24
Selling, general and administrative (SG&A) expenses were $2.7 billion, $2.5
billion, and $2.2 billion in 1998, 1997 and 1996, respectively. As a percent
of net sales, SG&A expenses were 19.9 percent in 1998 and 1997, and 19.6
percent in 1996. These increases in SG&A expenses reflect increased
investment in new product development and other revenue growth programs and
acquisitions, offset by ongoing cost reduction efforts. The Company continued
its commitment to new product development by increasing engineering and
development expense 10.4 percent to a record $491 million in 1998, compared to
$445 million and $399 million in 1997 and 1996, respectively.
Interest expense increased to $152 million in 1998 from $121 million in 1997,
reflecting higher average borrowings resulting from acquisitions and share
repurchases. In 1997, interest expense decreased from $127 million in 1996,
reflecting lower interest rates.
Other deductions, net, including amortization of intangibles, were $100
million in 1998, compared to $78 million and $57 million in 1997 and 1996,
respectively. The fourth quarter of 1997 included a gain of approximately $80
million from the formation of the joint venture between Emerson's Appleton
Electric division and General Signal's Electrical Group. The fourth quarter of
1996 included a $78 million gain from the disposition of Emerson's interest in
the S-B Power Tool joint venture. These gains were substantially offset by
other non-recurring items. See note 2 for additional information.
Income Before Income Taxes
Income before income taxes increased $140 million, or 7.8 percent, to $1.9
billion in 1998, reflecting increased sales and improvement in underlying
margins, partially offset by increased interest expense. Income before
interest expense and income taxes in the Commercial and Industrial segment
increased $110 million, or 10.9 percent, to $1,123 million in 1998. Income of
the segment was 13.9 percent and 13.8 percent of net sales in 1998 and 1997,
respectively. These results reflect worldwide sales growth, acquisitions and
ongoing cost reduction efforts. Income in the Appliance and Construction-
Related segment increased $127 million, or 15.6 percent, to $940 million in
1998. As a percent of net sales, income of the segment was 17.6 percent in
1998 and 16.5 percent in 1997. This improvement is primarily the result of
solid domestic sales growth and ongoing cost reduction efforts.
Income before income taxes increased $175 million, or 10.9 percent, to $1.8
billion in 1997, reflecting increased sales and improved margins. Income
before interest expense and income taxes in the Commercial and Industrial
segment increased $103 million, or 11.3 percent, to $1,013 million in 1997.
This improvement is primarily a result of solid international demand, moderate
domestic sales growth and acquisitions. Income of the segment was 13.8
percent and 13.7 percent of net sales in 1997 and 1996. Income in the
Appliance and Construction-Related segment increased $71 million, or 9.6
percent, to $813 million in 1997. As a percent of net sales, income of the
segment was 16.5 percent in 1997 and 16.4 percent in 1996. These results
reflect increased worldwide sales volume, acquisitions and ongoing cost
reduction efforts. See note 13 for additional information by industry segment
and geographic area.
Income Taxes
Income taxes were $695 million, $662 million and $590 million in 1998, 1997,
and 1996, respectively. The effective income tax rate was 36.1 percent in
1998, compared to 37.1 percent in 1997 and 36.7 percent in 1996, reflecting
the impact of global tax planning strategies and acquisitions.
<PAGE> 25
Net Earnings and Return on Equity
Net earnings for 1998 were a record $1.2 billion, up 9.5 percent from $1.1
billion in 1997. Net earnings as a percent of sales was 9.1 percent in 1998
and 1997. Diluted earnings per common share were a record $2.77 in 1998, up
10.8 percent from $2.50 in 1997. Emerson achieved a return on average
stockholders' equity of 21.9 percent compared to 20.8 percent and 19.9 percent
in 1997 and 1996, respectively. Net earnings for 1997 were up 10.2 percent
from $1.0 billion in 1996. Diluted earnings per common share in 1997 were up
11.1 percent from $2.25 in 1996.
Financial Position, Capital Resources and Liquidity
The Company continues to generate substantial cash from operations and remains
in a strong financial position with resources available for reinvestment in
existing businesses, strategic acquisitions and managing the capital structure
on a short- and long-term basis.
Cash Flow
Emerson generated record operating cash flow of $1.7 billion in 1998, an
increase of 10.2 percent compared to 1997. Operating cash flows were $1.5
billion and $1.3 billion in 1997 and 1996, respectively. Operating working
capital was approximately 17 percent of sales in 1998 and 1997, and 18 percent
of sales in 1996. Initiatives to reduce working capital during the year
contributed to solid improvements in the underlying company's inventory
turnover and days sales outstanding.
Capital expenditures were $603 million, $575 million and $514 million in 1998,
1997 and 1996, respectively. These expenditures increase the Company's global
capacity to leverage opportunities within the heating, ventilating and air
conditioning and stand-by power generation industries, as well as improve
manufacturing productivity in a number of our businesses. The Company
continued work on a $200 million project focused on a new compressor and motor
plant in Suzhou, China. Cash paid in connection with Emerson's purchase
acquisitions was $573 million, $319 million and $300 million in 1998, 1997 and
1996, respectively.
Dividends were a record $521 million ($1.18 per share) in 1998, compared with
$481 million ($1.08 per share) in 1997 and $439 million ($.98 per share) in
1996. In November 1998, the Board of Directors voted to increase the
quarterly cash dividend 10.2 percent to an annualized rate of $1.30 per share.
Leverage/Capitalization
Total debt increased to $2.6 billion in 1998 from $2.0 billion in 1997 and
$1.7 billion in 1996, reflecting the impact of acquisitions and the Company's
share repurchase program. The program, initiated in fiscal 1997, authorizes
the repurchase of up to 40 million shares of the Company's outstanding common
stock, with more than 16 million shares repurchased through September 30,
1998. Net purchases of treasury stock totaled $499 million and $377 million
in 1998 and 1997, respectively. See notes 2, 3 and 4 for additional
information.
The total debt-to-capital ratio was 30.8 percent at year-end 1998, compared to
27.1 percent in 1997 and 24.5 percent in 1996. At September 30, 1998, net
debt (total debt less cash and equivalents and short-term investments) was
29.0 percent of net capital, compared to 24.9 percent in 1997 and 22.9 percent
in 1996. The Company's interest coverage ratio (income before income taxes,
non-recurring items and interest expense divided by interest expense) was
13.7 times in 1998, compared to 15.8 times in 1997 and 13.7 times in 1996, as
a result of higher average borrowings in 1998, partially offset by earnings
growth.
<PAGE>
26
At year-end 1998, the Company and its subsidiaries maintained lines of credit
amounting to $1.8 billion to support commercial paper and had available
non-U.S. bank credit facilities of $585 million to support non-U.S.
operations. Lines of credit totaling $900 million are effective until 2003,
with the remainder through June 1999. These lines of credit and bank credit
facilities assure the availability of funds at prevailing interest rates. In
addition, the Company increased its shelf registration with the Securities and
Exchange Commission subsequent to year end to permit the issuance of up to $1
billion of additional debt securities. See note 3.
Financial Instruments
The Company is exposed to market risk related to changes in interest rates and
European and other foreign currency exchange rates, and selectively uses
derivative financial instruments, including forwards, swaps and purchased
options, to manage these risks. The Company does not hold derivatives for
trading purposes. The value of market risk sensitive derivative and other
financial instruments is subject to change as a result of movements in market
rates and prices. Sensitivity analysis is one technique used to evaluate
these impacts. Based on a hypothetical ten-percent increase in interest rates
or ten-percent weakening in the U.S. dollar across all currencies, the
potential losses in future earnings, fair value and cash flows are immaterial.
This methodology has limitations; for example, a weaker U.S. dollar would
benefit future earnings through favorable translation of non-U.S. operating
results. See notes 1, 3, 4 and 5.
Year 2000 Readiness
The Company has developed a comprehensive Year 2000 plan that includes
assessment, hardware and software remediation, and testing. The Company has
substantially completed the assessment phase, which included review of
internal computer applications and information systems, products, facilities
and equipment, as well as products and services provided by third parties.
Remediation and testing activities at the Company's divisions are at various
stages, with more than half of the work completed on critical systems.
Substantially all computer applications and systems are expected to be Year
2000 compliant by September 30, 1999. Numerous third parties have been
contacted to assess and monitor their compliance and remediation efforts, with
particular emphasis placed on more than 3,000 key suppliers. The estimated
costs of the Year 2000 compliance program are not material to the Company's
operating results or financial position.
The Company is supplementing existing emergency recovery plans with Year 2000-
specific procedures to mitigate the impact of any unsuccessful remediation or
third party failures. Management believes that the diversity of the Company's
operations and systems reduces overall exposure and expects that the
consequences of any unsuccessful remediation will not be significant. However,
there can be no assurance that the Company's efforts or those of other
entities will be successful, or that any potential failure would not have a
material adverse effect on the Company's operating results or financial
condition.
<PAGE>
27
Consolidated Statements of Earnings
Emerson Electric Co. and Subsidiaries
Years ended September 30
(Dollars in millions except per share amounts)
<TABLE>
<CAPTION>
1998 1997 1996
--------- -------- --------
<S> <C> <C> <C>
Net sales $13,447.2 12,298.6 11,149.9
--------- -------- --------
Costs and expenses:
Cost of sales 8,595.6 7,865.6 7,165.0
Selling, general and administrative expenses 2,676.7 2,450.9 2,192.0
Interest expense 151.7 120.9 126.9
Other deductions, net 99.7 77.6 57.0
--------- -------- --------
Total costs and expenses 11,523.7 10,515.0 9,540.9
--------- -------- --------
Income before income taxes 1,923.5 1,783.6 1,609.0
Income taxes 694.9 661.7 590.5
--------- -------- --------
Net earnings $ 1,228.6 1,121.9 1,018.5
========= ======== ========
Basic earnings per common share $ 2.80 2.52 2.27
========= ======== ========
Diluted earnings per common share $ 2.77 2.50 2.25
========= ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
28
Consolidated Balance Sheets
Emerson Electric Co. and Subsidiaries
September 30
(Dollars in millions except per share amounts)
<TABLE>
<CAPTION>
Assets
1998 1997
--------- --------
<S> <C> <C>
Current assets
Cash and equivalents $ 209.7 221.1
Receivables, less allowances of $54.6 in 1998
and $54.0 in 1997 2,416.1 2,200.2
Inventories:
Finished products 858.6 789.6
Raw materials and work in process 1,137.9 1,092.0
--------- --------
Total inventories 1,996.5 1,881.6
Other current assets 379.0 413.9
--------- --------
Total current assets 5,001.3 4,716.8
--------- --------
Property, plant and equipment
Land 173.4 167.0
Buildings 1,205.5 1,066.0
Machinery and equipment 4,373.5 3,928.9
Construction in progress 318.3 271.8
--------- --------
6,070.7 5,433.7
Less accumulated depreciation 3,059.1 2,698.3
--------- --------
Property, plant and equipment, net 3,011.6 2,735.4
--------- --------
Other assets
Excess of cost over net assets of purchased businesses,
less accumulated amortization of $617.5 in 1998 and $509.5 in 1997 3,702.7 3,116.0
Other 944.2 895.1
--------- --------
Total other assets 4,646.9 4,011.1
--------- --------
$12,659.8 11,463.3
========= ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
29
<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity
1998 1997
--------- --------
<S> <C> <C>
Current liabilities
Short-term borrowings and current
maturities of long-term debt $ 1,524.4 1,445.1
Accounts payable 1,036.7 942.1
Accrued expenses 1,252.7 1,241.9
Income taxes 207.9 213.3
--------- --------
Total current liabilities 4,021.7 3,842.4
--------- --------
Long-term debt 1,056.6 570.7
--------- --------
Other liabilities 1,778.2 1,629.5
--------- --------
Stockholders' equity
Preferred stock of $2.50 par value per share.
Authorized 5,400,000 shares; issued - none -- --
Common stock of $.50 par value per share. Authorized
1,200,000,000 shares; issued 476,677,006 shares in
1998 and 1997 238.3 238.3
Additional paid-in capital 27.9 3.3
Retained earnings 7,056.5 6,348.9
Cumulative translation adjustments (236.2) (205.9)
--------- --------
7,086.5 6,384.6
Less cost of common stock in treasury, 38,452,823
shares in 1998 and 35,873,321 shares in 1997 1,283.2 963.9
--------- --------
Total stockholders' equity 5,803.3 5,420.7
--------- --------
$12,659.8 11,463.3
========= ========
</TABLE>
<PAGE> 30
Consolidated Statements
of Stockholders' Equity
Emerson Electric Co. and Subsidiaries
Years ended September 30
(Dollars in millions except per share amounts)
<TABLE>
<CAPTION>
1998 1997 1996
--------- ------- -------
<S> <C> <C> <C>
Common stock $ 238.3 238.3 238.3
--------- ------- -------
Additional paid-in capital
Beginning balance 3.3 12.3 15.0
Stock plans (43.4) (2.8) .1
Treasury stock issued for acquisitions and other 68.0 (6.2) (2.8)
--------- ------- -------
Ending balance 27.9 3.3 12.3
--------- ------- -------
Retained earnings
Beginning balance 6,348.9 5,707.7 5,128.3
Net earnings 1,228.6 1,121.9 1,018.5
Cash dividends (per share: 1998, $1.18;
1997, $1.08; 1996, $.98) (521.0) (480.7) (439.1)
--------- ------- -------
Ending balance 7,056.5 6,348.9 5,707.7
--------- ------- -------
Cumulative translation adjustments
Beginning balance (205.9) (29.2) 17.0
Translation adjustments (30.3) (176.7) (46.2)
--------- ------- -------
Ending balance (236.2) (205.9) (29.2)
--------- ------- -------
Treasury stock
Beginning balance (963.9) (575.7) (527.8)
Acquired (498.4) (427.2) (99.5)
Issued under stock plans 108.5 18.3 14.2
Issued for acquisitions and other 70.6 20.7 37.4
--------- ------- -------
Ending balance (1,283.2) (963.9) (575.7)
--------- ------- -------
Total stockholders' equity $ 5,803.3 5,420.7 5,353.4
========= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 31
Consolidated Statements of Cash Flows
Emerson Electric Co. and Subsidiaries
Years ended September 30
(Dollars in millions)
<TABLE>
<CAPTION>
1998 1997 1996
--------- ------- -------
<S> <C> <C> <C>
Operating activities
Net earnings $ 1,228.6 1,121.9 1,018.5
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 562.5 511.6 464.6
Changes in operating working capital (81.0) (42.6) (131.6)
Other (58.5) (92.3) (34.2)
--------- ------- -------
Net cash provided by operating activities 1,651.6 1,498.6 1,317.3
--------- ------- -------
Investing activities
Capital expenditures (602.6) (575.4) (513.5)
Purchases of businesses, net of cash and equivalents acquired (572.9) (319.2) (299.8)
Divestiture of business interests and other, net 76.2 34.0 272.3
--------- ------- -------
Net cash used in investing activities (1,099.3) (860.6) (541.0)
--------- ------- -------
Financing activities
Net increase (decrease) in short-term borrowings 145.4 321.8 (363.8)
Proceeds from long-term debt 452.0 5.8 249.9
Principal payments on long-term debt (132.5) (13.1) (77.0)
Net purchases of treasury stock (499.4) (376.6) (120.3)
Dividends paid (521.0) (480.7) (439.1)
--------- ------- -------
Net cash used in financing activities (555.5) (542.8) (750.3)
--------- ------- -------
Effect of exchange rate changes on cash and equivalents (8.2) (23.1) 5.7
--------- ------- -------
Increase (decrease) in cash and equivalents (11.4) 72.1 31.7
Beginning cash and equivalents 221.1 149.0 117.3
--------- ------- -------
Ending cash and equivalents $ 209.7 221.1 149.0
========= ======= =======
Changes in operating working capital
Receivables $ (76.1) (117.3) (124.3)
Inventories (27.7) (64.4) (18.0)
Other current assets 19.7 (19.5) 7.8
Accounts payable .9 28.0 43.7
Accrued expenses (2.8) 88.6 (16.5)
Income taxes 5.0 42.0 (24.3)
--------- ------- -------
$ (81.0) (42.6) (131.6)
========= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
32
Notes to Consolidated Financial Statements
Emerson Electric Co. and Subsidiaries
(Dollars in millions except per share amounts)
(1) Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its controlled affiliates. All significant intercompany transactions, profits
and balances are eliminated in consolidation. Other investments of 20 to 50
percent are accounted for by the equity method. Investments of less than 20
percent are carried at cost.
Foreign Currency Translation
The functional currency of nearly all of the Company's non-U.S. subsidiaries
is the local currency. Adjustments resulting from the translation of
financial statements are reflected as a separate component of stockholders'
equity.
Cash Equivalents
Cash equivalents consist of highly liquid investments with original maturities
of three months or less.
Inventories
Inventories are stated at the lower of cost or market. The majority of
inventory values are based upon standard costs which approximate average
costs, while the remainder are principally valued on a first-in, first-out
basis. Standard costs are revised at the beginning of the fiscal year, and
variances incurred during the year are allocated between inventories and cost
of sales.
Property, Plant and Equipment
The Company records investments in land, buildings, and machinery and
equipment at cost. Depreciation is computed principally using the straight-
line method over estimated service lives. Service lives for principal assets
are 30 to 40 years for buildings and 8 to 12 years for machinery and
equipment.
Excess of Cost Over Net Assets of Purchased Businesses
Assets and liabilities related to business combinations accounted for as
purchase transactions are recorded at their respective fair values. Excess of
cost over net assets of purchased businesses is amortized on a straight-line
basis to other deductions over the periods estimated to be benefited, not
exceeding 40 years. Long-lived assets are reviewed for impairment whenever
events and changes in business circumstances indicate the carrying value of
the assets may not be recoverable. Impairment losses are recognized if
expected future cash flows of the related assets are less than their carrying
values.
Revenue Recognition
The Company recognizes nearly all of its revenues from the sale of
manufactured products as shipped.
Financial Instruments
The net amount to be paid or received under interest rate swap agreements is
accrued over the life of the agreement as a separate component of interest
expense. Gains and losses on purchased currency option and forward exchange
contracts that qualify for deferral accounting are recognized in income with
the underlying hedged transactions; otherwise, the contracts are recorded in
the balance sheet, and changes in fair value are recognized immediately in
other deductions, net. Currency fluctuations on non-U.S. dollar obligations
that have been designated as hedges of non-U.S. net asset exposures are
included in cumulative translation adjustments.
Income Taxes
No provision is made for U.S. income taxes on the undistributed earnings of
non-U.S. subsidiaries (approximately $950 at September 30, 1998), primarily
because retention of a significant portion of these earnings is considered
essential for continuing operations. In those cases in which distributions
have been made, additional income taxes, if any, have been minimal due to
available foreign tax credits.
Financial Statement Presentation
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts and related disclosures. Actual
results could differ from those estimates. All share and per share data
reflect the 1997 two-for-one stock split.
<PAGE>
33
(2) Acquisitions and Divestitures
Cash paid in connection with the Company's purchase acquisitions, which
include several smaller businesses, follows:
<TABLE>
<CAPTION>
1998 1997 1996
------ ----- -----
<S> <C> <C> <C>
Fair value of assets acquired............................. $947.0 359.4 402.1
Less liabilities assumed.................................. 214.5 38.2 79.3
Less notes and common stock issued to sellers............. 159.6 2.0 23.0
------ ----- -----
Cash paid (net of cash and equivalents acquired)........ $572.9 319.2 299.8
====== ===== =====
</TABLE>
During the first quarter of 1998, the Company purchased Computational Systems,
Inc. ("CSI") for approximately $160, primarily in common stock. CSI is a
supplier of condition monitoring and diagnostic products and services for
motors and other rotational equipment. During the fourth quarter of 1998,
Astec (BSR) Plc, a subsidiary of Emerson, purchased the Advanced Power Systems
("APS") business from Northern Telecom Limited for approximately $325. APS
manufactures power conversion products for a wide variety of
telecommunications applications. In addition, the Company purchased Plaset
SpA, a European manufacturer of appliance drain pumps, and acquired a majority
interest in Hiross, an Italian manufacturer of precision environmental control
and site monitoring products. Several smaller businesses were also purchased
in 1998. The companies acquired in 1998 had annualized sales of approximately
$775.
During the second quarter of 1997, Emerson acquired a majority interest in
Astec (BSR) Plc through additional share purchases and began consolidating its
results. Astec had annual sales of approximately $600 in calendar 1996.
During the fourth quarter of 1997, the Company purchased InterMetro Industries
for approximately $275 and acquired Clairson International Corporation. These
two companies produce free-standing and wall-mounted ventilated shelving and
specialty storage products. Emerson previously owned a controlling interest
in Clairson through Vermont American Corporation ("V.A."), the Company's joint
venture with Robert Bosch GmbH. InterMetro and Clairson had combined annual
sales of more than $300. Several smaller businesses were also purchased or
sold in 1997.
In addition, in the fourth quarter of 1997, the Company and General Signal
Corporation formed a joint venture combining Emerson's Appleton Electric
operations and General Signal's Electrical Group. Emerson holds a controlling
interest in this venture, and the transaction resulted in a pretax gain of
approximately $80, which was substantially offset by costs arising from
relocation of several production facilities, asset impairments and litigation.
Emerson began consolidating V.A. in the second quarter of 1996 as a result of
an agreement in which Emerson acquired control over the venture. At September
30, 1998, Emerson had guaranteed V.A.'s indebtedness of approximately $255. If
required to perform under the guarantee, the Company will be indemnified for
up to approximately $90 by Bosch. In addition, the Company purchased
Kop-Flex, Inc., a manufacturer of flexible couplings, and Dieterich Standard,
a manufacturer of flow measurement sensors, along with several smaller
businesses in 1996.
In the fourth quarter of 1996, Emerson received $200 from the disposition of
its fifty-percent interest in the S-B Power Tool Company joint venture. The
transaction resulted in a pretax gain of $78 in 1996, which was substantially
offset by costs arising from divestiture of operations, write-off of
discontinued product line assets and relocation of several production
facilities.
The results of operations of these businesses have been included in the
Company's consolidated results of operations since the respective dates of the
acquisitions and prior to the dates of divestiture.
(3) Short-term Borrowings and Lines of Credit
Short-term borrowings consist of commercial paper, notes issued to sellers in
connection with business combinations and non-U.S. bank borrowings as follows:
<TABLE>
<CAPTION>
United States Non-U.S.
---------------- -------------
1998 1997 1998 1997
-------- ----- ----- -----
<S> <C> <C> <C> <C>
Borrowings at year end.........................$1,005.5 907.1 505.0 411.1
Weighted average interest rate at year end..... 5.7% 5.9% 4.4% 4.1%
</TABLE>
In 1998, the Company entered into an interest rate agreement which caps the
rate on $250 of commercial paper at 6.0 percent through September 1999. In
1997, the Company entered into a five-year interest rate swap which fixed the
rate on $250 of commercial paper at 6.1 percent. The Company had 152 million
and 163 million of British pound notes with a weighted average interest rate
of 7.5 and 6.7 percent swapped to $257 and $260 at U.S. commercial paper rates
at September 30, 1998 and 1997, respectively.
<PAGE>
34
The Company and its subsidiaries maintained lines of credit amounting to
$1,800 with various banks at September 30, 1998, to support commercial paper
and to assure availability of funds at prevailing market interest rates.
Lines of credit totaling $900 are effective until 2003 with the remainder
through June 1999. There were no borrowings against U.S. lines of credit in
the last three years. The Company's non-U.S. subsidiaries maintained bank
credit facilities in various currencies approximating $835 ($585 unused) at
September 30, 1998. In some instances, borrowings against these credit
facilities have been guaranteed by the Company to assure availability of funds
at favorable interest rates. In addition, as of September 30, 1998, the
Company could issue up to $500 of additional debt securities under its shelf
registration with the Securities and Exchange Commission. Subsequent to year
end, the Company issued $175 of 5%, 10-year notes which were used to reduce
outstanding U.S. commercial paper, and increased its shelf registration to $1
billion.
(4) Long-term Debt
Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
1998 1997
-------- -----
<S> <C> <C>
Commercial paper with a weighted average interest rate of
5.5 percent at September 30, 1998......................... $ 252.6 255.5
6.3% notes due 2006......................................... 250.0 250.0
5 1/2% notes due 2008....................................... 250.0 --
Term loan due 2000 through 2003 with a weighted average
interest rate of 6.0 percent at September 30, 1998........ 200.0 --
7 7/8% Eurodollar notes due 1998............................ -- 100.0
8% convertible subordinated debentures due through 2011..... 9.5 14.0
Other....................................................... 108.4 78.1
-------- -----
1,070.5 697.6
Less current maturities..................................... 13.9 126.9
-------- -----
Total..................................................... $1,056.6 570.7
======== =====
</TABLE>
The Company has the ability to refinance commercial paper on a long-term basis
through its credit lines, and the obligation is included in long-term debt.
The 7 7/8% Eurodollar notes and $55 of U.S. commercial paper were effectively
exchanged for non-U.S. dollar obligations due in 1998. The non-U.S. dollar
obligations had an effective weighted average interest rate of 4.7 percent at
September 30, 1997, and were composed of 136 million Dutch guilders, 5 billion
Japanese yen and 27 million Swiss francs. These non-U.S. dollar obligations
were designated as a partial hedge of the Company's non-U.S. dollar net asset
exposure.
Long-term debt maturing during each of the four years after 1999 is $62.9,
$61.1, $73.5 and $310.6, respectively. Total interest paid related to
short-term borrowings and long-term debt was approximately $138, $108 and $120
in 1998, 1997 and 1996, respectively.
(5) Financial Instruments
The Company selectively uses derivative financial instruments to manage
interest costs and minimize currency exchange risk. The Company does not hold
derivatives for trading purposes. No credit loss is anticipated as the
counterparties to these agreements are major financial institutions with high
credit ratings.
As part of its currency hedging strategy, the Company utilizes purchased
option and forward exchange contracts to minimize the impact of currency
fluctuations on transactions, cash flows and firm commitments. The Company
and its subsidiaries had approximately $335 and $575 of contracts (primarily
options) outstanding at September 30, 1998 and 1997, respectively. These
contracts for the sale or purchase of European and other currencies generally
mature within one year, and deferred gains and losses are not material.
Fair values of the Company's financial instruments are estimated by reference
to quoted prices from market sources and financial institutions, as well as
other valuation techniques. At September 30, 1998 and 1997, respectively, the
market value of the Company's convertible debentures was $44 and $60, compared
to the related carrying value of $10 and $14. Common stock has been reserved
for the conversion of these debentures (see note 8). The fair values of
derivative financial instruments were not material at September 30, 1998 and
1997, and the estimated fair value of each of the Company's other classes of
financial instruments approximated the related carrying value at September 30,
1998 and 1997.
<PAGE>
35
(6) Retirement Plans
The Company sponsors retirement plans covering substantially all employees.
Benefits are provided to employees under defined benefit pay-related and flat-
dollar plans which are primarily noncontributory. Annual contributions to
retirement plans equal or exceed the minimum funding requirements of the
Employee Retirement Income Security Act or applicable local regulations.
The Company also sponsors defined contribution plans and participates in
multiemployer plans for certain union employees. Benefits are determined and
funded annually based on terms of the plans or as stipulated in collective
bargaining agreements.
Retirement plan expense includes the following components:
<TABLE>
<CAPTION>
U.S. Plans Non-U.S. Plans
------------------------ -------------------------
1998 1997 1996 1998 1997 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Defined benefit plans:
Service cost (benefits earned during the period)............ $ 33.2 31.7 30.1 7.9 8.0 8.3
Interest cost............................................... 106.1 94.3 88.1 16.4 16.3 15.9
Actual return on plan assets................................ 23.5 (182.3) (185.0) (27.6) (37.8) (25.4)
Net amortization and deferral............................... (178.0) 44.1 60.1 9.9 19.7 9.2
-------- ------ ------ ----- ----- -----
Net periodic pension expense (income)..................... (15.2) (12.2) (6.7) 6.6 6.2 8.0
Defined contribution and multiemployer plans.................. 54.6 48.5 43.4 9.4 8.1 7.4
-------- ------ ------ ----- ----- -----
Total retirement plan expense............................... $ 39.4 36.3 36.7 16.0 14.3 15.4
======== ====== ====== ===== ===== =====
</TABLE>
The actuarial present value of benefit obligations and the funded status of
the Company's defined benefit pension plans follow:
<TABLE>
<CAPTION>
U.S. Plans Non-U.S. Plans
------------------- ---------------
1998 1997 1998 1997
-------- ------- ----- -----
<S> <C> <C> <C> <C>
Accumulated benefit obligation........................................ $1,247.1 1,065.1 226.9 199.0
======== ======= ===== =====
Vested benefits included in accumulated benefit obligation............ $1,180.4 1,003.9 192.7 167.6
======== ======= ===== =====
Projected benefit obligation.......................................... $1,437.9 1,248.4 263.2 231.1
Plan assets at fair value (primarily corporate equity
and fixed income securities)........................................ 1,515.5 1,544.1 232.6 205.3
-------- ------- ----- -----
Plan assets in excess of (less than) projected benefit obligation. 77.6 295.7 (30.6) (25.8)
Unamortized transition amount......................................... (29.2) (36.4) (2.0) (2.4)
Unrecognized net loss (gain).......................................... 89.3 (143.3) (32.4) (31.4)
Unrecognized prior service costs...................................... 23.7 20.2 1.6 1.9
-------- ------- ----- -----
Pension asset (liability) recognized in the balance sheet........... $ 161.4 136.2 (63.4) (57.7)
======== ======= ===== =====
</TABLE>
In 1998, the Company changed the measurement date for the defined benefit
pension plans from September 30 to June 30 to improve administrative
efficiencies and the timeliness and accuracy of its financial reporting and
planning process. The effect of the change on retirement plan expense was
immaterial. The fair value of plan assets decreased approximately $145 in the
quarter ended September 30, 1998, reflecting the impact of the equity market
decline; this change will be offset by an increase in the unrecognized net
loss.
For 1998, the assumed discount rate, rate of increase in compensation levels
and expected long-term rate of return on plan assets used in the actuarial
calculations were, respectively, 7.5 percent, 4.0 percent and 10.5 percent for
U.S. plans; and an average of 6.8 percent, 3.7 percent and 8.6 percent for
non-U.S. plans. For 1997, the assumed discount rate, rate of increase in
compensation levels and expected long-term rate of return on plan assets were,
respectively, 8.0 percent, 5.0 percent and 10.5 percent for U.S. plans; and an
average of 7.4 percent, 4.1 percent and 8.7 percent for non-U.S. plans.
<PAGE>
36
(7) Postretirement Plans
The Company sponsors unfunded postretirement benefit plans (primarily health
care) for U.S. retirees and their dependents. Net postretirement plan expense
for the years ended September 30, 1998, 1997 and 1996, follows:
<TABLE>
<CAPTION>
1998 1997 1996
----- ---- ----
<S> <C> <C> <C>
Service cost......................................... $ 4.1 3.6 4.0
Interest cost........................................ 20.2 19.0 18.4
Net amortization and deferral........................ (3.6) (4.2) (4.4)
----- ---- ----
$20.7 18.4 18.0
===== ==== ====
</TABLE>
The actuarial present value of accumulated postretirement benefit obligations
as of September 30, 1998 and 1997, follows:
<TABLE>
<CAPTION>
1998 1997
------ -----
<S> <C> <C>
Retirees............................................. $181.2 167.0
Fully eligible active plan participants.............. 19.8 18.7
Other active plan participants....................... 78.6 74.3
------ -----
Accumulated postretirement benefit obligation...... 279.6 260.0
Unrecognized net gain................................ 25.0 39.9
Unrecognized prior service benefit................... 8.2 9.6
------ -----
Postretirement benefit liability recognized in
the balance sheet................................ $312.8 309.5
====== =====
</TABLE>
The assumed discount rate used in measuring the obligation as of September 30,
1998, was 7.25 percent; the initial assumed health care cost trend rate was
7.0 percent, declining to 4.5 percent in the year 2004. The assumed discount
rate used in measuring the obligation as of September 30, 1997, was 7.75
percent; the initial assumed health care cost trend rate was 8.0 percent,
declining to 5.0 percent in the year 2004. A one-percentage-point increase in
the assumed health care cost trend rate for each year would increase the
obligation as of September 30, 1998, by approximately 4 percent and increase
the 1998 postretirement plan expense by approximately 5 percent.
(8) Common Stock
The Company has various stock option plans which permit certain officers and
employees to purchase common stock at specified prices. Options are granted
at 100% of the market value of the Company's common stock on the date of
grant, vest one-third each year and expire ten years from the date of grant.
At September 30, 1998, 8.3 million options were available for grant under
these plans. Changes in the number of shares subject to option during 1998,
1997 and 1996, follow (shares in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
--------------- --------------- ---------------
Average Average Average
Price Shares Price Shares Price Shares
------- ------ ------ ------ ------- ------
<S> <C> <C> <C> <C> <C> <C>
Beginning of year........................ $34.77 6,698 $25.47 4,523 $22.39 4,483
Options granted........................ 57.71 974 45.09 3,398 38.54 791
Assumed options of acquired company.... 26.08 330 -- -- -- --
Options exercised...................... 25.91 (1,198) 22.55 (794) 19.60 (662)
Options canceled....................... 45.23 (196) 41.02 (429) 30.20 (89)
----- ----- -----
End of year.............................. 39.02 6,608 34.77 6,698 25.47 4,523
----- ----- -----
Exercisable at year end.................. 3,479 2,727 2,614
===== ===== =====
</TABLE>
<PAGE>
37
Summarized information regarding stock options outstanding and exercisable at
September 30, 1998, follows (shares in thousands):
<TABLE>
<CAPTION>
Outstanding Exercisable
-------------------------------------- ------------------
Range of Average Average Average
Exercise Prices Shares Contractual Life Price Shares Price
- --------------- ------ ---------------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
up to $25.................. 911 2.8 years $ 15.87 911 $ 15.87
$26 to 43.................. 1,809 5.9 30.98 1,649 30.30
$44 to 65.................. 3,888 8.3 48.18 919 45.14
------ ------
Total.................. 6,608 6.9 39.02 3,479 30.44
====== ======
</TABLE>
The Company's Incentive Shares Plans authorize the distribution of common
stock to key management personnel. At September 30, 1998, 2,321,098 shares
are outstanding with restriction periods of three to ten years, including
371,000 shares issued in 1998. In addition, 2,287,854 rights to receive
common shares have been awarded, including 213,543 shares awarded in 1998,
which are contingent upon accomplishing certain objectives by 2001. Upon
accomplishment of the five-year performance objectives, 2,688,444 shares were
distributed to participants in 1998, including 685,983 shares paid in cash and
972,674 shares subject to a three-year restriction period. At September 30,
1998, approximately 6 million shares remained available for award under these
plans.
The Company applies Accounting Principles Board Opinion No. 25 in accounting
for its stock plans. The compensation expense charged against income for the
Company's incentive shares plans was immaterial. Had compensation expense for
the Company's stock plans been determined in accordance with Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," net earnings and diluted earnings per common share,
respectively, would have been $1,215 and $2.74 per share in 1998, $1,110 and
$2.47 per share in 1997, and $1,017 and $2.25 per share in 1996. The fair
value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions used for grants: risk-free interest rate of 5.7%, 6.4% and 6.0%,
dividend yield of 2.0%, 2.4% and 2.7%, expected volatility of 16%, 16% and 17%
for 1998, 1997 and 1996, respectively, and expected life of 5 years for all
years. The weighted average fair value of options granted was $12.01, $9.46
and $7.59 for 1998, 1997 and 1996, respectively.
At September 30, 1998, 23,931,571 shares of common stock were reserved,
including 23,223,493 shares for issuance under the Company's stock plans and
708,078 shares for conversion of the outstanding 8% convertible subordinated
debentures at a price of $13.49 per share. During 1998, 8,384,870 treasury
shares were acquired and 5,805,368 treasury shares were issued.
Approximately 1.2 million preferred shares are reserved for issuance under a
Preferred Stock Purchase Rights Plan. Under certain conditions involving
acquisition of or an offer for 20 percent or more of the Company's common
stock, all holders of Rights, except an acquiring entity, would be entitled
(i) to purchase, at an exercise price of $260, common stock of the Company or
an acquiring entity with a value twice the exercise price, or (ii) at the
option of the Board, to exchange each Right for one share of common stock. The
Rights remain in existence until November 1, 2008, unless earlier redeemed (at
one-half cent per Right), exercised or exchanged under the terms of the plan.
(9) Earnings Per Common Share
In the first quarter of 1998, the Company adopted Statement of Financial
Accounting Standards No. 128, "Earnings per Share," (SFAS 128) which
establishes standards for computing and presenting earnings per share. Basic
earnings per common share considers only the weighted average of common shares
outstanding while diluted earnings per common share considers the dilutive
effects of stock options, incentive shares and convertible securities.
Previously reported earnings per share amounts have been restated to conform
to SFAS 128 requirements. Reconciliations of basic earnings per common share
and diluted earnings per common share follow (shares in millions):
<TABLE>
<CAPTION>
1998 1997 1996
------------------------------ ------------------------------ ------------------------------
Weighted Earnings Weighted Earnings Weighted Earnings
Average Per Average Per Average Per
Earnings Shares Share Earnings Shares Share Earnings Shares Share
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Basic........................ $1,228.6 439.2 $ 2.80 $1,121.9 445.0 $ 2.52 $1,018.5 448.1 $ 2.27
======== ======== ========
Convertible debt............. .6 .9 .9 1.3 1.5 2.4
Stock plans.................. 4.0 3.2 2.3
-------- -------- -------- -------- -------- --------
Diluted...................... $1,229.2 444.1 $ 2.77 $1,122.8 449.5 $ 2.50 $1,020.0 452.8 $ 2.25
======== ======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
<PAGE>
38
(10) Income Taxes
The principal components of income tax expense follow:
<TABLE>
<CAPTION>
1998 1997 1996
------- ------ -----
<S> <C> <C> <C>
Federal:
Current......................................................... $ 453.4 447.8 393.0
Deferred........................................................ 35.9 10.1 7.4
State and local................................................... 51.4 48.2 53.0
Non-U.S........................................................... 154.2 155.6 137.1
------- ------ -----
Income tax expense.............................................. $ 694.9 661.7 590.5
======= ====== =====
</TABLE>
The federal corporate statutory rate is reconciled to the Company's effective
income tax rate as follows:
<TABLE>
<CAPTION>
1998 1997 1996
-------- ------- ------
<S> <C> <C> <C>
Federal corporate statutory rate.................................. 35.0% 35.0% 35.0%
State and local taxes, less federal tax benefit................. 1.7 1.8 2.1
Other........................................................... (.6) .3 (.4)
-------- ------- ------
Effective income tax rate......................................... 36.1% 37.1% 36.7%
======== ======= ======
</TABLE>
The principal components of deferred tax assets (liabilities) follow:
<TABLE>
<CAPTION>
1998 1997
------- ------
<S> <C> <C>
Property, plant and equipment and intangibles..................... $(344.1) (321.3)
Leveraged leases.................................................. (185.4) (191.1)
Pension........................................................... (69.3) (62.2)
Accrued liabilities............................................... 255.9 237.6
Postretirement and postemployment benefits........................ 129.1 128.9
Employee compensation and benefits................................ 99.4 108.8
Other............................................................. 84.0 92.7
------- ------
Total deferred tax assets (liabilities)......................... $ (30.4) (6.6)
======= ======
</TABLE>
At September 30, 1998 and 1997, respectively, net current deferred tax assets
were $248.3 and $268.3, and net noncurrent deferred tax liabilities were
$278.7 and $274.9. Total income taxes paid were approximately $665, $645 and
$575 in 1998, 1997 and 1996, respectively.
(11) Other Financial Data
Items charged to earnings during the years ended September 30, 1998, 1997 and
1996, included the following:
<TABLE>
<CAPTION>
1998 1997 1996
------- ------ -----
<S> <C> <C> <C>
Research, new product development and product improvement costs... $ 491.3 445.1 398.7
Rent expense...................................................... 170.4 156.9 144.8
Amortization of intangibles....................................... 122.8 114.0 104.1
</TABLE>
The Company leases computers, transportation equipment and various other
property under operating lease agreements. The minimum annual rentals under
noncancelable long-term leases, exclusive of maintenance, taxes, insurance and
other operating costs, will approximate $88 in 1999 and decline substantially
thereafter.
Other assets include an investment in leveraged leases of $187.5 and $190.9 at
September 30, 1998 and 1997, respectively. Accrued expenses include employee
compensation of $295.2 and $344.2, and other liabilities include minority
interests in consolidated subsidiaries of $619.9 and $523.1 at September 30,
1998 and 1997, respectively.
<PAGE>
39
(12) Contingent Liabilities and Commitments
At September 30, 1998, there were no known contingent liabilities (including
guarantees, pending litigation, taxes and other claims) that management
believes will be material in relation to the Company's financial position, nor
were there any material commitments outside the normal course of business.
(13) Industry Segment Information
The Company is engaged principally in the worldwide design, manufacture and
sale of a broad range of electrical, electromechanical and electronic products
and systems. The products manufactured by the Company are classified into the
following industry segments: Commercial and Industrial Components and Systems,
and Appliance and Construction-Related Components. The Commercial and
Industrial segment includes process control instrumentation, valves and
systems; industrial motors and drives; industrial machinery, equipment and
components; and electronics. Products of this segment are sold to commercial
and industrial distributors and end-users for manufacturing and commercial
applications. The Appliance and Construction-Related segment consists of
fractional motors and appliance components; heating, ventilating and air
conditioning components; and tools. This segment includes components sold to
distributors and original equipment manufacturers for inclusion in end
products and systems (ultimately sold through commercial and residential
building construction channels), and construction-related products which
retain their identity and are sold through distributors to consumers and the
professional trades. Summarized information about the Company's operations in
each industry segment and geographic area follows:
Industry Segments
(See note 2)
<TABLE>
<CAPTION>
Net Sales to Income Before
Unaffiliated Customers Income Taxes Total Assets
--------------------------- ----------------------- --------------------------
1998 1997 1996 1998 1997 1996 1998 1997 1996
------- ------ ------ ----- ----- ----- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial and Industrial.................... $ 8,102 7,365 6,635 1,123 1,013 910 7,769 6,879 6,336
Appliance and Construction-
Related.................................... 5,345 4,934 4,515 940 813 742 4,396 4,100 3,544
Corporate and other items.................... -- -- -- 13 79 84 495 484 601
Interest expense............................. -- -- -- (152) (121) (127) -- -- --
------- ------ ------ ----- ----- ----- ------ ------ ------
Total...................................... $13,447 12,299 11,150 1,924 1,784 1,609 12,660 11,463 10,481
======= ====== ====== ===== ===== ===== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Depreciation and Capital
Amortization Expense Expenditures
-------------------- --------------------
1998 1997 1996 1998 1997 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Commercial and Industrial............................................................ $325 300 280 279 252 236
Appliance and Construction-Related................................................... 230 206 179 309 305 246
Corporate and other items............................................................ 8 6 6 15 18 32
---- --- --- --- --- ---
Total.............................................................................. $563 512 465 603 575 514
==== === === === === ===
</TABLE>
Geographic Areas
(By origin)
<TABLE>
<CAPTION>
Net Sales to Income Before
Unaffiliated Customers Income Taxes Total Assets
--------------------------- ----------------------- --------------------------
1998 1997 1996 1998 1997 1996 1998 1997 1996
------- ------ ------ ----- ----- ----- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
United States................................ $ 9,028 8,108 7,168 1,570 1,342 1,193 7,638 7,147 6,159
Europe....................................... 3,205 2,951 2,919 337 318 316 3,416 2,947 3,023
Other areas.................................. 1,214 1,240 1,063 156 166 143 1,469 1,199 913
Corporate and other items.................... -- -- -- 13 79 84 495 484 601
Interest expense............................. -- -- -- (152) (121) (127) -- -- --
Eliminations................................. -- -- -- -- -- -- (358) (314) (215)
------- ------ ------ ----- ----- ----- ------ ------ ------
Total...................................... $13,447 12,299 11,150 1,924 1,784 1,609 12,660 11,463 10,481
======= ====== ====== ===== ===== ===== ====== ====== ======
</TABLE>
<PAGE>
40
(14) Quarterly Financial Information (Unaudited)
Financial Results
<TABLE>
<CAPTION>
Net Sales Gross Profit Net Earnings
-------------------- ----------------- ----------------
1998 1997 1998 1997 1998 1997
--------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
First Quarter...... $ 3,171.5 2,830.6 1,141.7 1,025.2 282.3 254.9
Second Quarter..... 3,382.4 3,103.5 1,222.7 1,116.1 307.6 280.4
Third Quarter...... 3,465.2 3,208.4 1,254.1 1,141.4 324.8 296.6
Fourth Quarter..... 3,428.1 3,156.1 1,233.1 1,150.3 313.9 290.0
--------- -------- ------- ------- ------- -------
Fiscal Year...... $13,447.2 12,298.6 4,851.6 4,433.0 1,228.6 1,121.9
========= ======== ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Basic Diluted
Earnings per Earnings per Dividends per
Common Share Common Share Common Share
------------ ------------ -------------
1998 1997 1998 1997 1998 1997
----- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
First Quarter...... $ .64 .57 .64 .57 .295 .27
Second Quarter..... .70 .63 .69 .62 .295 .27
Third Quarter...... .74 .67 .73 .66 .295 .27
Fourth Quarter..... .72 .65 .71 .65 .295 .27
----- ---- ---- ---- ---- ----
Fiscal Year...... $2.80 2.52 2.77 2.50 1.18 1.08
===== ==== ==== ==== ==== ====
</TABLE>
See Note 2 for information regarding non-recurring items and the Company's
acquisition and divestiture activities.
- --------------------------------------------------------------------------------
Stock Prices
<TABLE>
<CAPTION>
Price Range Per Common Share
----------------------------------------
1998 1997
------------------- -----------------
High Low High Low
--------- ------- ------ -------
<S> <C> <C> <C> <C>
First Quarter...................... $ 58 1/4 49 3/4 51 3/4 43 3/4
Second Quarter..................... 66 1/4 55 1/2 52 5/8 45
Third Quarter...................... 67 7/16 58 9/16 57 1/2 45
Fourth Quarter..................... 63 3/4 54 1/2 60 3/8 52 5/16
Fiscal Year...................... $ 67 7/16 49 3/4 60 3/8 43 3/4
</TABLE>
Emerson Electric Co. common stock (Symbol EMR) is listed on the New York Stock
Exchange and Chicago Stock Exchange.
<PAGE>
41
Independent Auditors' Report
The Board of Directors and Stockholders
Emerson Electric Co.:
We have audited the accompanying consolidated balance sheets of Emerson
Electric Co. and subsidiaries as of September 30, 1998 and 1997, and the
related consolidated statements of earnings, stockholders' equity, and cash
flows for each of the years in the three-year period ended September 30, 1998.
These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Emerson
Electric Co. and subsidiaries as of September 30, 1998 and 1997, and the
results of their operations and their cash flows for each of the years in the
three-year period ended September 30, 1998, in conformity with generally
accepted accounting principles.
/s/ KPMG Peat Marwick LLP
St. Louis, Missouri
November 2, 1998
<PAGE>
48
Safe Harbor Statement
This Annual Report contains various forward-looking statements and includes
assumptions concerning Emerson's operations, future results and prospects.
These forward-looking statements are based on current expectations, are
subject to risk and uncertainties and Emerson undertakes no obligation to
update any such statement to reflect later developments. In connection with
the "safe harbor" provisions of the Private Securities Litigation Reform Act
of 1995, Emerson provides the following cautionary statement identifying
important economic, political and technological factors, among others, the
absence of which could cause the actual results or events to differ materially
from those set forth in or implied by the forward-looking statements and
related assumptions.
Such factors include the following: (i) continuation of the current and
projected future business environment, including interest rates and capital
and consumer spending; (ii) competitive factors and competitor responses to
Emerson initiatives; (iii) successful development and market introductions of
anticipated new products; (iv) stability of government laws and regulations,
including taxes; (v) stable governments and business conditions in emerging
economies; (vi) successful penetration of emerging economies; (vii)
continuation of the favorable environment to make acquisitions, domestic and
foreign, including regulatory requirements and market values of candidates and
(viii) timely resolution of the Year 2000 issues by the Company, its customers
and suppliers.
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF EMERSON ELECTRIC CO.
SEPTEMBER 30, 1998
Jurisdiction
of
Legal Name Incorporation
- ---------- -------------
ADI Control Techniques Drives, Inc. California
Alco Controls S.A. de C.V. Mexico
Applied Concepts, Inc. Pennsylvania
Astec (BSR) PLC UK
Astec Advanced Power Systems B.V. Netherlands
Astec Advanced Power Systems Limited Canada
Astec America Inc. Delaware
AAI Export Inc. Barbados
BI Technologies Corporation Delaware
BI Technologies S.A. de C.V. Mexico
ENI Technology Inc. Delaware
Semiconductor Circuits Inc. California
Astec America de Mexico, S.A. de C.V. Mexico
Astec Electronics (Malaysia) Sdn Bhd Malaysia
Astec Germany GmbH Germany
Astec International Limited Hong Kong
Astec Agencies Limited Hong Kong
Astec Custom Power (Hong Kong) Limited Hong Kong
Astec Custom Power (Philippines) Inc. Philippines
Astec Custom Power (Singapore) Pte Ltd Singapore
Astec Electronics Company Limited China
Astec Electronics (Luoding) Co. Ltd. China
Astec Japan Limited Japan
Astec Pekan Sdn Bhd Malaysia
Astec Power Supply (Shenzhen) Co. Ltd. China
BI Technologies Corporation Malaysia
BI Technologies Pte Ltd. Singapore
ENI Taiwan Limited Taiwan
Northern Telecom Industries Sdn Bhd Malaysia
Northern Telecom Penang Sdn Bhd Malaysia
Astec Power Inc. BVI
BI Technologies GmbH Germany
BI Technologies Japan Limited Japan
BI Technologies S.r.l. Italy
ENI Japan Limited Japan
Stourbridge Holdings (UK) Limited UK
BI Technologies Limited UK
Brandenburg Limited UK
Mirroware Manufacturing Limited UK
Astec Europe Ltd. UK
Astec France S.A.R.L. France
BI Technologies S.A.R.L. France
Astec International PLC UK
Branson Ultrasonic S.A. Switzerland
Buehler Ltd. Illinois
Buehler Holdings Delaware
Wirtz-Buehler Corporation Delaware
Clairson International Corp. Florida
Clairson, Inc. Delaware
Clairson de Mexico, S.A. de C.V. Mexico
Clairson (Hong Kong) Limited Hong Kong
Commercial Cam Co., Inc. Delaware
Compania de Motores Domesticos S.A. de C.V. Mexico
Computational Systems, Incorporated Tennessee
CSI Delaware I, Inc. Delaware
CSI Delaware II, Inc. Delaware
CSI International, Inc. Tennessee
CSI Real Property, LLC Tennessee
CSI Services, Inc. Tennessee
CSI Technology, Inc. Delaware
CTL Japan Japan
Canada Systems de Mexico Mexico
Computational Systems, Inc. Europe Belgium
Computational Systems, Ltd. UK
STATUS Technologies, Inc. Tennessee
Controles Electromecanicos de Mexico Mexico
Control Techniques (USA) Inc. Delaware
Control Techniques Drives, Inc. Delaware
Control Techniques Drives Limited Canada
Control Techniques Iberia S.A. Spain
Copeland Electric Corporation Delaware
Digital Appliance Controls Manufacturing (Singapore) Pte Ltd. Singapore
DACM SDN BHD Malaysia
Digital Appliance Controls (UK) Limited UK
EECO, Inc. Delaware
Apple JV Holding Corp. Delaware
EGS Electrical Group LLC Delaware
Appleton Electric LLC Delaware
Appleton Electric, S.A. de C.V. Mexico
Appleton Holding Corp. Delaware
Easy Heat Limited Canada
Easy Heat Holding B.V. Netherlands
East Heat Europe B.V. Netherlands
Easy Heat Polska
Sp. z.o.o. Poland
EGS Electrical Group Canada, Ltd. Canada
EGS Holding S.A.R.L. France
ATX S.A. France
Easy Heat, Inc. Delaware
GSEG LLC Delaware
Dual-Lite Manufacturing, Inc. Delaware
O-Z Gedney LLC Delaware
Terasaki Nelson Limited Japan
Emersub 1 LLC Delaware
Conameter Corporation New Jersey
Copeland Corporation Delaware
CDP International, Inc. Delaware
Computer Process Controls, Inc. Georgia
Copeland Access +, Inc. Delaware
Copeland de Mexico S.A. de C.V. Mexico
Copeland International, Inc. Ohio
Copeland Redevelopment Corporation Missouri
Electro-Test, Inc. California
Bath Electrical, Inc. Delaware
Bath Electrical Systems, Inc. Texas
El-O-Matic USA, Inc. Delaware
Emerson Electric (U.S.) Holding Corporation Delaware
Automatic Switch Company Delaware
Asco Investment Corp. New Jersey
Angar Scientific Company, Inc. New Jersey
Asco Controls A.G. Switzerland
Asco Controls B.V. Netherlands
Asco Mideast B.V. Netherlands
Asco Gmbh Hungary
Asco/Joucomatic SP. z.o.o. Poland
Asco/Joucomatic Czech Republic Czech Republic
Asco/Joucomatic Zuid Afrika B.V. Netherlands
Asco Electrical Products Co., Inc. New Jersey
Ascomation Pty. Ltd. Australia
Ascomation (NZ) Limited N. Zealand
Asco Sweden AB Sweden
Asco (Japan) Company Ltd. Japan
Asco Services, Inc. New Jersey
Ascomatica S.A. de C.V. Mexico
Ascoval Industria E Commercio Ltda. Brazil
Firetrol, Inc. North Carolina
Hanover Advertising Services, Inc. New Jersey
Joucomatic Controls, Inc. North Carolina
Branson Ultrasonics Corporation Delaware
American Technology, Inc. Connecticut
Amtech S.a.r.L. France
Branson Korea Co., Inc. Korea
Branson Ultrasonics S.A. Sweden
Branson Ultrasonidos S.A.E. Spain
Branson Ultrasons S.A. France
Krautkramer France S.A. France
Camco Vertriebs-GmbH Germany
Camco Vertriebs-GmbH & Co. Germany
Chromalox GmbH Germany
Copeland GmbH Germany
Copeland France S.A. France
Copeland Corporation Limited UK
Copeland Italia S.a.R.l. Italy
Copeland Iberica CIB S.A. Spain
Copeland Refrigeration Europe S.A. Belgium
Copeland S.A. Belgium
El-O-Matic GmbH Germany
Emerson Electric GmbH Germany
Emerson Electric GmbH & Co. Germany
Emerson Electric Overseas Finance Corp. Delaware
Emerson Electric de Colombia, LTDA Colombia
Motores U.S. de Mexico, S.A. Mexico
U.S.E.M. de Mexico S.A. de C.V. Mexico
Emerson Technologies Verwaltungs-GmbH Germany
Emerson Technologies GmbH & Co. Germany
Fisher-Rosemount GmbH Germany
Fisher-Rosemount GmbH & Co. Germany
Heraeus Sensor GmbH Germany
Krautkramer GmbH Germany
Krautkramer GmbH & Co. Germany
Liebert GmbH Germany
Liebert A.G. Switzerland
PEPT Investment Corporation Delaware
Skil Europe Corporation Delaware
Reglerwerk Dresden GmbH Germany
Ridge Tool GmbH Germany
Ridge Tool GmbH & Co. Germany
RIDGID Peddinghaus Werkzeug GmbH Germany
Rosemount Inc. Minnesota
Dieterich Standard, Inc. Delaware
Dieterich Technology Holding Corp. Delaware
Fisher-Rosemount AS (Norway) Norway
Fisher-Rosemount, S.A. Spain
Rosemount Portugal Instrumentos Lda. Portugal
Fisher-Rosemount Holding AG Switzerland
Fisher-Rosemount AG Switzerland
Fisher Rosemount Proses Kontrol
Ticaret Limited Sirketi Turkey
Rosemount Spo Czech Republic
Fisher-Rosemount A/S Denmark
Fisher-Rosemount Ges. M.B.H. Austria
Rosemount Poland Ltd. Poland
Fisher-Rosemount Instruments Pty. Ltd. Australia
Emerson Electric Co. Pty. Ltd. Australia
Rosemount Instruments Ltd. New Zealand
Fisher-Rosemount Instruments Taiwan, Ltd. Taiwan
Fisher-Rosemount Japan Co. Ltd. Japan
Fisher-Rosemount Korea Ltd. Korea
Fisher-Rosemount Middle East, Inc. Delaware
Fisher-Rosemount Singapore Private Limited Singapore
P I Components Corp. Texas
Rosemount AB Sweden
Rosemount Shanghai International
Trade Co. Ltd. China
Rosemount Analytical Inc. Delaware
Rosemount China Inc. Minnesota
Rosemount Mexicana S.A. de C.V. Mexico
Rosemount Nuclear Instruments Delaware
Rosemount Shanghai Co. Ltd. China
Tekmar Company Ohio
Wirtz-Buehler GmbH Germany
Xomox Corporation Ohio
Fisher-Rosemount do Brasil
Industria e Comerco Ltda. Brazil
Fisher-Rosemount S.A. de C.V. Mexico
Flow Technology, Inc. (Taiwan) Ohio
Flow Technology S.A. de C.V. Mexico
Inversiones Xomox Venezuela
Xomox France S.A. France
Xomox A.G. Switzerland
Xomox Chihuahua S.A. de C.V. Mexico
Xomox Corporation de Venezuela, C.A. Venezuela
Xomox South America S.A. Uruguay
Xomox Uruguay S.A. Uruguay
Xomox International GmbH Germany
Fisher-Gulde GmbH Germany
Fisher-Gulde GmbH & Co. Germany
Xomox International GmbH & Co. Germany
Pfannenschmidt GmbH Germany
Emerson Power Transmission Corporation Delaware
Emerson Chain, Inc. Delaware
Emerson Motion Control, Inc. Minnesota
Emerson Power Transmission Drives and
Components, Inc. Delaware
Emerson Power Transmission Ithaca, Inc. Delaware
McGill Manufacturing Company, Inc. Indiana
Emerson Power Transmission Bearings, Inc. Delaware
Emerson Power Transmissions
Manufacturing, L.P. Missouri
McGill International, Inc. Taiwan
Environmental Remediation Management, Inc. Delaware
Krautkramer-Branson, Incorporated Connecticut
Stresstel Corporation California
Liebert Corporation Ohio
Atlas Asia Ltd. Hong Kong
Control Concepts Corporation Delaware
Edco, Inc. of Florida Florida
Emerson Computer Power (Thailand) Company Limited Thailand
Emersub XXV, Inc. Delaware
Computersite-Preparations, Inc. Ohio
Global Energy Services, Inc. Delaware
Liebert Asia Ltd. Hong Kong
Liebert Corporation Australia Pty, Ltd. Australia
Atlas Air Australia Pty. Ltd. Australia
Rougemont Enterprises Pte. Ltd. Australia
Liebert Far East Pte. Ltd. Singapore
Atlas Air (S.E.A.) Pte Ltd. Singapore
Liebert (Malaysia) Sdn. Bhd. Malaysia
Liebert International B.V. Netherlands
Liebert Property Holdings, LLC Delaware
Liebert Tecnologia Ltda. Brazil
Northeast Electrical Testing, Inc. Delaware
Micro Motion, Inc. Colorado
Ridge Tool Company Ohio
Emerson Electric SRL Italy
Ridge Tool (Australia) Pty., Ltd. Australia
Ridge Tool Manufacturing Company Delaware
Ridge Tool Pattern Company Delaware
Ridge Werkzeuge AG Switzerland
Therm-O-Disc, Incorporated Ohio
Componentes Avanzados de Mexico, S.A. de C.V. Mexico
Controles de Temperatura S.A. de C.V. Mexico
E.G.P. Corporation Delaware
Electronic Control Systems, Inc. W. Virginia
Fairmont Building and Investment Corp. W. Virginia
Emermex S.A. de C.V. Mexico
Emerson Electric (Asia) Limited Hong Kong
Branson Ultrasonics (Asia Pacific) Co. Ltd. Hong Kong
Emerson Electric (South Asia/Pacific) Pte. Ltd. Singapore
Emerson Electric II, C.A. Venezuela
Emerson Electric, C.A. Venezuela
Emerson Electric Foreign Sales Corporation Virgin Islands
Emerson Electric International, Inc. Delaware
Emerson Electric Ireland Ltd. Bermuda
Emersub Treasury Ireland Ireland
Emerson Electric Nederland B.V. Netherlands
Branson Ultrasonics B.V. Netherlands
Brooks Instrument B.V. Netherlands
Emerson Computer Power B.V. Netherlands
Capax Electrische Apparatenfabriek B.V. Netherlands
Crouzet Appliance Controls D.O.O. Slovenia
Emerson Electric RG Russia
Emerson Electric Slovakia Limited Slovakia
Vuma a.s Czech Republic
Emerson Electric, SpoL, s.r.o. Czech Republic
Fisher-Rosemount B.V. Netherlands
Fusite, B.V. Netherlands
Heraeus Sensor B.V. Netherlands
New-Tech Cuijk B.V. Netherlands
El-O-Matic B.V. Netherlands
El-O-Matic Valve Actuators (F.E.) Pte. Ltd. Singapore
El-O-Matic S.A. (Proprietary) Ltd. South Africa
Skil AG Switzerland
Emerson Electric Puerto Rico, Inc. Delaware
Emerson Puerto Rico, Inc. Delaware
Emerson Electric (Taiwan) Company Limited Taiwan
Emerson Finance Co. Delaware
Emersub XIX, Inc. Delaware
Emerson Global Finance Company Missouri
Emerson Middle East, Inc. Delaware
Emerson Sice S.p.A. Italy
C.E. Set S.R.L. Italy
CODI S.p.A. Italy
Plaset, S.p.A. Italy
Branson Ultrasuoni S.P.A. Italy
Fisher-Rosemount Italia S.R.L. Italy
Hiross Holding AG Austria
Hiross International Corporation BV Netherlands
Hiross Management SA Switzerland
Hiross S.p.A. Italy
Hiross AG Switzerland
Hiross Ltd. UK
Hiross SA France
Hiross Austria GmbH Austria
Hiross Hungaria Kft Hungary
Hiross Batliboi Ltd. India
Hiross Deutschland GmbH Germany
Hiross Flexible Space System S.r.l. Italy
Mecanotronic GmbH Austria
Xomox Italia S.R.L. Italy
Emerson Pacific Pte. Ltd. Singapore
Emersub XXXVI, Inc. Delaware
Control Techniques plc UK
Control Techniques (Holding) GmbH Germany
Control Techniques GmbH Germany
INAG Industrielle Antriebssysteme GmbH Germany
Reta Anlagenbau GmbH Germany
Reta Elektronic GmbH Germany
Control Techniques Asia-Pacific Pte. Ltd. Singapore
Control Techniques Drives (Malaysia) Sdn Bhd Malaysia
Control Techniques Singapore Pte Limited Singapore
Control Techniques (Thailand) Limited Thailand
PT Kontroltek Indopratama Indonesia
Control Techniques Australia Pty Ltd. Australia
Control Techniques Bermuda Limited Bermuda
Control Techniques Drives Limited UK
K.T.K. (Newtown) Limited UK
Control Techniques Dynamics Limited UK
Evershed Powerotor Limited UK
Moore Reed & Company Limited UK
Control Techniques Italia srl Italy
Control Techniques Precision Systems Limited UK
Control Techniques SpA Italy
Electric Drives Limited Ireland
Electric Drives Manufacturing Limited Ireland
CT Stafford Park 4 Limited UK
Control Techniques Worldwide BV Netherlands
ASI Control Techniques A/B Norway
Control Technika Kft. Hungary
Control Techniques Automation BV Netherlands
Control Techniques BV Netherlands
Control Techniques BV/SA Belgium
Control Techniques Denmark A/S Denmark
Control Techniques East Asia Pte Limited Hong Kong
Control Techniques Endustriyel Kontrol
Sistemleri Sanayii Ve Ticaret A.S. Turkey
Control Techniques GesmbH Austria
Control Techniques India Limited India
Control Techniques Elpro
Automation Limited India
Control Techniques Vietnam Limited Vietnam
Control Techniques Vues s.r.o. Czech Republic
CTS Control Techniques Antriebsregelungen
GmbH Switzerland
SKS Arlacon Oy Finland
Siliconics (Pty) Ltd. S. Africa
Styrkonsult Drives AB Sweden
Emersub XXXVIII, Inc. Delaware
Emersub XLIV, Inc. Delaware
Emersub XLV, Inc. Delaware
Valycontrol, S.A. de C.V. Mexico
Filcore, Inc. Texas
Emersub XLVI, Inc. Nevada
Wilson Investment 2, Inc. Delaware
Copesub, Inc. Delaware
Alliance Compressors Delaware
Emersub LII, Inc. Delaware
Emersub LIV, Inc. Delaware
Emersub LXIV, Inc. Delaware
Emersub LXVI, Inc. Nevada
Emersub LXVIII, Inc. Delaware
Emersub LXX, Inc. Delaware
Emersub LXXI, Inc. Delaware
Emersub LXXII, Inc. Delaware
EMR Holdings, Inc. Delaware
Branson de Mexico, S.A. de C.V. Mexico
Digital Appliance Controls, S.A. de C.V. Mexico
EMR Manufacturing (M) Sdn Bhd Malaysia
Emerson Argentina S.A. Argentina
Emerson Electric Canada Limited Canada
Ascolectric Limited Canada
Fisher Controls Inc. (Controles Fisher Inc.) Canada
Fisher-Rosemount Instruments Ltd. Canada
KVT Technologies, Inc. Canada
Therm-O-Disc (Canada) Limited Canada
Xomox Canada Ltd. Canada
Emerson Electric (China) Holdings Ltd. China
Beijing Rosemount Far East Instrument Co., Ltd. China
Clairson (Jiangmen) Storage Limited China
Emerson Electric (Suzhou) Co. Ltd. China
Emerson Electric (Tianjin) Co., Ltd. China
Emerson Engineering System (Shanghai) Co., Limited China
Emerson Electric (Shenzhen) Co., Ltd. China
Emerson Machinery & Equipment (Shenzhen) Co., Ltd. China
Emerson Trading (Shanghai) Co. Ltd. China
Emerson White-Rodgers Electric (Xiamen) Co., Ltd. China
Hangzhou LiShi Ridge Tool Co., Ltd. China
Shanghai Branson Ultrasonics Co., Ltd. China
Shenyang Copeland Refrigeration Co., Ltd. China
Emerson Electric de Mexico S.A. de C.V. Mexico
Ascotech, S.A. de C.V. Mexico
Motores Reynosa, S.A. de C.V. Mexico
Emerson Electric do Brasil Ltda Brazil
Emerson Electric Hungary Ltd. Hungary
Emerson Electric Korea Ltd. Korea
Emerson Electric (M) SDN BHD Malaysia
Emerson Electric (Mauritius) Ltd. India
Emerson Electric Company India Private Ltd. India
Emerson Electric Poland Sp. z.o.o. Poland
Emerson Electric (Thailand) Limited Thailand
Emerson Europe S.A. France
Asco Joucomatic S.A. France
Asco Joucomatic GmbH Germany
Asco Joucomatic GmbH & Co. Germany
Fluidocontrol S.A. Spain
Joucomatic Controls Ltd. New Zealand
Joucomatic Controls Pty. Limited Australia
AscoJoucomatic S.p.A. Italy
AscoJoucomatic N.V. Belgium
Sotrac S.r.l. Italy
Crouzet Appliance Controls S.A. France
Crouzet Appliance Controls SpA Italy
Francel S.A. France
Leroy-Somer S.A. France
Bertrand Polico S.A. France
Constructions Electriques DeBeaucourt S.A. France
Comercial Leroy-Somer Ltda. Chile
Electronique du Sud-Quest S.A. France
Andre Cocard S.A.R.L. France
Atelier de Bobinage de Moteurs Electriques
S.a.r.L. France
Construction Electriques du Nord S.A. France
Electro Maintenance Courbon S.A. France
Establissements Belzon & Richardot S.A.R.L. France
Establissements J. Michel S.A. France
Establissements Suder et Fils S.A.R.L. France
Houssin S.A.R.L. France
Lorraine Services Electrique
Electromecanique S.A.R.L. France
M.I.S. Kerebel Provence S.A.R.L. France
M.I.S. Poitouraine S.A.R.L. France
M.I.S. Societe Peaucelle D'Installations
et Reparations Electriques S.A.R.L. France
M.L.S. Holice Spol. s.r.o. Czech Republic
Maintenance Industrie Services
Rennes S.a.r.L. France
Maintenance Industrie Services Rhone-
Alpes S.A.R.L. France
Maintenance Industrie Services Toulouse
S.a.r.L. France
Marcel Oury S.A.R.L. France
Mezierres S.A. France
Navarre Services S.A.R.L. France
Ouest Electro Service S.A.R.L. France
Poteau Moderne du Sud-Ouest S.A. France
Radiel Bobinage S.A.R.L. France
Societe Nouvelle Paillet Services S.A.R.L. France
Societe Nouvelle Silvain S.A.R.L. France
Societe DeReparation Electro-Mecanique
S.A.R.L. France
Sud Bobinage S.A.R.L. France
Viet Services S.A.R.L. France
Etablissements Sevenier S.A. France
Etablissements Trepeau S.A. France
Girard Transmissions S.A. France
IMI Kft Hungary
La Francaise de Manutention S.A. France
Leroy-Somer AB Sweden
Leroy-Somer A/S Denmark
Leroy-Somer A/S Norway
Leroy-Somer BV Netherlands
Leroy Somer N.V. Belgium
Leroy-Somer Elektroantriebe GmbH Austria
Leroy-Somer Elektromotoren GmbH Germany
Leroy-Somer Ltd. UK
Leroy-Somer OY Finland
Leroy-Somer Pty. Ltd. South Africa
Leroy-Somer (Pty) Ltd. Australia
Leroy-Somer S.A. Switzerland
Leroy-Somer S.A. Spain
Leroy-Somer S.p.A. Italy
Leroy-Somer Maroc S.A. Morocco
Leroy-Somer Motores E Sistemas
Electromecanicos Ltda. Portugal
Leroy-Somer (SEA) Pte. Ltd. Singapore
MLS Industries Inc. Delaware
Yorba Linda International Inc. Delaware
Maintenance Industrielle de Vierzon S.A. France
Motadour S.A. France
Moteurs Leroy-Somer S.A. France
Moteurs Patay S.A. France
Societe Anonyme de Mecanique et D'outillage
du Vivarais S.A. France
Societe Confolentaise de Metalurgie S.A. France
Societe Commerciale des Ateliers de
Constructions Electriques Dorleans S.A. France
Societe de Mecanique et D'Electrothermie
des Pays de L'Adour S.A. France
Liebert France S.A. France
Ridgid France S.A. France
Emerson Holding Company Limited UK
Asco Joucomatic Ltd. UK
Joucomatic Controls Ltd. UK
Copeland Ltd. N. Ireland
El-O-Matic Limited UK
Emerson Electric (U.K.) Limited UK
Fisher-Rosemount Limited UK
Xomox U.K. Limited UK
Liebert Ltd. UK
Liebert Swindon Ltd. UK
Pactrol Controls Limited UK
Switched Reluctance Drives Ltd. (SDRL) UK
Reluctance Motors Ltd. UK
Emerson Laminaciones de Acero de Monterrey, S.A. de C.V. Mexico
F-R Tecnologias de Flujo, S.A. de C.V. Mexico
Fisher-Rosemount Hungary Ltd. Hungary
Fisher-Rosemount Manufacture Ltd. Hungary
Liebert Europe Espana S.A. Spain
Motoreductores U.S., S.A. de C.V. Mexico
Rotores S.A. de C.V. Mexico
Termotec de Chihuahua S.A. de C.V. Mexico
Wilson Investment 1, Inc. Delaware
F.G. Wilson L.L.C. Delaware
F.G. Wilson (Engineering) Limited UK
Everton Engineering (N.I.) Limited UK
F.G. Wilson Australia PTY Limited Australia
F.G. Wilson Engineering (Dublin) Limited UK
F.G. Wilson (Engineering) HK Limited Hong Kong
F.G. Wilson Engineering Vertriebs-GmbH Germany
F.G. Wilson Inc. Delaware
F.G. Wilson (Proprietary) Limited S. Africa
F.G. Wilson S.A. France
F.G. Wilson Singapore Pte Limited Singapore
F.G. Wilson Technology India Pvt. Ltd. India
Genrent Limited UK
F.G. Wilson (USA) LLC Delaware
Etirex S.A. France
Fisher Controls International, Inc. Delaware
Con-Tek Valves, Inc. Georgia
Exac Corporation California
Fisher Controles Industria E Commercio Ltda. Brazil
Fisher-Rosemount Do Brasil Ltda. Brazil
Fisher-Rosemount Asia Pacific Ltd. Delaware
Fisher Controls De Mexico, S.A. de C.V. Mexico
Fisher-Rosemount China Limited Hong Kong
Tianjin Fisher Controls Valve Co. Ltd. China
Fisher Controls Pty. Limited Australia
Fisher Service Company Delaware
Fisher-Rosemount Manufacturing (M) SDN BHD Malaysia
Fisher-Rosemount Systems, Inc. Delaware
Westinghouse Process Control, Inc. Delaware
Fisher-Rosemount de Venezuela S.A. Venezuela
Fro-Mex, S.A. de C.V Mexico
H.D. Baumann Inc. Delaware
Nippon Fisher Company Ltd. Japan
Fisco Ltd. (Fisco Kabushiki Kaisha) Japan
Fisher Rosemount, Inc. Delaware
Fisher-Rosemount N.V./S.A. Belgium
Senpro N.V. Belgium
Fisher-Rosemount S.A. France
Rosemount Portugal Instrumentos Lta. Portugal
Fusite Corporation Ohio
Emerson Japan, Ltd. Japan
Okura Intex Co. Ltd. Japan
Taiyo Emerson Ltd. Japan Japan
Fusite Land Company Delaware
High Voltage Maintenance Corporation Ohio
Innoven III Corporation Delaware
Intellution, Inc. Massachusetts
Intellution Asia Pte. Ltd. Singapore
Intellution Australia Pty Ltd. Australia
Intellution GmbH Germany
Intellution Korea Limited Korea
Intellution K.K. (Japan) Incorporated Japan
Intellution SARL France
Intellution Limited UK
Wizdom Controls, Inc. Delaware
Kop-Flex, Inc. Delaware
Kop-Flex Canada Limited Canada
Kop-Flex International, Inc. Virgin Islands
Lipe-Rollway Corporation New York
Lipe-Rollway International Ltd. Delaware
Lipe-Rollway Australia Pty. Ltd. Australia
Lipe-Rollway de Mexico, S.A. de C.V. Mexico
Lipe-Rollway Deutschland GmbH Germany
Lipe-Rollway Ltd. Canada
Lipe-Rollway N.V. Belgium
Lipe-Rollway Technology, Inc. New York
Rollway Bearing Ltd. Delaware
Louisville Ladder Holding Corp.-Nevada Nevada
Louisville Holding Corp.- Delaware Delaware
Louisville Ladder Group LLC Delaware
Escaleras Holding LLC Delaware
Louisville Ladder Group International, Inc. Delaware
Metaloy, Inc. Massachusetts
Metropolitan International, Inc. Nevada
InterMetro Industries Corporation Nevada
InterMetro Industries Corporation Delaware
Metro Industries, Inc. Nevada
Metropolitan Wire (Canada) Ltd. Canada
Metropolitan Wire Corporation Pennsylvania
Motores Hermeticos del Sur, S.A. de C.V. Mexico
PC & E, Inc. Missouri
Ridge Tool Europe NV Belgium
Ridgid Scandinavia A/S Denmark
Ridge Tool Europe S.A. Belgium
Ridgid Vaerktoj A/S Denmark
Ridgid Ferramentas E. Maquinas, Ltda. Brazil
SWECO Europe, S.A. Belgium
Termocontroles de Juarez S.A. de C.V. Mexico
The Sulton Company, Inc. Delaware
Transmisiones de Potencia Emerson S.A. de C.V. Mexico
Vermont American Corporation Delaware
Credo Tool Company Delaware
Carbide Blast Joints, Inc. Texas
DML Industrial Products, Inc. North Carolina
Vermont American Corporation, Fountain Inn Delaware
Primark DML, Inc. North Carolina
VAC Data Management, Inc. Delaware
VAC Services LP Kentucky
Gilmour Enterprises, Inc. Delaware
Gilmour Manufacturing Company Pennsylvania
Gilmour, Inc. Delaware
VA Export, Ltd. Virgin Islands
VA Holding Delaware
VA (Hong Kong) Limited Hong Kong
Vermont American Asia-Pacific, Inc. Delaware
Vermont American (Australia) Ltd. Nevada
Vermont American Canada Inc. Canada
Vermont Westa Werkzeugbau GmbH Germany
Western Forge Corporation Delaware
Wiegand S.A. de C.V. Mexico
<PAGE>
Exhibit 23
INDEPENDENT AUDITORS' CONSENT
-----------------------------
The Board of Directors
Emerson Electric Co.:
We consent to incorporation by reference in Registration Statement
Nos. 333-46919, 333-44163, 33-60055, 33-57161, 33-38805, 33-34948,
33-34633, 33-57985, 33-60399, 33-2739 and 2-76653 on Form S-8 and
Registration Statement Nos. 333-66865, 33-62545 and 33-39109 on Form
S-3 of Emerson Electric Co. of our report dated November 2, 1998, relating
to the consolidated balance sheets of Emerson Electric Co. and subsidiaries
as of September 30, 1998 and 1997, and the related consolidated statements
of earnings, stockholders' equity, and cash flows for each of the years in the
three-year period ended September 30, 1998, which report is incorporated by
reference in the September 30, 1998 annual report on Form 10-K of Emerson
Electric Co.
/s/ KPMG PEAT MARWICK LLP
St. Louis, Missouri
December 22, 1998
<PAGE>
Exhibit 24
POWER OF ATTORNEY
The undersigned members of the Board of Directors and
Executive Officers of Emerson Electric Co., a Missouri corporation
with principal offices at 8000 West Florissant Avenue, St. Louis,
Missouri 63136, hereby appoint W. J. Galvin as their Attorney-in-
Fact for the purpose of signing Emerson Electric Co.'s Securities
and Exchange Commission Form 10-K (and any and all amendments
thereto) for the fiscal year ended September 30, 1998.
Dated: October 6,1998.
-----------------
Signature Title
--------- -----
/s/C. F. Knight Chairman of the Board and Chief Executive
- ----------------------------- Officer and Director
C. F. Knight
/s/W. J. Galvin Senior Vice President of Finance and Chief
- ----------------------------- Financial Officer
W. J. Galvin
/s/J. G. Berges Director
- -----------------------------
J. G. Berges
/s/L. L. Browning, Jr. Director
- -----------------------------
L. L. Browning, Jr.
/s/A. A. Busch, III Director
- -----------------------------
A. A. Busch, III
/s/D. C. Farrell Director
- -----------------------------
D. C. Farrell
<PAGE>
/s/J. A. Frates Director
- -----------------------------
J. A. Frates
/s/R. B. Horton Director
- -----------------------------
R. B. Horton
/s/G. A. Lodge Director
- -----------------------------
G. A. Lodge
/s/R. B. Loynd Director
- -----------------------------
R. B. Loynd
/s/V. R. Loucks, Jr. Director
- -----------------------------
V. R. Loucks, Jr.
/s/R. L. Ridgway Director
- -----------------------------
R. L. Ridgway
/s/R. W. Staley Director
- -----------------------------
R. W. Staley
/s/A. E. Suter Director
- -----------------------------
A. E. Suter
/s/G. W. Tamke Director
- -----------------------------
G. W. Tamke
/s/W. M. Van Cleve Director
- -----------------------------
W. M. Van Cleve
/s/E. E. Whitacre, Jr. Director
- -----------------------------
E. E. Whitacre, Jr.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 1998
EMERSON ELECTRIC CO. CONSOLIDATED STATEMENT OF EARNINGS AND CONSOLIDATED
BALANCE SHEET FILED WITH THE COMPANY'S 1998 FORM 10-K AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<CASH> 209,700
<SECURITIES> 0
<RECEIVABLES> 2,470,700
<ALLOWANCES> 54,600
<INVENTORY> 1,996,500
<CURRENT-ASSETS> 5,001,300
<PP&E> 6,070,700
<DEPRECIATION> 3,059,100
<TOTAL-ASSETS> 12,659,800
<CURRENT-LIABILITIES> 4,021,700
<BONDS> 1,056,600
<COMMON> 238,300
0
0
<OTHER-SE> 5,565,000
<TOTAL-LIABILITY-AND-EQUITY> 12,659,800
<SALES> 13,447,200
<TOTAL-REVENUES> 13,447,200
<CGS> 8,595,600
<TOTAL-COSTS> 8,595,600
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 151,700
<INCOME-PRETAX> 1,923,500
<INCOME-TAX> 694,900
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,228,600
<EPS-PRIMARY> 2.80
<EPS-DILUTED> 2.77
</TABLE>
