<PAGE> 1
May 14, 1998 (9:44AM)
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
------------------------------------
[ x ]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 1998
[ ]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 1-584
------------------------------------
FERRO CORPORATION
(Exact Name of Registrant as specified in its charter)
An Ohio Corporation 1000 LAKESIDE AVENUE CLEVELAND, OH 44114
IRS No. 34-0217820
(Address of principal executive offices)
Registrant's telephone number including area code: 216/641-8580
------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
---- ----
At April 30 1998, there were 37,167,391 shares of Ferro common stock, par value
$1.00, outstanding.
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PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS.
The Condensed Consolidated Balance Sheets as of March 31, 1998 (unaudited) and
December 31, 1997, and the Condensed Consolidated Statements of Income and
Condensed Consolidated Statements of Cash Flows for the three months ended March
31, 1998 and 1997 (unaudited) of Ferro Corporation and Subsidiaries are set
forth in Exhibit 99, which is incorporated by reference herein.
Those consolidated interim financial statements should be read in conjunction
with the consolidated financial statements and notes thereto included in the
Company's annual report for the fiscal year ended December 31, 1997. The interim
figures are unaudited, but in the opinion of the Management of the Company, all
adjustments, consisting of normal recurring accruals, necessary for a fair
presentation have been made.
The results of the three months ended March 31, 1998 are not necessarily
indicative of the results expected in subsequent quarters.
Cash dividends were paid at the rate of $0.12 per common share in the first
quarter of 1998 and $0.103 per common share in the first quarter of 1997. Cash
dividends on preferred shares were paid at the rate of $0.81 per preferred share
in the first quarter of 1998 and 1997.
Net sales and net income for the three months ended March 31, 1998 were $339.8
million and $17.1 million ($0.43 basic and $0.40 diluted earnings per common
share) as compared with net sales and net income of $342.2 million and $15.2
million ($0.37 basic and $0.35 diluted earnings per common share) for the
corresponding 1997 period.
During the first quarter of 1998, the Company issued $55 million of Debentures
under its Universal Shelf Registration filed with the Securities and Exchange
Commission on October 31, 1995 and declared effective on January 4, 1996. The
notes bear interest at 7 1/8 %, are due in 2028 and pay interest semi-annually.
Effective, January 1, 1998, the Company adopted Statement of Financial
Accounting Standards, No.130, " Reporting Comprehensive Income". This Statement
establishes standards for reporting and display of comprehensive income and its
components. Comprehensive income reflects the change in equity of a business
enterprise during a period from transactions and other events and circumstances
from non-owner sources. For Ferro, comprehensive income represents net income
adjusted for items such as foreign currency translation adjustments and minimum
pension liability adjustments. Comprehensive income was approximately $11.8
million and $1.5 million for the quarters ended March 31, 1998 and 1997,
respectively. Accumulated other comprehensive income at March 31, 1998 and
December 31, 1997 was $54.8 million and $50.4 million, respectively.
2
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Comparison Between Three Months Ended March 31, 1998 and 1997.
- --------------------------------------------------------------
Net Sales. First quarter 1998 sales of $339.8 million were 0.7% less than the
$342.2 million of the comparable 1997 period.
Sales declined 1.6% in the Coatings, Colors and Ceramics group and 1.0% in the
Chemicals group but increased 2.7% in the Plastics group. The decrease in
Coatings, Colors and Ceramics was mainly due to the negative impact of currency
exchange. The decrease in Chemicals is primarily attributable to a 1997
divestiture. Plastics sales were higher primarily due to strong demand in the
United States for consumer durable goods.
The variety of products sold by the Company makes it difficult to determine with
certainty the increases or decreases in sales resulting from changes in physical
volume of products sold and selling prices. Management's best estimate is that
the 0.7% decrease in sales comprises: volume, 3.1%; price/mix, 0.1%; currency,
- -3.2%; acquisitions, 0.0%; divestitures -0.7%.
Cost of Sales. Gross profit as a percent of sales was 26.5% as compared to the
25.3% for the comparable 1997 period. This improvement was driven by lower
conversion costs associated with increased volumes and improved manufacturing
efficiencies.
Selling, administrative and general expenses. Such expenses increased 2.6% and,
as a percent of sales were 17.5% in the first quarter of 1998 compared to 16.9%
in the first quarter of 1997.
Interest expense. Interest expense of $3.0 million was comparable to the $3.1
million of last year.
Net foreign currency gain or loss. The net foreign currency gain is primarily
attributable to gains on foreign currency option contracts purchased by the
parent company to hedge the earnings of various foreign subsidiaries.
Other income/expense. Net other expense decreased to $1.0 million compared to
the 1997 first quarter expense of $2.5 million.
Income taxes. The effective tax rate declined from 37.9% to 37.6% reflecting
worldwide tax planning and a favorable mix of income from international
subsidiaries with lower tax rates.
Geographic discussion. Sales were up in the United States and Latin America but
down in Europe and Asia-Pacific. Continued economic turmoil in Asia affected
volumes in that region and combined with a 1997 divestiture, led to the sales
decline. European sales were impacted by negative currency translation.
Operating profits were up in all regions, except for Europe which was flat. The
United States
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continued to be strong with operating profit up more than 10%, reflecting the
impact of improved operating profit in the chemicals and plastics groups.
Asia-Pacific, despite a decline in volume, recorded operating profit improvement
of approximately 35%. Being a local supplier to the ceramic tile market in the
region has helped the Company maintain a competitive advantage and secure
earnings growth. Latin America showed operating profit improvement despite
continued difficulty in the Brazilian economy. European operating profit was
flat due to the negative impact of currency translation, which reduced profits.
Liquidity and Capital Resources
- -------------------------------
Working capital. Working capital increased to $210.0 million compared to $149.3
million in the first quarter of 1997. The increase in working capital is
attributable to the proceeds from the issuance of $55 million in 7 1/8%
debentures during the quarter.
Cash flow. Net cash provided from operating activities for the three months
ended March 31, 1998 decreased to $24.9 million compared to the $28.4 million
recorded in the first quarter of 1997. The increase in net cash used for
investing activities is associated with higher level of capital expenditures for
plant and equipment in the first quarter of 1998. The change in net cash from
financing activities is primarily associated with the issuance of $55 million in
7 1/8% debentures during the quarter.
Financing requirements and resources. The long-term debt to equity ratio was
55.6% at March 31, 1998, excluding the loan guarantee of the Employee Stock
Ownership Plan adopted in April 1989, as compared to the 37.3% ratio at December
31, 1997. The increase is attributable to the issuance of $55 million in 7 1/8%
debentures during the quarter. The Company expects to be able to meet the
financial requirements of its existing businesses from existing cash and cash
equivalents and future cash flow. The Company has available to it a $150.0
million five-year revolving credit facility with four domestic banks. There were
no borrowings under this facility as of the close of the quarter ended March 31,
1998. The Company also has $245 million of availability under a Universal Shelf
Registration that was filed with the Securities and Exchange Commission on
October 31, 1995 and declared effective on January 4, 1996, pursuant to which
various types of securities may be issued.
OTHER DEVELOPMENTS
In March 1998, the Company announced that it had signed a definitive agreement
to acquire a majority interest in Ningbo Powder Coatings Company in the Peoples
Republic of China. The transaction is not material to the Company. A new company
called Ferro Ningbo Powder Coatings Company was formed. Ningbo powder coatings
company is an independent powder coatings manufacturer with facilities in
Ningbo, where the company is headquartered and in Xinxiang. Both facilities are
in the eastern region of the country and Ningbo is located approximately 100
miles south of Shanghai.
4
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ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK FACTORS.
Not Applicable
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS.
No change
ITEM 2 - CHANGE IN SECURITIES.
No change.
ITEM 3 - DEFAULT UPON SENIOR SECURITIES.
No change.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At the Annual Meeting of Shareholders held on April 24, 1998, the
Shareholders:
a) Elected three directors to the Ferro Corporation Board of
Directors - Albert C. Bersticker, Michael H. Bulkin and
William J. Sharp - to serve on the Board until the meeting in
the year 2001.
The results of the voting for directors were as follows:
For Against Abstain
--- ------- -------
Bersticker 34,157,124.462 0 397,170.164
Bulkin 33,704,392.943 0 849,901.683
Sharp 34,136,865.696 0 417,428.930
The terms of office for Sandra Harden Austin, Glen R. Brown,
William, E. Butler, John C. Morley, Hector R. Ortino, Rex A.
Sebastian and Dennis W. Sullivan continued after the meeting.
Directors A. James Freeman and Paul S. Brentlinger retired
from the Board on this date.
5
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b) Approved an amendment to the articles of incorporation
increasing the number of authorized common shares from
150,000,000 shares to 300,000,000 shares.
Shareholders approved the proposal to amend to the articles of
incorporation and increase the number of authorized common
shares from 150,000,000 shares to 300,000,000 shares by a vote
of 27,835,132.665 shares for, 6,578,010.767 against and
140,851.194 shares that were present but abstained from voting
on this issue.
c) Adopted a resolution to ratify the designation of KPMG Peat
Marwick LLP as independent auditors of Ferro's books and
accounts.
Shareholders approved the designation of KPMG Peat Marwick LLP
as independent auditors by a vote of 34,348,012.766 shares
for, 106,524.965 shares against and 99,756.895 shares that
were present but abstained from voting on this issue.
ITEM 5 - OTHER INFORMATION.
None.
6
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ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K.
(a) The exhibits listed in the attached Exhibit Index are filed
herewith pursuant to Item 6(a) of the Form 10-Q.
(b) The Company filed one report on Form 8-K on March 31, 1998 for
the quarter ended March 31, 1998. The items reported were the
following exhibits in connection with the offering of 7 1/8%
debentures issued on March 30, 1998:
Exhibit No: Exhibit
(4a-1) Form of Security (7 1/8% Debentures Due 2028)
(12b) Computation of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.
7
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FERRO CORPORATION
(Registrant)
Date: May 15, 1998
/s/Hector R. Ortino
------------------------
Hector R. Ortino
President and Chief Operating Officer
Date: May 15, 1998
/s/ Gary H. Ritondaro
------------------------
Gary H. Ritondaro
Vice President and
Chief Financial Officer
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EXHIBIT 10(b)
SCHEDULE I
Ferro Corporation has entered into executive employment agreements with
the officers listed below. The executive employment agreements are substantially
identical in all material respects to the Form of Executive Employment Agreement
filed as Exhibit 10 hereto, except the lump sum severance payment is equal to a
full year's compensation (base salary and incentive compensation) multiplied by
three in the cases of Albert C. Bersticker and Hector R. Ortino and multiplied
by two in the case of all other officers. These employment agreements supersede
the Amended and Restated Executive Employment Agreements formerly in effect with
the officers (the form of which was filed as Exhibit 10(b) to Ferro
Corporation's Form 10-Q for the three months ended September 30, 1995).
Albert C. Bersticker
David G. Campopiano
R. Jay Finch
James F. Fisher
James B. Friederichsen
D. Thomas George
J. Larry Jameson
Charles M. Less
Hector R. Ortino
Thomas O. Purcell
Paul V. Richard
Gary H. Ritondaro
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EXHIBIT INDEX
Exhibit:
(3) Articles of Incorporation and by-laws
(a) Eleventh Amended Articles of Incorporation. (Reference is made
to Exhibit 3 to Ferro Corporation's Quarterly Report on Form
1O-Q for the three months ended September 30, 1989, which
Exhibit is incorporated here by reference.)
(b) Certificate of Amendment to the Eleventh Amended Articles of
Incorporation of Ferro Corporation filed December 28, 1994.
(Reference is made to Exhibit (3)(b) to Ferro Corporation's
Annual Report on Form 10-K for the year ended December 31,
1994, which Exhibit is incorporated here by reference.)
(c) Amended Code of Regulations. (Reference is made to Exhibit
(3)(b) to Ferro Corporation's Quarterly Report on Form 1O-Q
for the three months ended June 30, 1987, which Exhibit is
incorporated here by reference.)
(4) Instruments defining rights of security holders, including indentures
(a) Shareholder Rights Agreement between Ferro Corporation and
National City Bank, Cleveland, Ohio, as Rights Agent, dated as
of March 22, 1996. (Reference is made to the Exhibit to the
Registration Statement on Form 8-A dated May 15, 1996, which
Exhibit is incorporated here by reference.)
(b) The rights of the holders of Ferro's Debt Securities issued
and to be issued pursuant to an Indenture between Ferro and
Society National Bank, as Trustee, are described in the form
of Indenture dated May 1, 1993 filed as Exhibit 4(j) to Ferro
Corporation's Form 1O-Q for the three months ended June 30,
1993, which Exhibit is incorporated here by reference.
(c) The rights of the holders of Ferro's Debt Securities issued
and to be issued pursuant to a Senior Indenture between Ferro
and Chase Manhattan Trust Company, National Association, as
Trustee, are described in the Senior Indenture, dated as of
March 25, 1998.
(d) Form of Security (7 1/8% Debentures due 2028) filed as Exhibit
4(a-1) to Ferro Corporation's Form 8-K filed March 31, 1998,
which Exhibit is incorporated here by reference.
(10) Material Contracts
(a) Form of Executive Employment Agreement between Ferro
Corporation and certain executive officers.
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(b) Schedule I listing the officers with whom Ferro has entered
into Executive Employment Agreements.
(11) Statement Regarding Computation of Earnings per Share.
(12) Ratio of Earnings to Fixed Charges.
(27) Financial Data Schedule (Electronic Filing Only)
(99) The Condensed Consolidated Balance Sheets as of March 31, 1998
(Unaudited) and December 31, 1997, and the Condensed Consolidated
Statements of Income and Condensed Consolidated Statements of Cash
Flows for the three months March 31, 1998 and 1997 (Unaudited) of Ferro
Corporation and Subsidiaries.
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Exhibit 4(c)
================================================================================
FERRO CORPORATION
and
CHASE MANHATTAN TRUST COMPANY,
NATIONAL ASSOCIATION
Trustee
INDENTURE
Dated as of March 25, 1998
-------------------
================================================================================
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FERRO CORPORATION
Certain Sections of this Indenture relating to
Sections 310 through 318, inclusive, of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
<S> <C> <C> <C>
Section 310 (a)(1) ................................................................ 609
(a)(2) ................................................................ 609
(a)(3) ................................................................ Not Applicable
(a)(4) ................................................................ Not Applicable
(a)(5) ................................................................ 609
(b) ................................................................ 608
................................................................ 610
Section 311 (a) ................................................................ 613
(b) ................................................................ 613
Section 312 (a) ................................................................ 701
................................................................ 702(a)
(b) ................................................................ 702(b)
(c) ................................................................ 702(c)
Section 313 (a) ................................................................ 703(a)
(b) ................................................................ 703(b)
(c) ................................................................ 703(a)
................................................................ 703(b)
(d) ................................................................ 703(c)
Section 314 (a) ................................................................ 704
(a)(4) ................................................................ 1004
(b) ................................................................ Not Applicable
(c)(1) ................................................................ 102
(c)(2) ................................................................ 102
(c)(3) ................................................................ Not Applicable
(d) ................................................................ Not Applicable
(e) ................................................................ 102
Section 315 (a) ................................................................ 601
(b) ................................................................ 602
(c) ................................................................ 601
(d) ................................................................ 601
(e) ................................................................ 514
Section 316 (a) ................................................................ 101
(a)(1)(A) ................................................................ 502
................................................................ 512
(a)(1)(B) ................................................................ 513
(a)(2) ................................................................ Not Applicable
(b) ................................................................ 508
(c) ................................................................ 104(c)
................................................................ 513
</TABLE>
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<TABLE>
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Section 317 (a)(1) ................................................................ 503
(a)(2) ................................................................ 504
(b) ................................................................ 1003
Section 318 (a) ................................................................ 107
<FN>
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NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the
Indenture.
</FN>
</TABLE>
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TABLE OF CONTENTS
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PARTIES.......................................................................................... 1
RECITALS OF THE COMPANY.......................................................................... 1
ARTICLE ONE
Definitions and Other Provisions of General Application
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Section 101. Definitions.................................................................... 1
Act............................................................................ 1
Affiliate...................................................................... 2
Attributable Debt.............................................................. 2
Authenticating Agent........................................................... 2
Board of Directors............................................................. 2
Board Resolution............................................................... 2
Book-Entry Security............................................................ 2
Business Day................................................................... 2
Commission..................................................................... 2
Company........................................................................ 2
Company Request................................................................ 3
Consolidated Net Tangible Assets............................................... 3
Corporate Trust Office......................................................... 3
corporation.................................................................... 3
Debt........................................................................... 3
Defaulted Interest............................................................. 3
Depository..................................................................... 3
Domestic Subsidiary............................................................ 3
Event of Default............................................................... 3
Funded Debt.................................................................... 3
Holder......................................................................... 3
Indenture...................................................................... 3
interest....................................................................... 4
Interest Payment Date.......................................................... 4
Maturity....................................................................... 4
Mortgage....................................................................... 4
Officers' Certificate.......................................................... 4
Opinion of Counsel............................................................. 4
Original Issue Discount Security............................................... 4
Outstanding.................................................................... 4
PARI PASSU..................................................................... 5
Paying Agent................................................................... 5
Person......................................................................... 5
Place of Payment............................................................... 5
Predecessor Security........................................................... 5
Principal Domestic Manufacturing Property...................................... 5
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<FN>
NOTE: This Table of Contents shall not, for any purpose, be deemed to be a part of the
Indenture.
</FN>
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Redemption Date................................................................ 6
Redemption Price............................................................... 6
Regular Record Date............................................................ 6
Securities..................................................................... 6
Security Register.............................................................. 6
Special Record Date............................................................ 6
Stated Maturity................................................................ 6
Subsidiary..................................................................... 6
Trustee........................................................................ 6
Trust Indenture Act............................................................ 6
Vice President................................................................. 6
Yield to Maturity.............................................................. 7
Section 102. Compliance Certificates and Opinions........................................... 7
Section 103. Form of Documents Delivered to Trustee......................................... 7
Section 104. Acts of Holders; Record Dates.................................................. 8
Section 105. Notices, Etc., to Trustee and Company.......................................... 9
Section 106. Notice to Holders; Waiver...................................................... 9
Section 107. Conflict with Trust Indenture Act.............................................. 9
Section 108. Effect of Headings and Table of Contents....................................... 9
Section 109. Successors and Assigns......................................................... 10
Section 110. Separability Clause............................................................ 10
Section 111. Benefits of Indenture.......................................................... 10
Section 112. Governing Law.................................................................. 10
Section 113. Legal Holidays................................................................. 10
ARTICLE TWO
Security Forms
--------------
Section 201. Forms Generally................................................................ 10
Section 202. Form of Face of Security....................................................... 11
Section 203. Form of Reverse of Security.................................................... 12
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<FN>
NOTE: This Table of Contents shall not, for any purpose, be deemed to be a part of the
Indenture.
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Section 204. Additional Provisions Required in Book-Entry Security.......................... 15
Section 205. Form of Trustee's Certificate of Authentication................................ 15
ARTICLE THREE
The Securities
--------------
Section 301. Amount Unlimited; Issuable in Series........................................... 16
Section 302. Denominations.................................................................. 18
Section 303. Execution, Authentication, Delivery and Dating................................. 18
Section 304. Temporary Securities........................................................... 19
Section 305. Registration, Registration of Transfer and Exchange............................ 19
Section 306. Mutilated, Destroyed, Lost and Stolen Securities............................... 21
Section 307. Payment of Interest; Interest Rights Preserved................................. 21
Section 308. Persons Deemed Owners.......................................................... 22
Section 309. Cancellation................................................................... 22
Section 310. Computation of Interest........................................................ 23
ARTICLE FOUR
Satisfaction and Discharge
--------------------------
Section 401. Satisfaction and Discharge of Indenture........................................ 23
Section 402. Application of Trust Money..................................................... 24
ARTICLE FIVE
Remedies
--------
Section 501. Events of Default.............................................................. 24
Section 502. Acceleration of Maturity; Rescission and Annulment............................. 26
Section 503. Collection of Indebtedness and Suits for
Enforcement by Trustee....................................................... 27
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<FN>
NOTE: This Table of Contents shall not, for any purpose, be deemed to be a part of the
Indenture.
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Section 504. Trustee May File Proofs of Claim............................................... 28
Section 505. Trustee May Enforce Claims without Possession
of Securities................................................................ 28
Section 506. Application of Money Collected................................................. 28
Section 507. Limitation on Suits............................................................ 29
Section 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest......................................................... 29
Section 509. Restoration of Rights and Remedies............................................. 29
Section 510. Rights and Remedies Cumulative................................................. 30
Section 511. Delay or Omission Not Waiver................................................... 30
Section 512. Control by Holders............................................................. 30
Section 513. Waiver of Past Defaults........................................................ 31
Section 514. Undertaking for Costs.......................................................... 31
Section 515. Waiver of Stay or Extension Laws............................................... 32
ARTICLE SIX
The Trustee
-----------
Section 601. Certain Duties and Responsibilities............................................ 32
Section 602. Notice of Defaults............................................................. 33
Section 603. Certain Rights of Trustee...................................................... 33
Section 604. Not Responsible for Recitals or Issuance of Securities......................... 34
Section 605. May Hold Securities............................................................ 34
Section 606. Money Held in Trust............................................................ 34
Section 607. Compensation and Reimbursement................................................. 34
Section 608. Disqualification; Conflicting Interests........................................ 35
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<FN>
NOTE: This Table of Contents shall not, for any purpose, be deemed to be a part of the
Indenture.
</FN>
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Section 609. Corporate Trustee Required; Eligibility........................................ 35
Section 610. Resignation and Removal; Appointment of Successor.............................. 35
Section 611. Acceptance of Appointment by Successor......................................... 37
Section 612. Merger, Conversion, Consolidation or Succession
to BusineSection ............................................................ 38
Section 613. Preferential Collection of Claim Against Company............................... 38
Section 614. Appointment of Authenticating Agent............................................ 38
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
-------------------------------------------------
Section 701. Company to Furnish Trustee Names and Addresses
Of Holders................................................................... 39
Section 702. Preservation of Information; Communications
to Holders................................................................... 40
Section 703. Reports by Trustee............................................................. 40
Section 704. Reports by Company............................................................. 41
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
----------------------------------------------------
Section 801. Company May Consolidate, Etc., Only on
Certain Terms................................................................ 41
Section 802. Successor Person Substituted................................................... 42
ARTICLE NINE
Supplemental Indentures
-----------------------
Section 901. Supplemental Indentures Without Consent of Holders............................. 42
Section 902. Supplemental Indentures with Consent of Holders................................ 43
Section 903. Execution of Supplemental Indentures........................................... 44
Section 904. Effect of Supplemental Indentures.............................................. 44
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<FN>
NOTE: This Table of Contents shall not, for any purpose, be deemed to be a part of the
Indenture.
</FN>
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Section 905. Conformity with Trust Indenture Act............................................ 44
Section 906. Reference in Securities to Supplemental Indentures............................. 45
ARTICLE TEN
Covenants
---------
Section 1001. Payment of Principal, Premium and Interest..................................... 45
Section 1002. Maintenance of Office or Agency................................................ 45
Section 1003. Money for Securities Payments to be Held in Trust.............................. 45
Section 1004. Statement by Officers as to Default............................................ 46
Section 1005. Existence...................................................................... 47
Section 1006. Maintenance of Properties...................................................... 47
Section 1007. Payment of Taxes and Other Claims.............................................. 47
Section 1008. Restrictions on Secured Debt................................................... 47
Section 1009. Limitation on Sales and Leasebacks............................................. 48
Section 1010. Waiver of Certain Covenants.................................................... 49
ARTICLE ELEVEN
Redemption of Securities
------------------------
Section 1101. Applicability of Article....................................................... 50
Section 1102. Election to Redeem; Notice to Trustee.......................................... 50
Section 1103. Selection by Trustee of Securities to be Redeemed.............................. 50
Section 1104. Notice of Redemption........................................................... 50
Section 1105. Deposit of Redemption Price.................................................... 51
Section 1106. Securities Payable on Redemption Date.......................................... 51
Section 1107. Securities Redeemed in Part.................................................... 51
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<FN>
NOTE: This Table of Contents shall not, for any purpose, be deemed to be a part of the
Indenture.
</FN>
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ARTICLE TWELVE
Sinking Funds
-------------
Section 1201. Applicability of Article....................................................... 52
Section 1202. Satisfaction of Sinking Fund Payments with Securities.......................... 52
Section 1203. Redemption of Securities for Sinking Fund...................................... 52
ARTICLE THIRTEEN
Defeasance and Covenant Defeasance
----------------------------------
Section 1301. Applicability of Article; Company's Option to
Effect Defeasance or Covenant Defeasance..................................... 53
Section 1302. Defeasance and Discharge....................................................... 53
Section 1303. Covenant Defeasance............................................................ 53
Section 1304. Conditions to Defeasance or Covenant Defeasance................................ 54
Section 1305. Deposited Money and U.S. Government Obligations to
be Held in Trust; Other Miscellaneous Provisions............................. 55
Section 1306. Reinstatement.................................................................. 56
TESTIMONIUM ............................................................................... 56
SIGNATURE AND SEALS ............................................................................... 56
ACKNOWLEDGMENTS ............................................................................... 57
</TABLE>
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[FN]
NOTE: This Table of Contents shall not, for any purpose, be deemed to
be a part of the Indenture.
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<PAGE> 11
INDENTURE, dated as of March 25, 1998 between Ferro Corporation, a
corporation duly organized and existing under the laws of the State of Ohio
(herein called the "Company"), having its principal office at 1000 Lakeside
Avenue, Cleveland, Ohio 44114, and Chase Manhattan Trust Company, National
Association, a national banking association duly organized and existing under
the laws of the United States of America, as Trustee (herein called the
"Trustee").
RECITALS OF THE COMPANY
-----------------------
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), to be issued in one or more series as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of
the Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities or of any series thereof,
as follows:
ARTICLE ONE
Definitions and Other Provisions of General Application
-------------------------------------------------------
Section 101. Definitions.
-----------
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as
the singular;
(2) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein, have
the meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally
accepted accounting principles in the United States, and, except
as otherwise herein expressly provided, the term "generally
accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting
principles as are generally accepted in the United States at the
date of this instrument; and
(4) 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.
"Act", when used with respect to any Holder, has the meaning
specified in Section 104.
<PAGE> 12
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Attributable Debt" means, as to any particular lease under which
any Person is at the time liable, at any date as of which the amount thereof is
to be determined, the total net amount of rent required to be paid by such
Person under such lease during the remaining term thereof (after giving effect
to any extensions at the option of the lessor), discounted from the respective
due dates thereof to such date at a rate of 1% per annum over the weighted
average Yield to Maturity of the Outstanding Securities compounded
semi-annually, such average being weighted by the principal amount of each
series Outstanding or in the case of any series of Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of that series that would be payable upon acceleration of the Maturity
thereof at the time of such determination. The net amount of rent required to be
paid under any such lease for any such period shall be the amount of rent
payable by the lessee with respect to such period, after excluding amounts
required to be paid on account of maintenance and repairs, insurance, taxes,
assessments, water rates and similar charges. In the case of any lease which is
terminable by the lessee upon the payment of a penalty, such net amount shall
also include the amount of such penalty, but no rent shall be considered as
required to be paid under such lease subsequent to the first date upon which it
may be so terminated.
"Authenticating Agent" means any Person authorized by the Trustee
pursuant to Section 614 to act on behalf of the Trustee to authenticate
Securities of one or more Series.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Book-Entry Security" means a Security in the form prescribed in
Section 204 evidencing all or part of a series of Securities, issued to the
Depository for such Series or its nominee, and registered in the name of such
Depository or nominee.
"Business Day", when used with respect to any Place of Payment,
means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on
which banking institutions in that Place of Payment are authorized or obligated
by law or executive order 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 of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
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<PAGE> 13
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President or a Vice President, and by its Treasurer,
an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered
to the Trustee.
"Consolidated Net Tangible Assets" means the aggregate amount of
assets (less applicable reserves and other properly deductible items) after
deducting therefrom (a) all current liabilities (excluding any thereof
constituting Funded Debt by reason of being renewable or extendible) and (b) all
goodwill, trade names, trademarks, patents, unamortized debt discount and
expense and other like intangibles, all as set forth on the most recent
consolidated balance sheet of the Company and its consolidated Subsidiaries and
computed in accordance with generally accepted accounting principles.
"Corporate Trust Office" means the designated office of the
Trustee in the United States of America at which at any particular time its
corporate trust business shall be administered.
"corporation" means a corporation, association, company,
joint-stock company or business trust.
"Debt" shall have the meaning ascribed to it in Section 1008.
"Defaulted Interest" has the meaning specified in Section 307.
"Depository" means, with respect to the Securities of any series
issuable or issued in whole or in part in the form of one or more Book-Entry
Securities, the Person designated as Depository for such series by the Company
pursuant to Section 301, which Person shall be a clearing agency registered
under the Securities Exchange Act of 1934, as amended; and if at any time there
is more than one such Person, `Depository' as used with respect to the
Securities of any series shall mean the Depository with respect to the
Securities of such series.
"Domestic Subsidiary" means a Subsidiary (a) substantially all the
fixed assets of which are located, or substantially all the business of which is
carried on, within the United States of America, or (b) which owns or leases any
Principal Domestic Manufacturing Property, except that such term shall exclude
any Subsidiary the principal business of which is the financing or ownership of
the operations of the Company or its Subsidiaries outside the United States of
America (but such Subsidiary shall be excluded only so long as it shall neither
own nor lease any Principal Domestic Manufacturing Property).
"Event of Default" has the meaning specified in Section 501.
"Funded Debt" means all indebtedness for money borrowed having a
maturity of more than 12 months from the date as of which the amount thereof is
to be determined or having a maturity of less than 12 months but by its terms
being renewable or extendible beyond 12 months from such date at the option of
the borrower.
"Holder" means a Person in whose name a Security is registered in
the Security Register.
"Indenture" means this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument, and any such supplemental
indenture, the provisions of the Trust Indenture Act
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<PAGE> 14
that are deemed to be a part of and govern this instrument and any such
supplemental indenture, respectively. The term "Indenture" shall also include
the terms of particular series of Securities established as contemplated by
Section 301.
"interest", when used with respect to an Original Issue Discount
security which by its terms bears interest only after Maturity, means interest
payable after Maturity.
"Interest Payment Date", when used with respect to any Security,
means the Stated Maturity of an installment of interest on such Security.
"Maturity", when used with respect to any Security, means the date
on which the principal of such Security or an installment of principal becomes
due and payable as therein or herein provided, whether at the Stated Maturity or
by declaration or acceleration, call for redemption or otherwise.
"Mortgage" means and includes any mortgage, pledge, lien, security
interest, conditional sale or other title retention agreement or other similar
encumbrance.
"Officers' Certificate" means a certificate signed by the Chairman
of the Board, a Vice Chairman of the Board, the President or a Vice President,
and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary, of the Company, and delivered to the Trustee. One of the officers
signing an Officers' Certificate given pursuant to Section 1004 shall be the
principal executive, financial or accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may
be counsel for the Company or other counsel acceptable to the Trustee.
"Original Issue Discount Security" means any Security which
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 502.
"Outstanding", when used with respect to Securities, means, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in
the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company) in trust or
set aside and segregated in trust by the Company (if the Company
shall act as its own Paying Agent) for the Holders of such
Securities; PROVIDED that, if such Securities are to be redeemed,
notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has
been made; and
(iii) Securities which have been paid pursuant to Section
306 or in exchange for or in lieu of which other Securities have
been authenticated and delivered pursuant to this Indenture, other
than any such Securities in respect of which there shall have been
presented to the Trustee proof satisfactory to it that such
Securities are held by a bona fide purchaser in whose hands such
Securities are valid obligations of the Company;
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<PAGE> 15
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, (i) the principal
amount of an Original Issue Discount Security that shall be deemed to be
Outstanding shall be the amount of the principal thereof that would be due and
payable as of the date of such determination upon acceleration of the Maturity
thereof pursuant to Section 502, (ii) the principal amount of a Security
denominated in one or more foreign currencies or currency units shall be the
U.S. dollar equivalent, determined in the manner provided as contemplated by
Section 301 on the date of original issuance of such Security, of the principal
amount (or, in the case of an Original Issue Discount Security, the U.S. dollar
equivalent on the date of original issuance of such Security of the amount
determined as provided in (i) above) of such Security and (iii) Securities owned
by the Company or any other obligor upon the Securities owned by the Company or
any other obligor upon the Securities or any Affiliate of the Company or of such
other obligor shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Securities which the Trustee knows to be 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 Company or any other obligor upon the Securities or any Affiliate of
the Company or of such other obligor.
"PARI PASSU", when used with respect to the ranking of any Debt of
any Person in relation to other debt of such Person, means that each such Debt
(a) either (i) is not subordinate in right of payment to any other Debt of such
person or (ii) is subordinate in right of payment to the same Debt of such
Person as is the other and is so subordinate to the same extent and (b) is not
subordinate in right of payment to the other or to any Debt of such Person as to
which the other is not so subordinate.
"Paying Agent" means any Person authorized by the Company to pay
the principal of or any premium or interest on any Securities on behalf of the
Company.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Place of Payment", when used with respect to the Securities of
any series, means the place or places where the principal of and any premium and
interest on the Securities of that series are payable as specified as
contemplated by Section 301.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 306 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Principal Domestic Manufacturing Property" means any building,
structure or other facility, together with the land upon which it is erected and
fixtures comprising a part thereof, used primarily for manufacturing, processing
or warehousing of the Company's products and located in the United States of
America, owned or leased by the Company or any Subsidiary, the gross book value
(without deduction of any depreciation reserves) of which on the date as of
which the determination is being made exceeds 1% of Consolidated Net Tangible
Assets, other than any such building, structure or other facility or portion
thereof or any such land or fixture (i) which is financed by obligations issued
by a State, a Territory, or a possession of the United States, or any political
subdivision of any of the
- 5 -
<PAGE> 16
foregoing, or the District of Columbia, the interest on which is excludable from
gross income of the holders thereof pursuant to the provisions of Section
103(a)(1) of the Internal Revenue Code or the provisions of Section 745 of Title
48 of the United States Code (or any successor to such provisions) as in effect
at the time of the issuance of such obligations, or (ii) which, in the opinion
of the Board of Directors of the Company, is not of material importance to the
total business conducted by the Company and its Subsidiaries as an entirety.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Regular Record Date" for the interest payable on any Interest
Payment Date on the Securities of any series means the date specified for that
purpose as contemplated by Section 301.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and delivered
under this Indenture.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by one
or more other Subsidiaries, or by the Company and one or more other
Subsidiaries. For the purposes of this definition, "voting stock" means stock
which ordinarily has voting power for the election of directors, whether at all
times or only so long as no senior class of stock has such voting power by
reason of any contingency.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder, and
if at any time there is more than one such Person, "Trustee" as used with
respect to the Securities of any series shall mean the Trustee with respect to
Securities of that series.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; PROVIDED, HOWEVER,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Vice President", when used with respect to the Company 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 "vice president".
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<PAGE> 17
"Yield to Maturity" means the yield to maturity calculated at the
time of issuance of a series of Securities, or, if applicable, at the most
recent redetermination of interest on such series, and calculated in accordance
with accepted financial practice.
Section 102. Compliance Certificates and Opinions.
------------------------------------
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company shall furnish
to the Trustee such certificates and opinions as may be required under the Trust
Indenture Act. Each such certificate or opinion shall be given in the form of an
Officers' Certificate, if to be given by an officer of the Company, or an
Opinion of Counsel, if to be given by counsel, and shall comply with the
requirements of the Trust Indenture Act and any other requirements set forth in
this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include
(1) a statement that each individual signing such
certificate or opinion has read such covenant or condition and the
definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to
whether or not such covenant or condition has been complied with;
and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 103. Form of Documents Delivered to Trustee.
--------------------------------------
In any case where several matters are required to be certified by,
or covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of any officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based insofar as it
relates to factual matters, upon a certificate or opinion of, or representations
by, an officer or officers of the Company stating that the information with
respect to such factual matters is in the possession of the Company, unless such
counsel knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to such matters are
erroneous.
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<PAGE> 18
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 104. Acts of Holders; Record Dates.
-----------------------------
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders 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 and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of determining the
Holders of Securities of any series entitled to give or take any request,
demand, authorization, direction, notice, consent, waiver or other action, or to
vote on any action, authorized or permitted to be given or taken by Holders of
Securities of such series. If not set by the Company prior to the first
solicitation of a Holder of Securities of such series in respect of any such
action, or, in the case of any such vote, prior to such vote, the record date
for any such action or vote shall be the 30th day (or, if later, the date of the
most recent list of Holders required to be provided pursuant to Section 701)
prior to such first solicitation or vote, as the case may be. With regard to any
record date for action to be taken by the Holders of one or more series of
Securities, only the Holders of Securities of such series on such date (or their
duly designated proxies) shall be entitled to give or take, or vote on, the
relevant action.
(d) The ownership of Securities shall be proved by the Security
Register.
(e) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee or
the Company in reliance thereon, whether or not notation of such action is made
upon such Security.
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<PAGE> 19
Section 105. Notices, Etc., to Trustee and Company.
-------------------------------------
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished
or filed in writing to or with the Trustee at its Corporate Trust
Office, Attention: Global Trust Services, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to it at the address of its
principal office specified in the first paragraph of this
instrument, Attention: Corporate Secretary, or at any other
address previously furnished in writing to the Trustee by the
Company.
Section 106. Notice to Holders; Waiver.
-------------------------
Where this Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each Holder
affected by such event, at his address as it appears in the Security Register,
not later than the latest date (if any), and not earlier than the earliest date
(if any), prescribed for the giving of such notice. 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 regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
Section 107. Conflict 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, 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 to be excluded, as the case
may be.
Section 108. Effect of Headings and Table of Contents.
----------------------------------------
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
- 9 -
<PAGE> 20
Section 109. Successors and Assigns.
----------------------
All covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.
Section 110. Separability Clause.
-------------------
In case any provision in this Indenture or in the Securities shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 111. Benefits of Indenture.
---------------------
Nothing in this Indenture or in the Securities, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder and the Holders, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
Section 112. Governing Law.
-------------
This Indenture and the Securities shall be governed by and
construed in accordance with the laws of the State of Ohio, exclusive of its
choice of law rules.
Section 113. Legal Holidays.
--------------
In any case where any Interest Payment Date, Redemption Date or
Stated Maturity of any Security shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or of the
Securities other than a provision of the Securities of any series which
specifically states that such provision shall apply in lieu of this Section)
payment of interest or principal (and premium, if any) need not be made at such
Place of Payment on such date, but may be made on the next succeeding Business
Day at such Place of Payment with the same force and effect as if made on the
Interest Payment Date or Redemption Date, or at the Stated Maturity, PROVIDED
that no interest shall accrue with respect to the amount so payable for the
period from and after such Interest Payment Date, Redemption Date or Stated
Maturity, as the case may be.
ARTICLE TWO
Security Forms
--------------
Section 201. Forms Generally.
---------------
The Securities of each series shall be in substantially the form
set forth in this Article, or in such other form as shall be established by or
pursuant to a Board Resolution or in one or more indentures supplemental hereto,
in each case with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture, and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Securities, as evidenced by their execution of the
Securities. If the form of Securities of any series is established by action
taken pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the Company
Order contemplated by Section 303 for the authentication and delivery of such
Securities.
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<PAGE> 21
The definitive Securities shall be printed, lithographed or
engraved on steel engraved borders or may be produced in any other manner, all
as determined by the officers executing such securities, as evidenced by their
execution of such Securities.
Section 202. Form of Face of Security.
------------------------
[Insert any legend required by the Internal Revenue Code and the
----------------------------------------------------------------
regulations thereunder.]
- ------------------------
FERRO CORPORATION
-----------------------------------
No. ___________ $___________
Ferro Corporation, a corporation duly organized and existing under
the laws of Ohio (herein called the "Company", which term includes any successor
Person under the Indenture hereinafter referred to), for value received, hereby
promises to pay to ___________________________, or registered assigns, the
principal sum of ________________________ Dollars ($_________) on
________________________ [IF THE SECURITY IS TO BEAR INTEREST PRIOR TO MATURITY,
INSERT -- , and to pay interest thereon from ___________ or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semi-annually on ______________ and __________ in each year, commencing
____________, at the rate of ____% per annum, until the principal hereof is paid
or made available for payment [IF APPLICABLE, INSERT -- , and (to the extent
that the payment of such interest shall be legally enforceable) at the rate of
____% per annum on any overdue principal and premium and on any overdue
installment of interest]. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in such Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the _________ or ________ (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for will forthwith
cease to be payable to the Holder on such Regular Record Date and may either be
paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities of this series not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the securities of this series may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in said Indenture].
[IF THE SECURITY IS NOT TO BEAR INTEREST PRIOR TO MATURITY, INSERT -- The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal of this Security shall bear
interest at the rate of ____% per annum (to the extent that the payment of such
interest shall be legally enforceable), which shall accrue from the date of such
default in payment to the date payment of such principal has been made or duly
provided for. Interest on any overdue principal shall be payable on demand. Any
such interest on any overdue principal that is not so paid on demand shall bear
interest at the rate of ____% per annum (to the extent that the payment of such
interest shall be legally enforceable), which shall accrue from the date of such
demand for payment to the date payment of such interest has been made or duly
provided for, and such interest shall also be payable on demand.]
- 11 -
<PAGE> 22
Payment of the principal of (and premium, if any) and any such
interest on this Security will be made at the office or agency of the Company
maintained for that purpose in [Cleveland, Ohio], in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts; PROVIDED, HOWEVER, that at the option of
the Company payment of interest may be made by check mailed to the address of
the Person entitled thereto as such address shall appear in the Security
Register or by wire transfer or by transfer through the Automated Clearing House
mechanism to an account maintained by such Person with a bank in the continental
United States (so long as the Paying Agent has received proper transfer
instructions in writing at least five Business Days prior to the Regular Record
Date).
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed
by the Trustee referred to on the reverse hereof by manual signature, this
Security shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.
Dated:
FERRO CORPORATION
By:
---------------------------------
Attest:
- ----------------------------------
Section 203. Form of Reverse of Security.
---------------------------
This Security is one of a duly authorized issue of securities of
the Company (herein called the "Securities"), issued and to be issued in one or
more series under an Indenture, dated as of March, 1998 (herein called the
"Indenture"), between the Company and Chase Manhattan Trust Company, National
Association, as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This Security is one
of the series designated on the face hereof [, limited in aggregate principal
amount to $____________].
[IF APPLICABLE, INSERT -- The Securities of this series are
subject to redemption upon not more than 60 or less than 30 days' notice by
mail, [IF APPLICABLE, INSERT -- (1) on ____________ in any year commencing with
the year _______ and ending with the year _____ through operation of the sinking
fund for this series at a Redemption Price equal to 100% of the principal
amount, and (2)] at any time [on or after _____________, 19__], as a whole or in
part, at the election of the Company, at the following Redemption Prices
(expressed as percentages of the principal amount): If redeemed [on or before
- 12 -
<PAGE> 23
________________, ___%, and if redeemed] during the 12-month period beginning
______________ of the years indicated.
<TABLE>
<CAPTION>
Redemption Redemption
Year Price Year Price
- ---- ---------- ---- ----------
<S> <C> <C> <C>
</TABLE>
and thereafter at a Redemption Price equal to ____% of the principal amount,
together in the case of any such redemption [IF APPLICABLE, INSERT -- (whether
through operation of the sinking fund or otherwise)] with accrued interest to
the Redemption Date, but interest installments whose Stated Maturity is on or
prior to such Redemption Date will be payable to the Holders of such Securities,
or one or more Predecessor securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.]
[IF APPLICABLE, INSERT -- The Securities of this series are
subject to redemption upon not more than 60 or less than 30 days' notice by
mail, (1) on _______________ in any year commencing with the year ____ and
ending with the year ____ through operation of the sinking fund for this series
at the Redemption Prices for redemption through operation of the sinking fund
(expressed as percentages of the principal amount) set forth in the table below,
and (2) at any time [on or after _____________], as a whole or in part, at the
election of the Company, at the Redemption Prices for redemption otherwise than
through operation of the sinking fund (expressed as percentages of the principal
amount) set forth in the table below: If redeemed during the 12-month period
beginning _______________ of the years indicated,
<TABLE>
<CAPTION>
Redemption Price
For Redemption Redemption Price For
Through Operation Redemption Otherwise
of the Than Through Operation
Year Sinking Fund of the Sinking Fund
---- ----------------- -------------------
<S> <C> <C>
</TABLE>
and thereafter at a Redemption Price equal to _____% of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued interest to the Redemption Date, but
interest installments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such Securities, or one or more
Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.]
[Notwithstanding the foregoing, the Company may not, prior to
_______________, redeem any Securities of this series as contemplated by [Clause
(2) of] the preceding paragraph as a part of, or in anticipation of, any
refunding operation by the application, directly or indirectly, of moneys
borrowed having an interest cost to the Company (calculated in accordance with
generally accepted financial practice) of less than ____% per annum.]
- 13 -
<PAGE> 24
[The sinking fund for this series provides for the redemption on
_____________ in each year beginning with the year _______ and ending with the
year _____ of [not less than $________ ("mandatory sinking fund") and not more
than] $_________ aggregate principal amount of Securities of this series.
Securities of this series acquired or redeemed by the Company otherwise than
through [mandatory] sinking fund payments may be credited against subsequent
[mandatory] sinking fund payments otherwise required to be made -- [in the
inverse order in which they become due].]
[IF THE SECURITY IS SUBJECT TO REDEMPTION, INSERT -- In the event
of redemption of this Security in part only, a new Security or Securities of
this series and of like tenor for the unredeemed portion hereof will be issued
in the name of the Holder hereof upon the cancellation hereof.]
[If applicable, insert -- The Securities of this series are not
redeemable prior to maturity.]
[IF THE SECURITY IS NOT AN ORIGINAL ISSUE DISCOUNT SECURITY,
INSERT -- If an Event of Default with respect to Securities of this series shall
occur and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.]
[IF THE SECURITY IS AN ORIGINAL ISSUE DISCOUNT SECURITY, INSERT --
If an Event of Default with respect to Securities of this series shall occur and
be continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal to -- INSERT FORMULA FOR DETERMINING THE
AMOUNT. Upon payment (i) of the amount of principal so declared due and payable
and (ii) of interest on any overdue principal and overdue interest (in each case
to the extent that the payment of such interest shall be legally enforceable),
all of the Company's obligations in respect of the payment of the principal of
and interest, if any, on the Securities of this series shall terminate.]
[The Indenture contains provisions for defeasance at any time of
[the entire indebtedness of this Security or] [certain restrictive covenants and
Events of Default with respect to this Security][, in each case] upon compliance
with certain conditions set forth therein.]
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities [of
each series] to be effected under the Indenture at any time by the Company and
the Trustee with the consent of the Holders of a majority in principal amount of
the Securities at the time Outstanding [of each series] to be affected. The
Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities [of each series] at the time
Outstanding, on behalf of the Holders of all securities [of such series], to
waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange therefor
or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Security.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and any
premium [and interest] on this Security at the times, place and rate, and in the
coin or currency, herein prescribed.
- 14 -
<PAGE> 25
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registerable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of (and
premium, if any) and interest on this security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series and of like tenor, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of $1000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities of this series are exchangeable for a like aggregate principal amount
of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any such agent shall be affected by notice to the
contrary.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
Section 204. Additional Provisions Required in Book-Entry Security.
-----------------------------------------------------
Any Book-Entry Security issued hereunder shall, in addition to the
provisions contained in Sections 202 and 203, bear a legend in substantially the
following form:
"This Security is a Book-Entry Security within the meaning
of the Indenture hereinafter referred to and is registered in
the name of a depository or a nominee of a Depository. This
Security is exchangeable for Securities registered in the name
of a person other than the Depository or its nominee only in
the limited circumstances described in the Indenture and may
not be transferred except as a whole by the Depository to a
nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository."
Section 205. Form of Trustee's Certificate of Authentication.
-----------------------------------------------
The Trustee's certificate of authentication shall be in
-------------------------------------------------------
substantially the following form:
---------------------------------
- 15 -
<PAGE> 26
This is one of the Securities of the series designated herein and
referred to in the within-mentioned Indenture.
---------------------------------------
By:
------------------------------------
Authorized Officer
------------------
ARTICLE THREE
The Securities
--------------
Section 301. Amount Unlimited; Issuable in Series.
------------------------------------
The aggregate principal amount of Securities which may be
authenticated and delivered and Outstanding under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution and, subject to Section 303,
set forth, or determined in the manner provided, 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
of any other series);
(2) any limit upon the aggregate principal amount of the
Securities of the series which may be authenticated and delivered
under this Indenture (except for securities authenticated and
delivered upon registration of transfer of, or in exchange for, or
in lieu of, other Securities of the series pursuant to Section
304, 305, 306, 906 or 1107 and except for any Securities which,
pursuant to Section 303, are deemed never to have been
authenticated and delivered hereunder);
(3) the Person to whom any interest on a Security of the
series shall be payable, if other than the Person in whose name
that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for
such interest;
(4) the date or dates on which the principal of the
Securities of the series is payable;
(5) the rate or rates at which the Securities of the
series shall bear interest, if any, the date or dates from which
such interest shall accrue, the Interest Payment Dates on which
any such interest shall be payable and the Regular Record Date for
any interest payable on any Interest Payment Date;
(6) the place or places where the principal of and any
premium and interest on Securities of the series shall be payable;
(7) the period or periods within which, the price or
prices at which and the terms and conditions upon which Securities
of the series may be redeemed, in whole or in part, at the option
of the Company;
- 16 -
<PAGE> 27
(8) the obligation, if any, of the Company to redeem or
purchase Securities of the series pursuant to any sinking fund or
analogous provisions or at the option of a Holder thereof and the
period or periods within which, the price or prices at which and
the terms and conditions upon which Securities of the series shall
be redeemed or purchased, in whole or in part, pursuant to such
obligation;
(9) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which Securities of the
series shall be issuable;
(10) the currency, currencies or currency units in which
payment of the principal of and any premium and interest on any
Securities of the series shall be payable if other than the
currency of the United States of America and the manner of
determining the equivalent thereof in the currency of the United
States of America for purposes of the definition of "Outstanding"
in Section 101;
(11) if the amount of payments of principal of or any
premium or interest on any Securities of the series may be
determined with reference to an index or formula, the manner in
which such amounts shall be determined;
(12) if the principal of or any premium or interest on any
Securities of the series is to be payable, at the election of the
Company or a Holder thereof, in one or more currencies or currency
units other than that or those in which the Securities are stated
to be payable, the currency, currencies or currency units in which
payment of the principal of and any premium and interest on
Securities of such series as to which such election is made shall
be payable, and the periods within which and the terms and
conditions upon which such election is to be made;
(13) 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 502;
(14) the application, if any, of Section 1302 or 1303 to
the Securities of any series;
(15) whether the Securities of the series shall be issued
in whole or in part in the form of one or more Book-Entry
Securities and, in such case, the Depository with respect to such
Book-Entry Security or Securities and the circumstances under
which any Book-Entry Security may be registered for transfer or
exchange, or authenticated and delivered, in the name of a Person
other than such Depository or its nominee, if other than as set
forth in Section 305; and
(16) any other terms of the series (which terms shall not
be inconsistent with the provisions of this Indenture, except as
permitted by Section 901(5)).
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 the Board Resolution referred to above and (subject to Section 303) set
forth, or determined in the manner provided, in the Officers' Certificate
referred to above or in any such indenture supplemental hereto.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by the
- 17 -
<PAGE> 28
Secretary or an Assistant Secretary of the Company and delivered to the Trustee
at or prior to the delivery of the Officers' Certificate setting forth the terms
of the series.
Section 302. Denominations.
-------------
The Securities of each series shall be issuable in registered form
without coupons in such denominations as shall be specified as contemplated by
Section 301. In the absence of any such provisions with respect to the
Securities of any series, the Securities of such series shall be issuable in
denominations of $1,000 and any integral multiple thereof.
Section 303. Execution, Authentication, Delivery and Dating.
----------------------------------------------
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its President or one of
its Vice Presidents, under its corporate seal reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers and the seal impression on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities or
did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Securities of any Series executed by
the Company to the Trustee for authentication, together with a Company Order for
the authentication and delivery of such Securities, and the Trustee in
accordance with the Company Order shall authenticate and deliver such
Securities. If the form or terms of the Securities of the series have been
established in or pursuant to one or more Board Resolutions as permitted by
Sections 201 and 301, 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 601) shall be
fully protected in relying upon, an Opinion of Counsel stating,
(a) if the form of such Securities has been established by
or pursuant to Board Resolution as permitted by Section 201, that
such form has been established in conformity with the provisions
of this Indenture;
(b) if the terms of such Securities have been established
by or pursuant to Board Resolution as permitted by Section 301,
that such terms have been established in conformity with the
provisions of this Indenture; and
(c) that such Securities, when authenticated and delivered
by the Trustee and issued by the Company in the manner and subject
to any conditions specified in such Opinion of Counsel, will
constitute valid and legally binding obligations of the Company,
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.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
- 18 -
<PAGE> 29
Notwithstanding the provisions of Section 301 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officers' Certificate otherwise
required pursuant to Section 301 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the time
of authentication of each Security of such series if such documents are
delivered at or prior to the authentication upon original issuance of the first
Security of such series to be issued and such documents reasonably contemplate
the issuance of all Securities of such series.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose unless there appears on such Security
a certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder. Notwithstanding the
foregoing, if any Security shall have been authenticated and delivered hereunder
but never issued and sold by the Company, and the Company shall deliver such
Security to the Trustee for cancellation as provided in Section 309, for all
purposes of this Indenture such Security shall be deemed never to have been
authenticated and delivered hereunder and shall never be entitled to the
benefits of this Indenture.
Section 304. Temporary Securities.
--------------------
Pending the preparation of definitive Securities of any Series,
the Company may execute, and upon Company Order the Trustee shall authenticate
and deliver, temporary Securities which are printed, lithographed, typewritten,
or xerographically or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Company will
cause definitive Securities of that series to be prepared without unreasonable
delay. After the preparation of definitive Securities of such series, the
temporary Securities of such series shall be exchangeable for definitive
Securities of such series upon surrender of the temporary Securities of such
series at the office or agency of the Company in a Place of Payment for that
series, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities of any series the Company shall execute and the
Trustee shall authenticate and deliver in exchange therefor one or more
definitive Securities of the same series of any authorized denominations and of
a like principal amount and tenor. Until so exchanged the temporary Securities
of any series shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of such series and tenor.
Section 305. Registration, Registration of Transfer and Exchange.
---------------------------------------------------
The Company shall cause to be kept at the Corporate Trust Office
of the Trustee a register (the register maintained in such office and in any
other office or agency of the Company in a Place of Payment being herein
sometimes collectively referred to as the "Security Register") in which, subject
to such reasonable regulations as it may prescribe, the Company shall provide
for the registration of Securities and of transfers of Securities. The Trustee
is hereby appointed "Security Registrar" for the purpose of registering
Securities and transfers of Securities as herein provided.
- 19 -
<PAGE> 30
Upon surrender for registration of transfer of any Security of any
series at the office or agency in a Place of Payment for that series, the
Company shall execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Securities of
the same series, of any authorized denominations and of a like aggregate
principal amount and tenor.
At the option of the Holder, Securities of any series may be
exchanged for other Securities of the same series, of any authorized
denominations and of a like aggregate principal amount and tenor, upon surrender
of the Securities to be exchanged at such office or agency. Whenever any
Securities are so surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the Securities which the Holder making
the exchange is entitled to receive.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company, evidencing
the same debt, and entitled to the same benefits under this Indenture, as the
Securities surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Security
Registrar) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed, by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer
or exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Securities, other
than exchanges pursuant to Section 304, 906 or 1107 not involving any transfer.
The Company shall not be required (i) to issue, register the
transfer of or exchange Securities of any series during a period beginning at
the opening of business 15 days before the day of the mailing of a notice of
redemption of Securities of that series selected for redemption under Section
1103 and ending at the close of business on the day of such mailing, or (ii) to
register the transfer of or exchange any Security so selected for redemption in
whole or in part, except the unredeemed portion of any Security being redeemed
in part.
Notwithstanding the foregoing, any Book-Entry Security shall be
exchangeable pursuant to this Section 305 for Securities registered in the names
of Persons other than the Depository for such Security or its nominee only if
(i) such Depository notifies the Company that it is unwilling or unable to
continue as Depository for such Book-Entry Security or if at any time such
Depository ceases to be a clearing agency registered under the Securities
Exchange Act of 1934, as amended, (ii) the Company executes and delivers to the
Trustee a Company Order that such Book-Entry Security shall be so exchangeable
or (iii) there shall have occurred and be continuing an Event of Default with
respect to the Securities. Any Book-Entry Security that is exchangeable pursuant
to the preceding sentence shall be exchangeable for Securities registered in
such names as such Depository shall direct.
Notwithstanding any other provision in this Indenture, a
Book-Entry Security may not be transferred except as a whole by the Depository
with respect to such Book-Entry Security to a nominee of such Depository or by a
nominee of such Depository to such Depository or another nominee of such
Depository.
- 20 -
<PAGE> 31
Section 306. Mutilated, Destroyed, Lost and Stolen Securities.
------------------------------------------------
If any mutilated Security is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Security
and (ii) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice to
the Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver in lieu of any such destroyed, lost or stolen Security, a new Security
of the same series and of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section
in lieu of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, 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 this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section 307. Payment of Interest; Interest Rights Preserved.
----------------------------------------------
Except as otherwise provided as contemplated by Section 301 with
respect to any series of Securities, interest on any Security which is payable,
and is punctually paid or duly provided for, on any Interest Payment Date shall
be paid to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest.
Any interest on any Security of any series which is payable, but
is not punctually paid or duly provided for, on any Interest Payment Date
(herein called "Defaulted Interest") shall forthwith cease to be payable to the
Holder on the relevant Regular Record Date by virtue of having been such Holder,
and such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Securities of such
series (or their respective Predecessor Securities) are registered
at the close of business on a Special Record Date for the payment
of such Defaulted Interest, which shall be fixed in the following
manner. The Company shall notify the Trustee in writing of the
amount
- 21 -
<PAGE> 32
of Defaulted Interest proposed to be paid on each Security of such
series and the date of the proposed payment, and at the same time
the Company shall deposit with the Trustee an amount of money
equal to the aggregate amount proposed to be paid in respect of
such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in
this Clause provided. Thereupon the Trustee shall fix a Special
Record Date for the payment of such Defaulted Interest which shall
be not more than 15 days and not less than 10 days prior to the
date of the proposed payment and not less than 10 days after the
receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record
Date and, in the name and at the expense of the Company, shall
cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be mailed, first-class
postage prepaid, to each Holder of Securities of such series at
his address as it appears in the Security Register, not less than
10 days prior to such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date
therefor having been so mailed, such Defaulted Interest shall be
paid to the Persons in whose names the Securities of such series
are registered at the close of business on such Special Record
Date and shall no longer be payable pursuant to the following
Clause (2).
(2) The Company may make payment of any Defaulted Interest
on the Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on
which such Securities may be listed, and upon such notice as may
be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this
Clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
Section 308. Persons Deemed Owners.
---------------------
Prior to due presentment of a Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Security is registered as the owner of
such Security for the purpose of receiving payment of principal of and any
premium and (subject to Section 307), any interest on such Security and for all
other purposes whatsoever, whether or not such Security be overdue, and neither
the Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
Section 309. Cancellation.
------------
All Securities surrendered for payment, redemption, registration
of transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly cancelled by it. The Company may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and may deliver to the Trustee (or to any other Person for delivery
to the Trustee) for cancellation any Securities previously authenticated
hereunder which the Company has not issued and sold, and all Securities so
delivered shall be promptly cancelled
- 22 -
<PAGE> 33
by the Trustee. No Securities shall be authenticated in lieu of or in exchange
for any Securities cancelled as provided in this Section, except as expressly
permitted by this Indenture. All cancelled Securities held by the Trustee shall
be destroyed in accordance with the Trustee's customary practices.
Section 310. Computation of Interest.
-----------------------
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a 360-day year of twelve 30-day months.
ARTICLE FOUR
Satisfaction and Discharge
--------------------------
Section 401. Satisfaction and Discharge of Indenture.
---------------------------------------
This Indenture shall upon Company Request cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for), and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or
stolen and which have been replaced or paid as provided in Section
306 and (ii) Securities for whose payment money has theretofore
been deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged from
such trust, as provided in Section 1003) have been delivered to
the Trustee for cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the
name, and at the expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust
funds in trust for the purpose an amount sufficient to pay and
discharge the entire indebtedness on such Securities not
theretofore delivered to the Trustee for cancellation, for
principal and any premium and interest to the date of such deposit
(in the case of Securities which have become due and payable) or
to the Stated Maturity or Redemption Date, as the case may be;
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<PAGE> 34
(2) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture have been complied
with.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 607, the obligations
of the Trustee to any Authenticating Agent under Section 614 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of Clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
Section 402. Application of Trust Money.
--------------------------
Subject to the provisions of the last paragraph of Section 1003,
all money deposited with the Trustee pursuant to Section 401 shall be held in
trust and applied by it, in accordance with the provisions of the Securities and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and any premium and
interest for whose payment such money has been deposited with the Trustee.
ARTICLE FIVE
Remedies
--------
Section 501. Events of Default.
-----------------
"Event of Default", wherever used herein with respect to
Securities of any series, means any one of the following events (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):
(1) default in the payment of any interest upon any
Security of that series when it becomes due and payable, and
continuance of such default for a period of 30 days; or
(2) default in the payment of the principal of (or
premium, if any, on) any Security of that series at its Maturity;
or
(3) default in the deposit of any sinking fund payment,
when and as due by the terms of a Security of that series; or
(4) default in the performance, or breach, of any covenant
or warranty of the Company in this Indenture (other than a
covenant or warranty a default in whose performance or whose
breach is elsewhere in this Section specifically dealt with or
which has expressly been included in this Indenture solely for the
benefit of series of Securities other than that series), and
continuance of such default or breach for a period of 90 days
after there has been given, by registered or certified mail, to
the Company by the Trustee or to the Company and the Trustee by
the Holders of at least 25% in principal amount of the Outstanding
Securities
- 24 -
<PAGE> 35
of that series 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
(5) a default under any bond, debenture, note or other
evidence of indebtedness for money borrowed in an aggregate
principal amount exceeding $10,000,000 by the Company or any
Domestic Subsidiary or under any mortgage, indenture or instrument
to which the Company or any Domestic Subsidiary is a party as an
obligor or by which either is bound and under which there may be
issued or by which there may be secured or evidenced any
indebtedness for money borrowed in an aggregate principal amount
exceeding $10,000,000, whether such indebtedness now exists or
shall hereafter be created, which default shall have resulted in
such indebtedness becoming or being declared due and payable prior
to the date on which it would otherwise have become due and
payable, without such acceleration having been rescinded or
annulled, or such indebtedness having been discharged, within a
period of 10 days after there shall have been given, by registered
or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in principal amount
of the Outstanding Securities of that series a written notice
specifying such default and requiring the Company to cause such
acceleration to be rescinded or annulled or cause such
indebtedness to be discharged and stating that such notice is a
"Notice of Default" hereunder; provided, however, that subject to
the provisions of Section 601 and 602, the Trustee shall not be
deemed to have knowledge of such default unless either (A) a
responsible officer of the Global Trust Services of the Trustee
shall have actual knowledge of such default or (B) the Trustee
shall have received written notice thereof from the Company, from
any Holder, from the holder of any such indebtedness or from the
trustee under any such mortgage, indenture or other instrument; or
(6) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the
Company in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other
similar law or (B) a decree or order adjudging the Company a
bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of
or in respect of the Company under any applicable Federal or State
law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company or
of any substantial part of its property, or ordering the winding
up or liquidation of its affairs, and the continuance of any such
decree or order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive days; or
(7) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by it to the entry of a decree or order for relief in
respect of the Company in an involuntary case or proceeding under
any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, or the
filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or State
law, or the consent by it to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar
official of the Company or of any substantial part of its
property, or the making by it of an assignment for the benefit of
creditors, or the admission by
- 25 -
<PAGE> 36
it in writing of its inability to pay its debts generally as they
become due, or the taking of corporate action by the Company in
furtherance of any such action; or
(8) Any other Event of Default provided with respect to
Securities of that series.
Upon receipt by the Trustee of any Notice of Default from any
Holder with respect to Securities of a series all or part of which is
represented by a Book-Entry Security, a record date shall be established for
determining Holders of Outstanding Securities of such series entitled to join in
such Notice of Default, which record date shall be at the close of business on
the day the Trustee receives such Notice of Default. The Holders on such record
date, or their duly designated proxies, and only such Persons, shall be entitled
to join in such Notice of Default, whether or not such Holders remain Holders
after such record date; PROVIDED, that unless Holders of at least 25% in
principal amount of the Outstanding Securities of such series, or their proxies,
shall have joined in such Notice of Default prior to the day which is 90 days
after such record date, such Notice of Default shall automatically and without
further action by any Holder be canceled and of no further effect. Nothing in
this paragraph shall prevent a Holder, or a proxy of a Holder, from giving (i)
after expiration of such 90-day period, a new Notice of Default identical to a
Notice of Default which has been canceled pursuant to the proviso to the
preceding sentence, or (ii) during any such 90-day period, an additional Notice
of Default with respect to any new or different fact or circumstance permitting
the giving of a Notice of Default with respect to Securities of such series, in
either of which events a new record date shall be established pursuant to the
provisions of this Section 501.
Section 502. Acceleration of Maturity; Rescission and Annulment.
--------------------------------------------------
If an Event of Default with respect to Securities of any series at
the time Outstanding occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series may declare the principal amount (or, if
any of the Securities of that series are Original Issue Discount Securities,
such portion of the principal amount of such Securities as may be specified in
the terms thereof) of all of the Securities of that series to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee if given
by Holders), and upon any such declaration such principal amount (or specified
amount) shall become immediately due and payable.
At any time after such a declaration of acceleration with respect
to Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article provided, the Holders of a majority in principal amount (or specified
amount) of the Outstanding Securities of that series, by written notice to the
Company and the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Company has paid or deposited with the Trustee a
sum sufficient to pay
(A) all overdue interest on all Securities of that
series,
(B) the principal of (and premium, if any, on) any
Securities of that series which have become due otherwise than by
such declaration of acceleration and interest thereon at the rate
or rates prescribed therefor in such Securities,
- 26 -
<PAGE> 37
(C) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate or rates
prescribed therefor in such Securities, and
(D) all sums paid or advanced by the Trustee hereunder
and the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel; and
(2) all Events of Default with respect to Securities of that
series, other than the non-payment of the principal of Securities of
that series which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Upon receipt by the Trustee of written notice declaring such an
acceleration, or rescission and annulment thereof, with respect to Securities of
a series all or part of which is represented by a Book-Entry Security, a record
date shall be established for determining Holders of Outstanding Securities of
such series entitled to join in such notice, which record date shall be at the
close of business on the day the Trustee receives such notice. The Holders on
such record date, or their duly designated proxies, and only such Persons, shall
be entitled to join in such notice, whether or not such Holders remain Holders
after such record date; PROVIDED, that unless such declaration of acceleration,
or rescission and annulment, as the case may be, shall have become effective by
virtue of the requisite percentage having joined in such notice prior to the day
which is 90 days after such record date, such notice of declaration of
acceleration, or rescission and annulment, as the case may be, shall
automatically and without further action by any Holder be canceled and of no
further effect. Nothing in this paragraph shall prevent a Holder, or a proxy of
a Holder, from giving, (i) after expiration of such 90-day period, a new written
notice of declaration of acceleration or rescission and annulment thereof, as
the case may be, that is identical to a written notice which has been canceled
pursuant to the proviso to the preceding sentence, or (ii) during any such
90-day period, an additional written notice of declaration of acceleration with
respect to Securities of such series, or an additional written notice of
rescission and annulment of any declaration of acceleration with respect to any
other Event of Default with respect to Securities of such series, in either of
which events a new record date shall be established pursuant to the provisions
of this Section 502.
Section 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
---------------------------------------------------------------
The Company covenants that if
(1) default is made in the payment of any interest on any
Security when such interest becomes due and payable and such
default continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and any premium and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal and any premium and on any overdue interest, at the rate or rates
prescribed therefor in such Securities, and, in addition thereto, such
- 27 -
<PAGE> 38
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If an Event of Default with respect to Securities of any series
occurs and is continuing, the Trustee may in its discretion proceed to protect
and enforce its rights and the rights of the Holders of Securities of such
series by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
Section 504. Trustee May File Proofs of Claim.
--------------------------------
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Securities), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 607.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
Section 505. Trustee May Enforce Claims Without Possession of Securities.
-----------------------------------------------------------
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
Section 506. Application of Money Collected.
------------------------------
Any money collected by the Trustee pursuant to this Article shall
be applied in the following order, at the date or dates fixed by the Trustee
and, in case of the distribution of such money on account of principal or any
premium or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the payment of all amounts due the Trustee
under Section 607; and
- 28 -
Section
<PAGE> 39
SECOND: To the payment of the amounts then due and unpaid
for principal of and any premium and interest on the
Securities in respect of which or for the benefit of which
such money has been collected, ratably, without preference
or priority of any kind, according to the amounts due and
payable on such Securities for principal and any premium
and interest, respectively.
Section 507. Limitation on Suits.
-------------------
No Holder of any Security of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Indenture,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default with respect to the
Securities of that series;
(2) the Holders of not less than 25% in principal amount
of the Outstanding Securities of that series shall have made
written request to the Trustee to institute proceedings in respect
of such Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities
to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any
such proceeding; and
(5) no direction inconsistent with such written request
has been given to the Trustee during such 60-day period by the
Holders of a majority in principal amount of the Outstanding
Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
Section 508. Unconditional Right of Holders to Receive Principal, Premium and
----------------------------------------------------------------
Interest.
--------
Notwithstanding any other provision in this Indenture, the Holder
of any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and any premium and (subject to Section 307)
any interest on such Security on the Stated Maturity or Maturities expressed in
such Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
Section 509. Restoration of Rights and Remedies.
----------------------------------
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every
- 29 -
<PAGE> 40
such case, subject to any determination in such proceeding, the Company, the
Trustee and the Holders shall be restored severally and respectively to their
former positions hereunder and thereafter all rights and remedies of the Trustee
and the Holders shall continue as though no such proceeding had been instituted.
Section 510. Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last paragraph
of Section 306, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders 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.
Section 511. Delay or Omission Not Waiver.
----------------------------
No delay or omission of the Trustee or of any Holder of any
Securities to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the Holders,
as the case may be.
Section 512. Control by Holders.
------------------
The Holders of a majority in principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Securities of such series, PROVIDED that
(1) such direction shall not be in conflict with any rule
of law or with this Indenture,
(2) the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction, and
(3) 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 shall be unduly prejudicial to the
interests of holders of the Securities of the series not joining
in the giving of said direction, it being understood that (subject
to Section 601) the Trustee shall have no duty to ascertain
whether or not such actions or forebearances are unduly
prejudicial to such holders.
Upon receipt by the Trustee of any such direction with respect to
Securities of a series all or part of which is represented by a Book-Entry
Security, the Trustee shall establish a record date for determining Holders of
Outstanding Securities of such series
- 30 -
<PAGE> 41
entitled to join in such direction, which record date shall be at the close of
business on the day the Trustee receives such direction. The Holders on such
record date, or their duly designated proxies, and only such Persons, shall be
entitled to join in such direction, whether or not such Holders remain Holders
after such record date; PROVIDED, that unless such majority in principal amount
shall have been obtained prior to the day which is 90 days after such record
date, such direction shall automatically and without further action by any
Holder be canceled and of no further effect. Nothing in this paragraph shall
prevent a Holder, or a proxy of a Holder, from giving, (i) after expiration of
such 90-day period, a new direction identical to a direction which has been
canceled pursuant to the provisions to the preceding sentence or (ii) during any
such 90-day period, a new direction contrary to or different from such
direction, in either of which events a new record date shall be established
pursuant to the provisions of this Section 512.
Section 513. Waiver of Past Defaults.
-----------------------
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to such
series and its consequences, except a default
(1) in the payment of the principal of or any premium or
interest on any Security of such series, or
(2) in respect of a covenant or provision hereof which
under Article Nine cannot be modified or amended without the
consent of the Holder of each Outstanding Security of such series
affected.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Persons entitled to waive any past default
hereunder. If a record date is fixed, the Holders on such record date, or their
duly designated proxies, and only such Persons, shall be entitled to waive any
default hereunder, whether or not such Holders remain Holders after such record
date; PROVIDED, that unless such majority in principal amount shall have been
obtained prior to the date which is 90 days after such record date, any such
waiver previously given shall automatically and without further action by any
Holder be canceled and of no further effect.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
Section 514. Undertaking for Costs.
---------------------
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, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; PROVIDED that neither this Section nor the Trust Indenture Act
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Company.
- 31 -
<PAGE> 42
Section 515. Waiver of Stay or Extension Laws.
--------------------------------
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE SIX
The Trustee
-----------
Section 601. Certain Duties and Responsibilities.
-----------------------------------
The Trustee, prior to the occurrence of an Event of Default and
after the curing or waiving of all Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Indenture. In case an Event of Default 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 person would exercise or use under the
circumstances in the conduct of his or her 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 wilful misconduct, except that
(1) prior to the occurrence of an Event of Default and
after the curing or waiving of all such Events of Default which
may have occurred:
(A) the duties and obligations of the Trustee
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
(B) 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 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;
(2) 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
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<PAGE> 43
(3) 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 of not less than a
majority in principal amount of the Securities of any series at
the time Outstanding 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 with respect to the Securities of such series.
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.
Section 602. Notice of Defaults.
------------------
If a default occurs hereunder with respect to Securities of any
series, the Trustee shall give the Holders of Securities of such series notice
of such default as and to the extent provided by the Trust Indenture Act;
PROVIDED, HOWEVER, that in the case of any default of the character specified in
Section 501(4) with respect to Securities of such series, no such notice to
Holders shall be given until at least 30 days after the occurrence thereof. For
the purpose of this Section, the term "default" means any event which is, or
after notice or lapse of time or both would become, an Event of Default with
respect to Securities of such series.
Section 603. Certain Rights of Trustee.
-------------------------
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence
of indebtedness 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 or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or
Company Order and any resolution of the Board of Directors may be
sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in
reliance thereon;
(e) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the
request or direction of any of the Holders pursuant to this
Indenture, unless such Holders shall have offered to the
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<PAGE> 44
Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in
compliance with such request or direction;
(f) 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, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and,
if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records
and premises of the Company, personally or by agent or attorney;
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 and the Trustee shall not be
responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder.
Section 604. Not Responsible for Recitals or Issuance of Securities.
------------------------------------------------------
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee or any Authenticating Agent assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the securities. The Trustee
or any Authenticating Agent shall not be accountable for the use or application
by the Company of Securities or the proceeds thereof.
Section 605. May Hold Securities.
-------------------
The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other agent of the Company or the Trustee, in its
individual or any other capacity, may become the owner or pledgee of Securities
and, subject to Sections 608 and 613, may otherwise deal with the Company with
the same rights it would have if it were not Trustee, Authenticating Agent,
Paying Agent, Security Registrar or such other agent.
Section 606. Money Held in Trust.
-------------------
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed with the Company.
Section 607. Compensation and Reimbursement.
------------------------------
The Company agrees
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses and
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Section
<PAGE> 45
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence
or bad faith; and
(3) to indemnify the 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 the trust or
trusts hereunder, including the costs and expenses of defending
itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
The Company's payment obligations pursuant to this Section
shall survive the discharge of this Indenture. When the Trustee
incurs expenses after the occurrence of an Event of Default
specified in Section 501(6) or (7) with respect to the Company,
the expenses are intended to constitute expenses of administration
under the Bankruptcy Law.
Section 608. Disqualification; 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 and this Indenture.
Section 609. Corporate Trustee Required; Eligibility.
---------------------------------------
There shall at all times be a Trustee hereunder which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such and
has a combined capital and surplus of at least $50,000,000 and subject to
supervision or examination by Federal or state authority and its Corporate Trust
Office in the United States of America. If such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.
Section 610. Resignation and Removal; Appointment of Successor.
-------------------------------------------------
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the
successor Trustee in accordance with the applicable requirements
of Section 611.
(b) The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof
to the Company. If the instrument of acceptance by a successor
Trustee required by Section 611 shall not have been delivered to
the Trustee within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee
with respect to the Securities of such series.
(c) The Trustee may be removed at any time with respect to
the Securities of any series by Act of the Holders of a majority
in principal amount of
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<PAGE> 46
the Outstanding Securities of such series, delivered to the
Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section
608 after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Security for at
least six months, or
(2) the Trustee shall cease to be eligible under
Section 609 and shall fail to resign after written request
therefor by the Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of
the Trustee or of its property shall be appointed or any
public officer shall take charge or control of the Trustee
or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to all Securities, or (ii) subject to Section 514, any
Holder who has been a bona fide Holder of a Security 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 with respect to all
Securities and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
Trustee for any cause, with respect to the Securities of one or
more series, the Company, by a Board Resolution, shall promptly
appoint a successor Trustee or Trustees with respect to the
Securities of that or those series (it being understood that any
such successor Trustee may be appointed with respect to the
Securities of one or more or all of such series and that at any
time there shall be only one Trustee with respect to the
Securities of any particular series) and shall comply with the
applicable requirements of Section 611. If, within one year after
such resignation, removal or incapability, or the occurrence of
such vacancy, a successor Trustee with respect to the Securities
of any series shall be appointed by Act of the Holders of a
majority in principal amount of the Outstanding Securities of such
series delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with the applicable
requirements of Section 611, become the successor Trustee with
respect to the Securities of such series and to that extent
supersede the successor Trustee appointed by the Company. If no
successor Trustee with respect to the Securities of any series
shall have been so appointed by the Company or the Holders and
accepted appointment in the manner required by Section 611, any
Holder who has been a bona fide Holder of a security 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 appointment of a successor Trustee with
respect to the Securities of such series.
(f) The Company shall give notice of each resignation and
each removal of the Trustee with respect to the Securities of any
series and each appointment of a successor Trustee with respect to
the Securities of any series to all Holders of Securities of such
series in the manner provided in Section 106.
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<PAGE> 47
Each notice shall include the name of the successor Trustee with
respect to the Securities of such series and the address of its
Corporate Trust Office.
Section 611. Acceptance of Appointment by Successor.
--------------------------------------
(a) In case of the appointment hereunder of a successor
Trustee with respect to all Securities, every such successor
Trustee so appointed shall execute, acknowledge and deliver to the
Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the
retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to
such successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such
retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor
Trustee with respect to the Securities of one or more (but not
all) series, the Company, the retiring Trustee and each successor
Trustee with respect to the Securities of one or more series shall
execute and deliver an indenture supplemental hereto wherein each
successor Trustee shall accept such appointment and which (1)
shall contain such provisions as shall be necessary or desirable
to transfer and confirm to, and to vest in, each successor Trustee
all the rights, powers, trusts and duties of the retiring Trustee
with respect to the Securities of that or those series to which
the appointment of such successor Trustee relates, (2) if the
retiring Trustee is not retiring with respect to all Securities,
shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and
duties of the retiring Trustee with respect to the Securities of
that or those series as to which the retiring Trustee is not
retiring shall continue to be vested in the retiring Trustee, and
(3) 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 cotrustees of the same
trust and that each such Trustee shall be trustee of a trust or
trusts hereunder separate and apart from any trust or trusts
hereunder administered by any other such Trustee; and upon the
execution and delivery of such supplemental indenture the
resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates;
but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring
Trustee hereunder with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the
Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all
such rights, powers and trusts referred to in paragraph (a) and
(b) of this Section, as the case may be.
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<PAGE> 48
(d) No successor Trustee shall accept its appointment
unless at the time of such acceptance such successor Trustee shall
be qualified and eligible under this Article.
Section 612. Merger, Conversion, Consolidation or Succession to Business.
-----------------------------------------------------------
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 the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
Section 613. Preferential Collection of Claims Against Company.
-------------------------------------------------
If and when the Trustee shall be or become a creditor of the
Company (or any other obligor upon the Securities), the Trustee shall be subject
to the provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
Section 614. Appointment of Authenticating Agent.
-----------------------------------
The Trustee may appoint an Authenticating Agent or Agents with
respect to one or more series of Securities which shall be authorized to act on
behalf of the Trustee to authenticate Securities of such series issued upon
original issue and upon exchange, registration of transfer or partial redemption
thereof or pursuant to Section 306, and Securities so authenticated shall be
entitled to the benefits of this Indenture and shall be valid and obligatory for
all purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be a corporation organized and
doing business under the laws of the United States of America, any State thereof
or the District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000
(unless it is an Affiliate of the Trustee) and subject to supervision or
examination by Federal or State authority. If such Authenticating Agent
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such Authenticating Agent
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section,
such Authenticating Agent shall resign immediately in the manner and with the
effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an
- 38 -
<PAGE> 49
Authenticating Agent, shall continue to be an Authenticating Agent, provided
such corporation shall be otherwise eligible under this Section, without the
execution or filing of any paper or any further act on the part of the Trustee
or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders of
Securities of the series with respect to which such Authenticating Agent will
serve, as their names and addresses appear in the Security Register. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time
to time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 607.
If an appointment with respect to one or more series is made
pursuant to this Section, the Securities of such series may have endorsed
thereon, in addition to the Trustee's certificate of authentication, an
alternate certificate of authentication in the following form:
This is one of the Securities of the series designated herein and
referred to in the within-mentioned Indenture.
-------------------------------------
As Trustee
By:
-------------------------------------
As Authenticating Agent
By:
-------------------------------------
Authorized Officer
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
-------------------------------------------------
Section 701. Company to Furnish Trustee Names and Addresses Of Holders.
--------------------------------------------------------
The Company will furnish or cause to be furnished to the Trustee
(a) semi-annually, not later than January 15 and July 15
in each year, a list, in such form as the Trustee may reasonably
require, of the names and
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Section
<PAGE> 50
addresses of the Holders as of the preceding January 1 or July 1,
as the case may be, and
(b) at such other times as the Trustee may request in
writing, within 30 days after the receipt by the Company of any
such request, a list of similar form and content as of a date not
more than 15 days prior to the time such list is furnished;
EXCLUDING from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
Section 702. Preservation of Information; Communications to Holders.
------------------------------------------------------
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders
contained in the most recent list furnished to the Trustee as
provided in Section 701 and the names and addresses of Holders
received by the Trustee in its capacity as Security Registrar. The
Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
(b) The rights of the Holders to communicate with other
Holders with respect to their rights under this Indenture or under
the Securities, and the corresponding rights and privileges of the
Trustee, shall be as provided by the Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding
the same, agrees with the Company and the Trustee that neither the
Company nor the Trustee nor any agent of either of them shall be
held accountable by reason of any disclosure of information as to
names and addresses of Holders made pursuant to the Trust
Indenture Act.
Section 703. Reports by Trustee.
------------------
(a) The Trustee shall transmit to Holders such reports
concerning the Trustee and its actions under this Indenture as may
be required pursuant to the Trust Indenture Act within 60 days
after May 15 of each year commencing with the year 1993.
(b) The Trustee shall transmit by mail to all Holders, as
their names and addresses appear in the Security Register, a brief
report with respect to the character and amount of any advances
(and if the Trustee elects so to state, the circumstances
surrounding the making thereof) made by the Trustee (as such)
since the date of the last report transmitted pursuant to
Subsection (a) of this Section (or if no such report has yet been
so transmitted, since the date of execution of this instrument)
for the reimbursement of which it claims or may claim a lien or
charge, prior to that of the Securities, on property or funds held
or collected by it as Trustee and which it has not previously
reported pursuant to this Subsection, except that the Trustee
shall not be required (but may elect) to report such advances to
the Holders of Securities of any series if such advances remaining
unpaid at any time aggregate 10% or less of the principal amount
of the Securities of such series Outstanding at such time, such
report to be transmitted within 90 days after such time.
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<PAGE> 51
(c) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock
exchange upon which any Securities are listed, with the Commission
and with the Company. The Company will notify the Trustee when any
Securities are listed on any stock exchange.
Section 704. Reports by Company.
------------------
The Company 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 such 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.
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
----------------------------------------------------
Section 801. Company May Consolidate, Etc., Only on Certain Terms.
----------------------------------------------------
The Company shall not consolidate with or merge into any other
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, and the Company shall not permit any Person to
consolidate with or merge into the Company or convey, transfer or lease its
properties and assets substantially as an entirety to the Company, unless:
(1) in case the Company shall consolidate with or merge
into another Person or convey, transfer or lease its properties
and assets substantially as an entirety to any Person, the Person
formed by such consolidation or into which the Company is merged
or the Person which acquires by conveyance or transfer, or which
leases, the properties and assets of the Company substantially as
an entirety shall be a corporation, partnership or trust, shall be
organized and validly existing under the laws of the United States
of America, any State thereof or the District of Columbia and
shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the
Trustee, the due and punctual payment of the principal of and any
premium and interest on and any sinking fund payment in respect
of, all the Securities and the performance or observance of every
covenant of this Indenture on the part of the Company to be
performed or observed;
(2) immediately after giving effect to such transaction
and treating any indebtedness which becomes an obligation of the
Company or a Subsidiary as a result of such transaction as having
been incurred by the Company or such Subsidiary at the time of
such transaction, no Event of Default, and no event which, after
notice or lapse of time or both, would become an Event of Default,
shall have happened and be continuing;
(3) if, as a result of any such consolidation or merger or
such conveyance, transfer or lease, properties or assets of the
Company or a Domestic Subsidiary would become subject to a
Mortgage, which would not be permitted by Section 1008, the
Company or such successor Person, as the case may be, shall
- 41 -
<PAGE> 52
take such steps as shall be necessary effectively to secure the
Securities equally and ratably with (or prior to) all indebtedness
secured thereby; and
(4) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a
supplemental indenture is required in connection with such
transaction, such supplemental indenture comply with this Article
and that all conditions precedent herein provided for relating to
such transaction have been complied with.
Section 802. Successor Person Substituted.
----------------------------
Upon any consolidation of the Company with or merger of the
Company into any other Person or any conveyance, transfer or lease of the
properties and assets of the Company substantially as an entirety in accordance
with Section 801, the successor Person formed by such consolidation or into
which the Company is merged or to which such conveyance, transfer or lease is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein, and thereafter, except in
the case of a lease, the predecessor Person shall be relieved of all obligations
and covenants under this Indenture and the Securities.
ARTICLE NINE
Supplemental Indentures
-----------------------
Section 901. Supplemental Indentures Without Consent of Holders.
--------------------------------------------------
Without the consent of any Holders, the Company, when authorized
by a Board Resolution, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form satisfactory to
the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants
of the Company herein and in the Securities; or
(2) to add to the covenants of the Company for the benefit
of the Holders of all or any series of Securities (and if such
covenants are to be for the benefit of less than all series of
Securities, stating that such covenants are expressly being
included solely for the benefit of such series) or to surrender
any right or power herein conferred upon the Company; or
(3) to add any additional Events of Default; or
(4) to add to or change any of the provisions of this
Indenture to such extent as shall be necessary to permit or
facilitate the issuance of Securities in bearer form, registrable
or not registrable as to principal, and with or without interest
coupons, or to permit or facilitate the issuance of Securities in
uncertificated form; or
(5) to add to, change or eliminate any of the provisions of
this Indenture in respect of one or more series of Securities,
PROVIDED that any such
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<PAGE> 53
addition, change or elimination (i) shall neither (A) apply to any
Security of any series created prior to the execution of such
supplemental indenture and entitled to the benefit of such
provision nor (B) modify the rights of the Holder of any such
Security with respect to such provision or (ii) shall become
effective only when there is no such Security Outstanding; or
(6) to secure the Securities pursuant to the requirements
of Section 1008 or otherwise; or
(7) to establish the form or terms of Securities of any
series as permitted by Sections 201 and 301; or
(8) 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
611(b); or
(9) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other
provision herein, or to make any other provisions with respect to
matters or questions arising under this Indenture, PROVIDED, that
such action pursuant to this clause (9) shall not adversely affect
the interests of the Holders of Securities of any series in any
material respect.
Section 902. Supplemental Indentures with Consent of Holders.
-----------------------------------------------
With the consent of the Holders of not less than majority in
principal amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee may
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Securities of such series under this Indenture; PROVIDED, HOWEVER,
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Security, or
reduce the principal amount thereof or the rate of interest
thereon or any premium payable upon the redemption thereof, or
reduce the amount of the principal of an Original Issue Discount
Security that would be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 502, or
change any Place of Payment where, or the coin, currency or
currency unit in which, any Security or any premium or any
interest thereon is payable, or impair the right to institute suit
for the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption, on or after the
Redemption Date), or
(2) reduce the percentage in principal amount of the
Outstanding Securities of any series, the consent of whose Holders
is required for any such supplemental indenture, or the consent of
whose Holders is required for any waiver (of compliance with
certain provisions of this Indenture or certain defaults hereunder
and their consequences) provided for in this Indenture, or
- 43 -
<PAGE> 54
(3) modify any of the provisions of this Section, Section
513 or Section 1010, except to increase any such percentage or to
provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each
Outstanding Security affected thereby, PROVIDED HOWEVER, that this
clause shall not be deemed to require the consent of any Holder
with respect to changes in the references to "the Trustee" and
concomitant changes in this Section and Section 1010, or the
deletion of this proviso, in accordance with the requirements of
Sections 611(b) and 901(8).
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Persons entitled to consent to any indenture
supplemental hereto. If a record date is fixed, the Holders on such record date,
or their duly designated proxies, and only such Persons, shall be entitled to
consent to such supplemental indenture, whether or not such Holders remain
Holders after such record date; PROVIDED, that unless such consent shall have
become effective by virtue of the requisite percentage having been obtained
prior to the date which is 90 days after such record date, any such consent
previously given shall automatically and without further action by any Holder be
canceled and of no further effect.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
Section 903. Execution of Supplemental Indentures.
------------------------------------
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not
(except to the extent required in the case of a supplemental indenture entered
into under Section 901(8)) be obligated to, enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
Section 904. Effect of Supplemental Indentures.
---------------------------------
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
Section 905. Conformity with Trust Indenture Act.
-----------------------------------
Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act.
- 44 -
<PAGE> 55
Section 906. Reference in Securities to Supplemental Indentures.
--------------------------------------------------
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities of any series so modified as to conform, in the opinion of the
Trustee and the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.
ARTICLE TEN
Covenants
---------
Section 1001. Payment of Principal, Premium and Interest.
------------------------------------------
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of and any premium
and interest on the Securities of that series in accordance with the terms of
the Securities and this Indenture.
Section 1002. Maintenance of Office or Agency.
-------------------------------
The Company will maintain in each Place of Payment for any series
of Securities an office or agency where Securities of that series may be
presented or surrendered for payment, where Securities of that series may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Securities of that series and
this Indenture may be served. The Company will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; PROVIDED, HOWEVER, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in each Place of Payment for Securities of any series for such
purposes. The Company will give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
Section 1003. Money for Securities Payments to Be Held in Trust.
-------------------------------------------------
If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of the
principal of and any premium or interest on any of the Securities of that
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal and any premium or interest so
becoming due until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and will promptly notify the Trustee of its action or
failure so to act.
- 45 -
<PAGE> 56
Whenever the Company shall have one or more Paying Agents for any
series of Securities, it will, prior to each due date of the principal of and
any premium or interest on any Securities of that series, deposit with a Paying
Agent a sum sufficient to pay such amount, such sum to be held as provided by
the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the
Company will promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent for any series of
Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will (i) comply with the
provisions of the Trust Indenture Act applicable to it as a Paying Agent and
(ii) during the continuance of any default by the Company (or any other obligor
upon the Securities of that series) in the making of any payment in respect of
the Securities of that series, and upon the written request of the Trustee,
forthwith pay to the Trustee all sums held in trust by such Paying Agent for
payment in respect of the Securities of that series.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of and any
premium or interest on any Security of any series and remaining unclaimed for
two years after such principal (and premium, if any) or interest has become due
and payable shall be paid to the Company on Company Request, or (if then held by
the Company) shall be discharged from such trust; and the Holder of such
Security shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in New York, New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
Section 1004. Statement by Officers as to Default.
-----------------------------------
The Company will deliver to the Trustee, within 120 days after the
end of each fiscal year of the Company ending after the date hereof, an
Officers' Certificate, stating whether or not to the best knowledge of the
signers thereof the Company is in compliance with all of the terms, provisions,
covenants and conditions of this Indenture (without regard to any period of
grace or requirement of notice provided hereunder) and, if the Company shall be
in default with respect to or shall not be in compliance with all such terms,
provisions, covenants and conditions, specifying all such defaults or events of
noncompliance and the nature and status thereof of which they may have
knowledge.
- 46 -
<PAGE> 57
Section 1005. Existence.
---------
Subject to Article Eight, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect its
existence, rights (charter and statutory) and franchises; PROVIDED, HOWEVER,
that the Company shall not be required to preserve any such right or franchise
if the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
Section 1006. Maintenance of Properties.
-------------------------
The Company will cause all properties used or useful in the
conduct of its business or the business of any Subsidiary to be maintained and
kept in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; PROVIDED,
HOWEVER, that nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, in the judgment of the Company, desirable in the conduct of
its business or the business of any Subsidiary and not disadvantageous in any
material respect to the Holders.
Section 1007. Payment of Taxes and Other Claims.
---------------------------------
The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (1) all taxes, assessments
and governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary, and (2)
all lawful claims for labor, materials and supplies which, if unpaid, might by
law become a lien upon the property of the Company or any Subsidiary; provided,
however, that the Company shall not be required to pay or discharge or cause to
be paid or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
actions or proceedings.
Section 1008. Restrictions on Secured Debt.
----------------------------
The Company will not itself, and will not permit any Domestic
Subsidiary to, incur, issue, assume or guarantee any indebtedness for money
borrowed represented by notes, bonds, debentures or other similar evidences of
indebtedness for money borrowed (such notes, bonds, debentures or other similar
evidences of indebtedness for money borrowed being hereinafter in this Article
called "Debt"), secured by a Mortgage on any Principal Domestic Manufacturing
Property of the Company or any Domestic Subsidiary, or any shares of stock or
Debt of any Domestic Subsidiary, without effectively providing that the
Outstanding Securities (together with, if the Company shall so determine, any
other Debt of the Company or such Domestic Subsidiary then existing or
thereafter created which is not subordinate to the Securities) shall be secured
equally and ratably with (or prior to) such secured Debt (for the purpose of
providing such equal and ratable security, the principal amount of Outstanding
Securities of any series of Original Issue Discount Securities shall be such
portion of the principal amount as may be specified in the terms of that series
that would be payable upon acceleration of the Maturity thereof at the time of
such determination), so long as such secured Debt shall be so secured, unless,
after giving effect thereto, the aggregate amount of all such secured Debt plus
all Attributable Debt of the Company and its Domestic Subsidiaries in respect of
sale and leaseback transactions (as defined in Section 1009) would not exceed
10% of Consolidated Net Tangible Assets;
- 47 -
<PAGE> 58
PROVIDED, HOWEVER, that this Section shall not apply to, and there shall be
excluded from secured Debt in any computation under this Section, Debt secured
by:
(1) Mortgages on property of, or on any shares of stock or
Debt of, any corporation existing at the time such corporation
becomes a Domestic Subsidiary;
(2) Mortgages in favor of the Company or any Domestic
Subsidiary;
(3) Mortgages on property of the Company or a Domestic
Subsidiary in favor of the United States of America or any State
thereof, or Puerto Rico, or any department, agency or
instrumentality or political subdivision of the United States of
America or any State thereof, or Puerto Rico, 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;
(4) Mortgages on property, shares of stock or Debt existing
at the time of acquisition thereof (including acquisition through
merger or consolidation) or to secure the payment of all or any
part of the purchase price or construction or improvement cost
thereof or to secure any Debt incurred prior to, at the time of,
or within 120 days after, the acquisition of such property or
shares or Debt or the completion of any such construction or
improvement for the purpose of financing all or any part of the
purchase price or construction or improvement cost thereof;
(5) Mortgages securing obligations issued by a State,
territory or possession of the United States, any political
subdivision of any of the foregoing, or the District of Columbia,
or any instrumentality of the foregoing to finance the acquisition
or construction of property, and on which the interest is not, in
the opinion of tax counsel of recognized standing or in accordance
with a ruling of the Internal Revenue Service, includable in gross
income of the holder by reason of Section 103(a)(1) of the
Internal Revenue Code (or any successor to such provision as in
effect at the time of issuance of such obligations); and
(6) Any extension, renewal or replacement (or successive
extensions, renewals or replacements), as a whole or in part, of
any Debt secured by any Mortgage referred to in the foregoing
clauses (1) to (5), inclusive; provided, that (i) such extension,
or replacement Mortgage shall be limited to all or a part of the
same property, shares of stock or Debt that secured the Mortgage
extended, renewed or replaced (plus improvements on such property)
and (ii) the Debt secured by such Mortgage at such time is not
increased.
Section 1009. Limitation on Sales and Leasebacks.
----------------------------------
The Company will not itself, and it will not permit any Domestic
Subsidiary to, enter into any arrangement with any bank, insurance company or
other lender or investor (not including the Company or any Subsidiary) or to
which any such lender or investor is a party, providing for the leasing by the
Company or any Domestic Subsidiary for a period, including renewals, in excess
of three years of any Principal Domestic Manufacturing Property which has been
or is to be sold or transferred, more than 120 days after the acquisition
thereof or the completion of construction and commencement of full operation
thereof, by the Company or any Domestic Subsidiary to such lender or investor or
to any person to whom funds have been or are to be advanced by such lender or
investor on the security of such Principal Domestic Manufacturing Property
(herein referred to as a "sale and leaseback transaction") unless either:
- 48 -
Section
<PAGE> 59
(1) the Company or such Domestic Subsidiary could create
Debt secured by a Mortgage pursuant to Section 1008 on the
Principal Domestic Manufacturing Property to be leased back in an
amount equal to the Attributable Debt with respect to such sale
and leaseback transaction without equally and ratably securing the
Outstanding Securities, or
(2) the Company within 120 days after the sale or transfer
shall have been made by the Company or by any such Domestic
Subsidiary, applies an amount equal to the greater of (i) the net
proceeds of the sale of the Principal Domestic Manufacturing
Property sold and leased back pursuant to such arrangement or (ii)
the fair market value of the Principal Domestic Manufacturing
Property so sold and leased back at the time of entering into such
arrangements (as determined by any two of the following: the
Chairman of the Board of the Company, its President, any Vice
President, Finance of the Company, its Treasurer and its
Controller) to the retirement of Funded Debt of the Company which
is PARI PASSU with the Outstanding Securities; PROVIDED, that the
amount to be applied to the retirement of Funded Debt of the
Company shall be reduced by (a) the principal amount of any
Securities delivered within 120 days after such sale to the
Trustee for retirement and cancellation, and (b) the principal
amount of such Funded Debt, other than Securities, voluntarily
retired by the Company within 120 days after such sale.
Notwithstanding the foregoing, no retirement referred to in this
clause (2) may be effected by payment at maturity or pursuant to
any mandatory sinking fund payment or any mandatory prepayment
provision.
Section 1010. Waiver of Certain Covenants.
---------------------------
The Company may omit in any particular instance to comply with any
term, provision or condition set forth in Sections 1005 to 1009, inclusive, with
respect to the Securities of any series if before the time for such compliance
the Holders of at least a majority in principal amount of the Outstanding
Securities of such series shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such term,
provision or condition, but no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such term, provision or condition shall remain in
full force and effect.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Persons entitled to waive any such term,
provision or condition. If a record date is fixed, the Holders on such record
date, or their duly designated proxies, and only such Persons, shall be entitled
to waive any such term, provision or condition hereunder, whether or not such
Holders remain Holders after such record date; PROVIDED, that unless the Holders
of at least a majority in principal amount of the Outstanding Securities of such
series shall have waived such term, provision or condition prior to the date
which is 90 days after such record date, any such waiver previously given shall
automatically and without further action by any Holder be canceled and of no
further effect.
- 49 -
<PAGE> 60
ARTICLE ELEVEN
Redemption of Securities
------------------------
Section 1101. Applicability of Article.
------------------------
Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 301 for Securities of any series)
in accordance with this Article.
Section 1102. Election to Redeem; Notice to Trustee.
-------------------------------------
The election of the Company to redeem any Securities shall be
evidenced by a Board Resolution. In case of any redemption at the election of
the Company of less than all the Securities of any series, the Company shall, at
least 60 days prior to the Redemption Date fixed by the Company (unless a
shorter notice shall be satisfactory to the Trustee in its sole discretion),
notify the Trustee of such Redemption Date and of the principal amount of
Securities of such series to be redeemed and, if applicable, of the tenor of the
Securities to be redeemed. In the case of any redemption of Securities prior to
the expiration of any restriction on such redemption provided in the terms of
such Securities or elsewhere in this Indenture, the Company shall furnish the
Trustee with an Officers' Certificate evidencing compliance with such
restriction.
Section 1103. Selection by Trustee of Securities to be Redeemed.
-------------------------------------------------
If less than all the Securities of any series are to be redeemed
(unless all of the Securities of such series and of a specified tenor are to be
redeemed) the particular Securities to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities of such series not previously called for redemption, by such method
as the Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions (equal to the minimum authorized
denomination for Securities of that series or any integral multiple thereof) of
the principal amount of Securities of such series of a denomination larger than
the minimum authorized denomination for Securities of that series. If less than
all of the Securities of such series and of a specified tenor are to be
redeemed, the particular Securities to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities of such series and specified tenor not previously called for
redemption in accordance with the preceding sentence.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities 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 shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
Section 1104. Notice of Redemption.
--------------------
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the Security Register.
- 50 -
<PAGE> 61
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price (and interest, if any),
(3) if less than all the Outstanding Securities of any
series are to be redeemed, the identification (and, in the case of
partial redemption of any Securities, the principal amounts) of
the particular Securities to be redeemed,
(4) that on the Redemption Date the Redemption Price (and
interest, if any) will become due and payable upon each such
Security or portion thereof to be redeemed and, if applicable,
that interest thereon will cease to accrue on and after said date,
(5) the place or places where such Securities are to be
surrendered for payment of the Redemption Price (and interest, if
any), and
(6) that the redemption is for a sinking fund, if such is
the case.
Notice of redemption of Securities to be redeemed at the election
of the Company shall be given by the Company or, at the Company's request, by
the Trustee in the name and at the expense of the Company.
Section 1105. Deposit of Redemption Price.
---------------------------
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date.
Section 1106. Securities Payable on Redemption Date.
-------------------------------------
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such date
(unless the Company shall default in the payment of the Redemption Price and
accrued interest) such Securities shall cease to bear interest. Upon surrender
of any such Security for redemption in accordance with said notice, such
Security shall be paid by the Company at the Redemption Price, together with
accrued interest to the Redemption Date; PROVIDED, HOWEVER, that, unless
otherwise specified as contemplated by Section 301, installments of interest
whose Stated Maturity is on or prior to the Redemption Date will be payable to
the Holders of such Securities, or one or more Predecessor Securities,
registered as such at the close of business on the relevant Record Dates
according to their terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal and any premium shall, until
paid, bear interest from the Redemption Date at the rate prescribed therefor in
the Security.
Section 1107. Securities Redeemed in Part.
---------------------------
Any Security which is to be redeemed only in part shall be
surrendered at a Place of Payment therefor (with, if the Company or the Trustee
so requires, due endorsement by,
- 51 -
<PAGE> 62
or a written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly authorized in
writing), and the Company shall execute, and the Trustee shall authenticate and
deliver to the Holder of such Security without service charge, a new Security or
Securities of the same series and of like tenor, of any authorized denomination
as requested by such Holder, in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Security so
surrendered. If a Book-Entry Security is so surrendered, such new Security so
issued shall be a new Book-Entry Security.
ARTICLE TWELVE
Sinking Funds
-------------
Section 1201. Applicability of Article.
------------------------
The provisions of this Article shall be applicable to any sinking
fund for the retirement of Securities of a series except as otherwise specified
as contemplated by Section 301 for Securities of such series.
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". If provided for by the terms of Securities of any series,
the cash amount of any sinking fund payment may be subject to reduction as
provided in Section 1202. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of such series.
Section 1202. Satisfaction of Sinking Fund Payments with Securities.
-----------------------------------------------------
The Company (1) may deliver Outstanding Securities of a series
(other than any previously called for redemption) and (2) may apply as a credit
Securities of a series which have been redeemed either at the election of the
Company pursuant to the terms of such Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of such series required to be made
pursuant to the terms of such Securities as provided for by the terms of such
series; PROVIDED that such Securities have not been previously so credited. Such
Securities shall be received and credited for such purpose by the Trustee at the
Redemption Price specified in such Securities for redemption through operation
of the sinking fund and the amount of such sinking fund payment shall be reduced
accordingly.
Section 1203. Redemption of Securities for Sinking Fund.
-----------------------------------------
Not less than 90 days prior to each sinking fund payment date for
any series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied by delivering and crediting Securities of that series
pursuant to Section 1202 and will also deliver to the Trustee any Securities to
be so delivered. Not less than 60 days before each such sinking fund payment
date the Trustee shall select the Securities to be redeemed upon such sinking
fund payment date in the manner specified in Section 1103 and cause notice of
the redemption thereof to be given in the name
- 52 -
<PAGE> 63
of and at the expense of the Company in the manner provided in Section 1104.
Such notice having been duly given, the redemption of such Securities shall be
made upon the terms and in the manner stated in Sections 1105, 1106 and 1107.
ARTICLE THIRTEEN
----------------
Defeasance and Covenant Defeasance
----------------------------------
<TABLE>
<S> <C>
Section 1301. Applicability of Article; Company's Option to Effect Defeasance or
------------------------------------------------------------------
Covenant Defeasance.
--------------------
</TABLE>
If pursuant to Section 301 provision is made for either or both of
(a) defeasance of the Securities of a series under Section 1302 or (b) covenant
defeasance of the Securities of a series under Section 1303, then the provisions
of such Section or Sections, as the case may be, together with the other
provisions of this Article Thirteen, shall be applicable to the Securities of
such series, and the Company may at its option by Board Resolution, at any time,
with respect to the Securities of such series, elect to have either Section 1302
(if applicable) or Section 1303 (if applicable) be applied to the Outstanding
Securities of such series upon compliance with the conditions set forth below in
this Article Thirteen.
Section 1302. Defeasance and Discharge.
------------------------
Upon the Company's exercise of the above option applicable to this
Section, the Company shall be deemed to have been discharged from its
obligations with respect to the Outstanding Securities of such series on and
after the date the conditions precedent set forth below are satisfied
(hereinafter, "defeasance"). For this purpose, such defeasance means that the
Company 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 Company,
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 1304 as more fully set
forth in such Section, payments of the principal of (and premium, if any) and
interest on such Securities when such payments are due, (B) the Company's
obligations with respect to such Securities under Sections 304, 305, 306, 1002
and 1003 and such obligations as shall be ancillary thereto, (C) the rights,
powers, trusts, duties, immunities and other provisions in respect of the
Trustee hereunder and (D) this Article Thirteen. Subject to compliance with this
Article Thirteen, the Company may exercise its option under this Section 1302
notwithstanding the prior exercise of its option under Section 1303 with respect
to the Securities of such series.
Section 1303. Covenant Defeasance.
-------------------
Upon the Company's exercise of the above option applicable to this
Section, the Company shall be released from its obligations under Sections 801,
1008 and 1009 (and any covenant applicable to such Securities that are
determined pursuant to Section 301 to be subject to this provision) and the
occurrence of an event specified in Section 501(4) (with respect to any of
Sections 801, 1008 or 1009) (and any other Event of Default applicable to such
Securities that are determined pursuant to Section 301 to be subject to this
provision) shall not be deemed to be an Event of Default with respect to the
Outstanding Securities of such series 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
- 53 -
<PAGE> 64
Outstanding Securities of such series, the Company may omit to comply with and
shall have no liability in respect of any term, condition or limitation set
forth in any such Section or Clause whether directly or indirectly by reason of
any reference elsewhere herein to any such Section or Clause or by reason of any
reference in any such Section or Clause to any other provision herein or in any
other document, but the remainder of this Indenture and such Securities shall be
unaffected thereby.
Section 1304. Conditions to Defeasance or Covenant Defeasance.
-----------------------------------------------
The following shall be the conditions precedent to application of
either Section 1302 or Section 1303 to the Outstanding Securities of such
series:
(1) The Company shall irrevocably have deposited or caused
to be deposited with the Trustee (or another trustee satisfying
the requirements of Section 609 who shall agree to comply with the
provisions of this Article Thirteen 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, (A) money in an amount,
or (B) 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, money in an amount, or (C) a combination
thereof, sufficient, without reinvestment, 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, the
principal of (and premium, if any) and interest on the Outstanding
Securities of such series on the Maturity of such principal,
premium, if any, or interest. Before such a deposit the Company
may make arrangements satisfactory to the Trustee for the
redemption of Securities at a future date or dates in accordance
with Article Eleven, which shall be given effect in applying the
foregoing. For this purpose, "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.
(2) No Event of Default or event which with notice or
lapse of time or both would become an Event of Default with
respect to the Securities of such series shall have occurred and
be continuing (A) on the date of such deposit or (B) insofar as
subsections 501(6) and (7) are concerned, at any time during the
period ending on the 121st 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
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<PAGE> 65
Company in respect of such deposit (it being understood that the
condition in this condition shall not be deemed satisfied until
the expiration of such period).
(3) Such defeasance or covenant defeasance shall not (A)
cause the Trustee for the Securities of such series to have a
conflicting interest as defined in Section 608 or for purposes of
the Trust Indenture Act with respect to any securities of the
Company or (B) result in the trust arising from such deposit to
constitute, unless it is qualified as, a regulated investment
company under the Investment Company Act of 1940, as amended.
(4) 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
Company is a party or by which it is bound.
(5) In the case of an election under Section 1302, the
Company 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 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
defeasance had not occurred.
(6) In the case of an election under Section 1303, the
Company 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.
(7) Such defeasance or covenant defeasance shall be
effected in compliance with any additional terms, conditions or
limitations which may be imposed on the Company in connection
therewith pursuant to Section 301.
(8) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that
all conditions precedent provided for relating to either the
defeasance under Section 1302 or the covenant defeasance under
Section 1303 (as the case may be) have been complied with.
Section 1305. Deposited Money and U.S. Government Obligations to be Held
----------------------------------------------------------
in Trust; Other Miscellaneous Provisions.
------------------------------------------
Subject to the provisions of the last paragraph of Section 1003,
all money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee -- collectively, for
purposes of this Section 1305, the "Trustee") pursuant to Section 1304 in
respect of the Outstanding Securities of such series shall be held in trust and
applied by the Trustee, in accordance with the provisions of such Securities and
this Indenture, to the payment, either directly or through any Paying Agent (but
not including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities, of all sums due and to become due
thereon in respect of principal (and premium, if any) and interest, but such
money need not be segregated from other funds except to the extent required by
law.
- 55 -
<PAGE> 66
The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the money or U.S. Government
Obligations deposited pursuant to Section 1304 or the principal and interest
received in respect thereof.
Anything herein to the contrary notwithstanding, the Trustee shall
deliver or pay to the Company from time to time upon Company Request any money
or U.S. Government Obligations held by it as provided in Section 1304 which, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, are in
excess of the amount thereof which would then be required to be deposited to
effect an equivalent defeasance or covenant defeasance.
Section 1306. Reinstatement.
-------------
If the Trustee or the Paying Agent is unable to apply any money in
accordance with Section 1302 or 1303 by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's obligations under the Securities of such
series shall be revived and reinstated as though no deposit had occurred
pursuant to this Article Thirteen until such time as the Trustee or Paying Agent
is permitted to apply all such money in accordance with Section 1302 or 1303;
PROVIDED, HOWEVER, that if the Company makes any payment of principal of (and
premium, if any) or interest on any such Security following the reinstatement of
its obligations, the Company shall be subrogated to the rights of the Holders of
such Securities to receive such payment from the money held by the Trustee or
the Paying Agent.
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
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 day and year first above written.
FERRO CORPORATION
By: /s/D.T. George
------------------------------------
Title: Treasurer
----------------------------------
Attest:
/s/ Mark A. Cusick
- -------------------------
Secretary
CHASE MANHATTAN TRUST
COMPANY, NATIONAL ASSOCIATION
By: /s/ R. Barker
------------------------------------
- 56 -
<PAGE> 67
STATE OF OHIO )
) ss.:
COUNTY OF CUYAHOGA )
On the 30th of March, 1998 before me personally came D. Thomas
George to me known, who, being by me duly sworn, did depose and say that he is
Treasurer of Ferro Corporation, one of the corporations described in and which
executed the foregoing instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by authority of the Board of Directors of said corporation, and that he
signed his name thereto by like authority.
/s/ Beth A. Campbell
----------------------------------------
, Notary Public
---------------
BETH A. CAMPBELL, NOTARY PUBLIC
STATE OF OHIO
MY COMMISSION EXPIRES OCT. 11, 1999
STATE OF OHIO )
) ss.:
COUNTY OF CUYAHOGA )
On the 30th day of March, 1998 before me personally came R.
Barker, to me known, who, being by me duly sworn, did depose and say that he is
an authorized signer of Chase Manhattan Trust Company NA, the Trustee described
in and which executed the foregoing instrument; that he knows the seal of said
Chase Manhattan Trust Company NA; that the seal affixed to said instrument is
such Chase Manhattan Trust Company NA seal; that it was so affixed by authority
of the Board of Directors of said Chase Manhattan Trust Company NA, and that he
signed his name thereto by like authority.
/s/ Beth A. Campbell
----------------------------------------
, Notary Public
---------------
BETH A. CAMPBELL, NOTARY PUBLIC
STATE OF OHIO
MY COMMISSION EXPIRES OCT. 11, 1999
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<PAGE> 1
Exhibit 10(a)
FERRO CORPORATION
Executive Employment Contract
-----------------------------
I. Recitals
--------
(A) This Executive Employment Contract (this "Agreement") is between
Ferro Corporation (the "Company") and _______________________(the "Executive")
and is effective as of March__, 1998.
(B) The address of the Company is 1000 Lakeside Avenue, Cleveland, Ohio
44114. The address of the Executive is _________________________.
(C) The Executive is currently employed by the Company in the capacity
of Chairman and Chief Executive Officer and the Executive is one of the key
executives of the Company.
(D) In consideration of the mutual promises contained herein and
other good and valuable consideration, the Executive and the Company have
entered into this Agreement.
II. Definitions
-----------
As used in this Agreement, the following terms shall have the meanings
set forth below:
"Agreement" means this Agreement.
"Bank" has the meaning set forth in Section VI.
"Base Salary" has the meaning set forth in Section III.D.(1).
<PAGE> 2
"Benefit Plans" has the meaning set forth in Section
III.E.(2).
"Board" means the Board of Directors of the Company.
"Cause" has the meaning set forth in Section IV.B(1).
"change in control of the Company" has the meaning set forth
in Section VI.
"Company" means Ferro Corporation, as modified by Section
VIII.A.
"Contract Term" has the meaning set forth in Section III.A.
"Date of Termination" has the meaning set forth in Section
IV.A.(2).
"Disabled" has the meaning set forth in Section IV.C.(1).
"Excise Tax" has the meaning set forth in Section V.A.(1).
"Escrow Account" has the meaning set forth in Section VI.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Executive" means the executive named in this Agreement.
"Firm" has the meaning set forth in Section V.A.(2) and refers
to certain Excise Tax matters.
"Good Reason" has the meaning set forth in Section IV.E.
"Gross-Up Payment" has the meaning set forth in Section
V.A.(1) and refers to certain Excise Tax matters.
"Incentive Compensation Plan" has the meaning set forth in
Section III.E.(1).
-2-
<PAGE> 3
"Normal Retirement Age" means the normal retirement age
provided for in the Company's Pension Plan.
"Notice of Termination" has the meaning set forth in Section
IV.A.(1).
"Payment" has the meaning set forth in Section V.A.(1) and
refers to certain Excise Tax matters.
"Pension Plan" means the Company's salaried employees'
retirement plan, or any successor plan thereto.
"Retirement" has the meaning set forth in Section IV.D.(1).
"Total Disability" means total disability as defined in the
Company's Pension Plan.
"Underpayment" has the meaning set forth in Section V.A.(2)
and refers to certain Excise Tax matters.
III. Provisions Applicable to the Contract Term
------------------------------------------
A. Contract Term
-------------
Except as otherwise provided in this Agreement, the Company and the
Executive agree that the Executive will remain in the employ of the Company for
a primary term ending on March __, 2000 and that this Agreement will
automatically continue after such primary term unless and until either party
shall have given the other at least 36 months prior written Notice of
Termination or, if earlier, until expiration of the Contract Term. The "Contract
Term" shall refer to the period commencing on the date hereof and ending on
March __, 2000 (or any continuation
-3-
<PAGE> 4
thereof pursuant to the preceding sentence); provided, however, that in no event
shall the Contract Term extend beyond the earliest to occur of (A) the
Executive's attaining Normal Retirement Age, (B) the date of death of the
Executive, and (C) the Date of Termination resulting from the termination of
this Agreement for Disability (as defined in Section IV.C.(1) hereof); and
provided, further, however, that, if a change in control of the Company (as
defined in Section VI hereof) occurs during the Contract Term, then, subject to
the preceding proviso in this sentence, the Contract Term shall not expire prior
to the second anniversary of the date of such change in control of the Company.
Nothing contained in this Agreement shall prevent the Company at any time
from terminating the Executive's right and obligation to perform service for the
Company or prevent the Company from removing the Executive from any position
which the Executive holds in the Company, subject to the obligation of the
Company to make payments and provide benefits if and to the extent required
under this Agreement, which payments and benefits shall be full and complete
liquidated damages for any such action taken by the Company. The Executive
specifically acknowledges that, except for this Agreement, his employment by the
Company is employment-at-will, subject to termination by the Executive, or by
the Company, at any time with or without cause. The Executive acknowledges that
such employment-at-will status cannot be modified except in a specific writing
which has been authorized or ratified by the Board.
-4-
<PAGE> 5
B. Nature of Duties
----------------
(1) The Executive agrees to serve the Company during the
Contract Term. The Executive agrees to devote his full business time during
normal business hours to the business and affairs of the Company (except as
otherwise provided herein) and to use his best efforts to promote the interests
of the Company and to perform faithfully and efficiently the responsibilities
assigned to him in accordance with the terms of this Agreement to the extent
necessary to discharge such responsibilities, except for (i) service on
corporate, civic or charitable boards or committees not significantly
interfering with the performance of such responsibilities, and (ii) periods of
vacation and sick leave or other legitimate absences under Company benefit plans
and established practices.
(2) The Company agrees that, on or after a change in control
of the Company (as defined in Section VI hereof), it will not, without the
Executive's express written consent, (a) assign to the Executive duties
inconsistent with his current positions, duties, responsibilities and status
with the Company, or (b) change his titles as currently in effect, or (c) remove
him from, or fail to re-elect him to, any of such positions, except in
connection with the termination of his employment for Cause, Disability or
Retirement or as a result of his death or voluntary termination. Except as so
limited, the powers and duties of the Executive are to be more specifically
determined and set by the Company from time to time.
-5-
<PAGE> 6
C. Place of Employment
-------------------
The Executive's initial place of employment is at the Company's
principal executive offices in Cleveland, Ohio. The Company agrees that it will
not, without the Executive's express written consent, require the Executive to
be based anywhere other than Cuyahoga County, Ohio, or a county contiguous
thereto, except for required travel on the Company's business to an extent
substantially consistent with present business travel obligations.
D. Compensation
------------
(1) BASE SALARY. During the Contract Term, the Executive shall
receive an annual base salary (the "Base Salary"), payable in installments,
substantially in accordance with current practice, at an annual rate at least
equal to the aggregate annual Base Salary payable to the Executive as of the
date hereof. The Base Salary may be increased (but may not be decreased) at any
time and from time to time by action of the Board, and, if so increased, such
increased Base Salary shall thereafter be the Base Salary for the purposes of
this Agreement.
(2) INCENTIVE COMPENSATION. During the Contract Term, the
Company agrees to pay annual incentive compensation to the Executive in an
amount at least equal to the annual incentive compensation that would have been
payable to the Executive for such year in question under the Company's Incentive
Compensation Plan as in effect for such applicable year, and giving effect to
the highest position in the Company held by the Executive during the Contract
Term.
-6-
<PAGE> 7
E. Benefit Plans
-------------
(1) During the Contract Term, the Company agrees to continue
the Company's Annual Incentive Compensation Plan as the same may be modified
from time to time but substantially in the form presently in effect (the
"Incentive Compensation Plan"). The Company agrees to continue the Executive as
a participant in the Incentive Compensation Plan on a basis at least equivalent
to the present basis of his participation for the calendar year in which the
effective date of this Agreement occurs.
(2) During the Contract Term, the Company agrees to continue
in effect any perquisite, benefit or compensation plan (in addition to the
Incentive Compensation Plan) including its pension plan, excess benefits plans,
supplemental retirement program for short service executives, dental plan, life
insurance plan, health and accident plan or disability plan in which the
Executive is currently participating (but excluding the Company's stock option
plan and performance share plan, participation in which shall be at the sole
discretion of the Company's Board of Directors, or any applicable committee
thereof) (such plans are collectively referred to with the Incentive
Compensation Plan as the "Benefit Plans"), or to maintain plans providing
substantially similar benefits; provided, however, that the Company may make
modifications in such Benefit Plans so long as such modifications (a) are
generally applicable to all salaried employees of the Company and (b) do not
discriminate against highly-paid employees of the Company.
-7-
<PAGE> 8
(3) During the Contract Term, except as permitted in the
proviso contained in paragraph (2) above, the Company agrees not to take any
action that would adversely affect the Executive's participation in, or
materially reduce the benefits under, any of the Benefit Plans.
(4) Benefits herein provided are in lieu of any severance
payment benefit otherwise provided under any other agreement, policy, or
practice provided by the Company and, in the event of an effective Notice of
Termination hereunder, are also in lieu of any obligations of the Company in
favor of the Executive with respect to vacation or vacation pay. The Executive
waives all rights to such payments under any such agreement, policy or practice
provided, however, that this waiver shall not extend to entitlements provided
under any disability insurance plan, retirement plan, excess benefit plan, or
applicable supplemental pension plan or agreement for short service executives
and any related Benefit Plans (including health and insurance plans), other than
those relating to severance or vacation.
F. Conflicting Interests
---------------------
Prior to the Date of Termination, the Executive agrees not to accept
any other employment or engage in any outside business or enterprise without the
Company's written consent. It is understood, however, that outside activities
are not prohibited provided they are legal; do not impair or interfere with the
conscientious performance of Company duties and responsibilities; do not involve
the misuse of the Company's
-8-
<PAGE> 9
influence, facilities or other resources; and do not reflect discredit upon the
good name and reputation of the Company.
G. Disclosure of Information
-------------------------
During the Contract Term and thereafter, the Executive shall not reveal
any confidential information of the Company to anyone except those employees of
the Company entitled to receive such information, or as otherwise permitted
under any contract or commitment of the Company, or as otherwise authorized.
H. Certain Payments Upon the Occurrence of a Change in Control of
--------------------------------------------------------------
the Company
-----------
In the event a change in control of the Company (as defined in
Section VI hereof) occurs during the Contract Term, the Company shall pay to the
Executive, within five days thereafter, an amount in cash, with respect to each
grant of Performance Shares (as defined in the Company's Amended and Restated
1997 Performance Share Plan, as amended (the "Performance Share Plan"))
previously awarded to the Executive under the Performance Share Plan (or any
predecessor thereto) in respect of a Performance Period (as defined in the
Performance Share Plan) which had not expired immediately prior to such change
in control of the Company (Performance Shares awarded in respect of any such
Performance Period being referred to as "Outstanding Performance Shares"), which
amount shall be equal to the excess (but not less than zero) of (a) over (b),
where (a) equals the product of (1) the number of Outstanding Performance Shares
awarded to the Executive in respect of the applicable Performance Period, (2)
the "fair market value of the Common Stock" (as
-9-
<PAGE> 10
defined in the Performance Share Plan) and (3) a fraction (not to exceed one)
the numerator of which is the sum of (x) the number of days which had elapsed in
the applicable Performance Period as of the date of such change in control of
the Company plus (y) 730, and the denominator of which is the number of days in
such applicable Performance Period, and where (b) equals the value payable to
the Executive under the Performance Share Plan (or any predecessor thereto) in
respect of such Outstanding Performance Shares in connection with such change in
control of the Company. The provisions of this Section III.H. shall not affect
in any manner the determination of amounts payable to the Executive under the
Performance Share Plan (or any predecessor thereto).
IV. Provisions Applicable to Termination of Employment
--------------------------------------------------
A. Notice of Termination; Date of Termination
------------------------------------------
(1) Any termination of the Executive's employment by the
Company or the Executive shall be communicated by written Notice of Termination
to the other party thereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination under the
provision so indicated. Furthermore, either the Executive or the Company may
give a Notice of Termination to the other party for the purpose of terminating
this Agreement, as such, without terminating the Executive's employment with the
Company, which Notice of Termination shall have
-10-
<PAGE> 11
the effect of terminating this Agreement at the expiration of the Contract Term
as in effect on the date of giving such Notice of Termination.
(2) "Date of Termination" shall mean the date on which the
Executive's right and obligation to perform employment services for the Company
shall terminate (subject to the right of the Company to accelerate such date
pursuant to Section III.A.) and shall be:
(a) If the Agreement is terminated for Disability, thirty (30)
days after Notice of Termination is given (provided that the
Executive shall not have returned to the performance of his
duties on a full-time basis during such thirty (30) day
period),
(b) If the Executive's employment is terminated by the Executive
for Good Reason, pursuant to Section IV.E., the date specified
in the Notice of Termination, which date (except with the
written consent of the Company to the contrary) shall not be
more than sixty (60) days after the date that the Notice of
Termination is given,
(c) The expiration or termination of the Contract Term, and
(d) If the Executive's employment is terminated by the Company for
Cause pursuant to Section IV.B.(1), the date on which a Notice
of Termination is given.
B. Termination for Cause
---------------------
(1) The Company may terminate the Executive's employment and
the Contract Term for Cause. For the purposes of this Agreement, the Company
shall have "Cause" to terminate employment hereunder only (a) if termination
shall have been the result of an act or acts by the Executive which have been
found in an applicable court to constitute a felony; or (b) if termination shall
have been the result of an act or acts of dishonesty by the Executive resulting
or intended to result directly
-11-
<PAGE> 12
or indirectly in significant gain or personal enrichment to the Executive at the
expense of the Company; or (c) upon the wilful and continued failure by the
Executive substantially to perform his duties with the Company (other than any
such failure resulting from incapacity due to mental or physical illness) after
a demand in writing for substantial performance is delivered by the Board, which
demand specifically identifies the manner in which the Board believes that the
Executive has not substantially performed his duties, and such failure results
in demonstrably material injury to the Company. The Executive's employment shall
in no event be considered to have been terminated by the Company for Cause if
such termination took place as the result of (a) bad judgment or negligence, or
(b) any act or omission believed in good faith to have been in or not opposed to
the interest of the Company. The Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board at a meeting of the Board
(after reasonable notice to the Executive and an opportunity for him, together
with his counsel, to be heard before the Board), finding that in the good faith
opinion of the Board the Executive was guilty of conduct set forth above in
clauses (a), (b) or (c) of the second sentence of this paragraph and specifying
the particulars thereof in detail.
(2) If the Executive's employment shall be terminated for
Cause, the Company shall pay the Executive his full Base Salary through the Date
of Termination
-12-
<PAGE> 13
at the rate in effect at the time Notice of Termination is given
and the Company shall have no further obligations to the Executive under this
Agreement.
C. Termination for Disability
--------------------------
(1) The Company may terminate this Agreement on account of the
Executive's "Disability" if the Executive is "Disabled." For purposes of this
Agreement, the Executive shall be considered Disabled only if, as a result of
his incapacity due to physical or mental illness, he shall have been absent from
his duties with the Company on a full-time basis for a period of six months and
within thirty (30) days after written Notice of Termination is given, he shall
not have returned to the full-time performance of his duties.
(2) If the Company terminates this Agreement because the
Executive is Disabled, the Company shall provide to the Executive (or his
successors) the benefits specified in Paragraph (3) (continued participation in
benefit plans) of Section IV.F. of this Agreement; provided, however, that for
this purpose the Contract Term shall be determined as of the Date of
Termination, but without regard to the termination of this Agreement by reason
of the Executive's Disability.
D. Termination Upon Retirement
---------------------------
(1) This Agreement will terminate upon the Executive's
Retirement. For purposes of this Agreement, "Retirement" shall mean termination
of the Executive's employment at or after attaining Normal Retirement Age or
early retirement if effected
-13-
<PAGE> 14
in accordance with any retirement arrangement established with the Executive's
consent with respect to him.
(2) In the event this Agreement terminates by reason of the
Executive's Retirement, the Company shall pay to the Executive the amounts, and
provide to the Executive the benefits, specified in Paragraph (3) (continued
participation in benefit plans) of Section IV.F. of this Agreement.
(3) Notwithstanding the preceding provisions of this Section
IV.D., unless the Executive otherwise consents in writing, a termination of the
Executive's employment which occurs on or after the date of a change in control
of the Company (as defined in Section VI hereof) shall not be deemed to be a
termination of employment for Retirement.
E. Termination of Employment by the Executive for Good Reason
----------------------------------------------------------
(1) The Executive may terminate his employment for Good
Reason. For purposes of this Agreement, Good Reason will exist if any one or
more of the following occur:
(a) Failure by the Company to honor any of its
obligations under Sections III.B.2. (assignment of
duties, responsibilities, etc., election to
positions), III.C. (place of employment), III.D.
(compensation), III.E. (benefit plans), VI
(security) or VIII.A. (successors); or
(b) Any purported termination by the Company of the
Executive's employment that is not effected pursuant
to a Notice of Termination satisfying the
requirements of Section IV.A. above and, for purposes
of this Agreement, no such purported termination
shall be effective; or
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(c) The issuance by or on behalf of the Company,
on or after a change in control of the
Company (as defined in Section VI hereof),
of a Notice of Termination described in the
third sentence of Section IV.A.(1) hereof
which specifies that such Notice of
Termination is given for the purpose of
terminating this Agreement and which does
not serve to terminate the Executive's
employment with the Company substantially
concurrently therewith; or
(d) Voluntary resignation by the Executive at
any time during the ninety-day period
commencing on the first anniversary of a
change in control of the Company (as defined
in Section VI hereof).
F. Compensation Upon Termination Other Than for Cause
--------------------------------------------------
(1) If the Company shall terminate the Executive's employment
other than pursuant to Sections IV.B. (Cause), IV.C. (Disability) or IV.D.
(Retirement) hereof or if the Executive shall terminate his employment for Good
Reason pursuant to Section IV.E. hereof, then the Company shall pay to the
Executive the following amounts:
(a) The Executive's Base Salary through the Date
of Termination at the rate in effect at the
time Notice of Termination is given;
(b) In a lump sum (in lieu of the installment
payments otherwise payable under this
Agreement), payable on or before the fifth
(5th) day following the Date of Termination,
an amount equal to the Executive's Base
Salary through the conclusion of the
Contract Term;
(c) In a lump sum (in lieu of the installment
payments otherwise payable under this
Agreement), payable on or before the fifth
(5th) day following the Date of Termination,
an amount equal to the Executive's annual
incentive compensation payments, applicable
to periods through the conclusion of the
Contract Term. For this purpose, the annual
incentive compensation amounts payable shall
be deemed to be thirty percent (30%) of the
Base Salary, or such greater percentage
thereof, as may be applicable to the
Executive, at target levels, under the
Incentive Compensation Plan as in effect (i)
immediately prior to the Notice of
Termination or (ii) immediately prior to a
change in control of the Company (as defined
in Section VI hereof), whichever is more
favorable to the Executive;
(d) In a lump sum, payable on or before the
fifth (5th) day following the Date of
Termination, an amount equal to the pro rata
portion of the Executive's annual incentive
compensation for the calendar year in which
the Date of Termination occurs, such amount
to be determined by multiplying the
Executive's annual incentive compensation
amount (as described below) by a fraction,
the numerator of which is the number of days
in such calendar year which had elapsed as
of the Date of Termination and the
denominator of which is 365; provided,
however, that this Section IV.F.(1)(d) shall
have effect only if the Date of Termination
occurs in a calendar year following the
calendar year in which occurs a change in
control of the Company (as defined in
Section VI hereof). For purposes of this
paragraph, the Executive's annual incentive
compensation amount shall be equal to the
amount determined pursuant to the second
sentence of Section IV.F.(1)(c) above; and
(e) The Company shall also pay all legal fees
and expenses incurred as a result of such
termination (including all such fees and
expenses, if any, incurred in seeking to
obtain or enforce any right or benefit
provided by this Agreement, or in
interpreting this Agreement).
(2) If the Company shall terminate the Executive's employment
other than pursuant to Sections IV.B. (Cause), IV.C. (Disability) or IV.D.
(Retirement) hereof or if the Executive shall terminate his employment for Good
Reason pursuant to Section IV.E. hereof, then the Company shall pay him in one
sum in cash, payable on or before the fifth (5th) day following the Date of
Termination, an amount equal to the present value as of the Date of Termination
(calculated at a discount rate equal to the discount rate used at the Date of
Termination for computing the present value of commuted payments under the
Pension Plan) of (a) the lump sum value (determined
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<PAGE> 16
as of the Executive's Normal Retirement Age, using the same methods and
assumptions used at the Date of Termination for purposes of the Pension Plan, of
the retirement pension to which the Executive would have been entitled under the
terms of the Pension Plan, excess benefits plan and supplemental retirement
program for short service executives in which he participates (as in effect on
the date of this Agreement) if the Executive's employment had continued through
the conclusion of the Contract Term, at compensation levels consistent with
those set forth in paragraphs (1)(b) (Base Salary) and (c) (Incentive
Compensation) above (and including any other compensation, if any, which is to
be considered under the formulas applicable to such plans), assuming
commencement of payment of the Executive's pension at Normal Retirement Age,
reduced by (b) the lump sum value (determined as of the Executive's Normal
Retirement Age using the methods and assumptions hereinabove specified) of the
retirement pension, if any, to which the Executive will be entitled under the
terms of the Pension Plan, excess benefits plan and supplemental retirement
program for short service executives in which the Executive participates (as in
effect on the Date of Termination), based upon termination of the Executive's
employment as of the Date of Termination and assuming commencement of payment of
the Executive's pension benefits at his Normal Retirement Age. The lump sum
value to be calculated under clause (a) of the immediately preceding sentence
shall be determined (y) under the assumption that the Executive is fully vested
in his retirement pension under the Pension Plan, excess benefits plan and
supplemental retirement
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<PAGE> 17
program for short service executives; and (z) without
regard to any amendments to any of such plans, which amendments are adopted on
or after the date of a change in control of the Company (as defined in Section
VI hereof), to the extent any such amendments adversely affect in any manner the
computation of benefits thereunder or are otherwise adverse to the Executive.
(3) Unless the Executive is terminated for Cause, the Company
shall maintain in full force and effect, for the Executive's continued benefit
throughout the Contract Term, all active and retired employee Benefit Plans in
which he was entitled to participate immediately prior to the Date of
Termination (except as specified in paragraphs (2) (right of Company to make
non-discriminatory changes in plans) and (4) (this Agreement in lieu of other
plans as to severance and vacation) of Section III.E. of this Agreement),
provided that continued participation is possible under the general terms and
provisions of such plans and programs. In the event that participation in any
such plan or program is barred, the Company shall arrange to provide him with
benefits substantially similar to those which he is entitled to receive under
such Benefit Plans. Unless the Executive is terminated for Cause, if prior to
the expiration of the Contract Term the Executive attains Normal Retirement Age
(or earlier retirement age should he so elect) as defined in the Pension Plan in
effect on the Date of Termination hereunder, he shall have the right at any time
prior to the expiration of the Contract Term to so retire and the Company shall
thereafter maintain in full force and effect, for the Executive's continued
benefit, all retired employee Benefit Plans applicable to him,
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<PAGE> 18
as in effect immediately prior to the Date of Termination (except as specified
in paragraphs (2) (right of Company to make non-discriminatory changes in plans)
and (4) (this Agreement in lieu of other plans as to severance and vacation) of
Section III.E. of this Agreement). If the termination of the Executive's
employment occurs on or after a change in control of the Company (as defined in
Section VI hereof), (a) the Company's obligation to maintain Benefit Plans
pursuant to this Section IV.F.(3) shall be determined, on a plan-by-plan basis,
based on the terms of the applicable Benefit Plan as in effect (i) immediately
prior to such change in control of the Company or (ii) immediately prior to the
Date of Termination, whichever is more favorable to the Executive, and (b) the
Executive shall be treated as having remained in employment throughout the
remainder of the Contract Term for purposes of determining his rights under any
such Benefit Plans applicable to retired employees.
(4) Upon termination of employment for any reason other than
pursuant to Sections IV.B. (Cause), IV.C. (Disability) or IV.D. (Retirement), or
by reason of the Executive's death, the Company will provide to the Executive,
at the cost and expense of the Company, the services of an outplacement firm to
be mutually agreed upon between the Company and the Executive.
G. Compensation Upon Disability
-------------------------------
During any period that the Executive fails to perform his duties
hereunder as a result of incapacity due to physical or mental illness, he shall
continue to receive his full Base Salary and incentive compensation at the rate
then in effect until this
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<PAGE> 19
Agreement is terminated pursuant to Section IV.C. hereof. Thereafter, his
benefits shall be determined in accordance with the Company's Pension Plan,
excess benefits plan, supplemental retirement program for short service
executives and disability insurance plans in which the Executive participates,
or a substitute plan then in effect; provided, however, that if the Executive's
employment is terminated pursuant to Section IV.C. hereof following a change in
control of the Company (as defined in Section VI hereof), the Company shall pay
to the Executive (a) in a cash lump sum on or before the fifth (5th) day
following the Date of Termination, the amounts described in Sections IV.F(1)(a)
and (d) hereof, and (b) during each month commencing with the month in which
occurs the Date of Termination and through and including the month in which
occurs the expiration of the Contract Term (for this purpose the Contract Term
shall be determined as of the Date of Termination, but without regard to the
Executive's termination for Disability), an aggregate amount in cash equal to
the excess (but not less than zero) of (i) one-twenty-fourth of the aggregate
amount determined under Sections IV.F.(1)(b) and (c) hereof over (ii) the
aggregate amount received by the Executive during such month under the Company's
long-term disability plans.
H. Compensation Upon Death
-----------------------
In the event this Agreement terminates by reason of the Executive's
death following a change in control of the Company (as defined in Section VI
hereof), the Company shall pay to the Executive's legal representatives or
estate or as may be
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<PAGE> 20
directed by the legal representatives of his estate, as the
case may be, in a lump sum payable on or before the fifth (5th) day following
the Executive's death, an amount in cash equal to the amounts determined under
Sections IV.F.(1)(a), (b), (c) and (d) hereof (and for the purpose of
determining such amounts payable under Sections IV.F.(1)(b) and (c), the
Contract Term shall be determined as of the date of the Executive's death, but
without regard to such death).
I. Restrictions on Competition.
(1) The Executive will not, at any time during the
Restricted Period (as defined in Section IV.I.(2)
below), accept employment with, own an interest in,
form a partnership or joint venture with, consult
with or otherwise assist any person or enterprise
that manufactures or sells products ("Competitive
Products") similar to, or competitive with, the
products manufactured or sold by the Company on the
Date of Termination.
(2) The "Restricted Period" means:
(a) 36 months after the Date of Termination; and
(b) an additional 12 months thereafter (the
"Additional Period") if:
(i) the Company has not terminated the
Executive's employment in accordance
with Section IV.C. (Disability);
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<PAGE> 21
(ii) the Company elects to impose the
Additional Period by providing to
the Executive written notice of such
election not later than two months
after the termination of the
Executive's employment; and
(iii) the Company pays the Executive, in
twelve (12) monthly installments
during the Additional Period, an
aggregate amount equal to the
Executive's Base Salary for the
calendar year in which the
Executive's employment terminated;
and
(c) in addition to the time period(s) set
forth in (a) and, if applicable, (b)
above, the remaining period of time, if
any, until the Executive is 60 years old
if:
(i) this Agreement has terminated by
reason of the Executive's
Retirement before the Normal
Retirement Age;
(ii) the Executive is an officer of the
Company;
(iii) the Executive has elected to receive
his or her early retirement benefit
on the basis of the increased
"Post-1995 Factors" set forth in
Section 4 of the Company's Excess
Benefits Plan, as such provision may
be amended from time to time.
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<PAGE> 22
(3) Section IV.I.(1) above will not apply if the relevant
person or enterprise acquires a business or product
line that manufactures or sells Competitive Products
after the commencement of the Executive's employment
or other relationship with such person or enterprise
and the Executive does not participate in any way in
the business of the Competitive Products for 36
months after the termination of the Executive's
employment and, at the request of the Company, the
Executive and the relevant person or enterprise
certify to the Company in writing that the Executive
has and will comply with the restrictions of this
Section IV.I.(3).
(4) Nothing in this Section IV.I. eliminates or affects
any right to payments or benefits that the Executive
otherwise has under other provisions of this Article
IV; and nothing in this Section IV.I. gives the
Executive the right to any payment or benefit under
other provisions of this Article IV that he or she
does not otherwise have.
J. Mitigation
----------
The Executive shall not be required to mitigate the amount of any
payment or benefit provided for in this Agreement by seeking other employment
or otherwise, nor shall the amount of any payment or benefit provided for
herein be reduced by any
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<PAGE> 23
compensation earned by the Executive as the result of employment by another
employer after the Date of Termination, or otherwise.
V. Certain Tax Matters
-------------------
A. Additional Payments
-------------------
(1) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined (as hereafter provided)
that any payment or distribution to or for the Executive's benefit, whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise pursuant to or by reason of any other agreement, policy,
plan, program or arrangement (including without limitation any stock option
agreement or Performance Share Plan Participant agreement), or similar right (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986 (or any successor provision thereto), or any
interest or penalties with respect to such excise tax (such excise tax, together
with any such interest and penalties, are hereafter collectively referred to as
the "Excise Tax"), then the Executive shall be entitled to receive an additional
payment or payments (a "Gross-Up Payment") in an amount such that, after payment
by the Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including any Excise Tax, imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments.
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<PAGE> 24
(2) Subject to the provisions of Section V.A.(5), all
determinations required to be made under this Section V.A., including whether an
Excise Tax is payable by the Executive, the amount of such Excise Tax, whether a
Gross-Up Payment is required, and the amount of such Gross-Up Payment, shall be
made by a nationally-recognized legal or accounting firm (the "Firm") selected
by the Executive in the Executive's sole discretion. The Executive agrees to
direct the Firm to submit its determination and detailed supporting calculations
to both the Executive and the Company as promptly as practicable. If the Firm
determines that any Excise Tax is payable by the Executive and that a Gross-Up
Payment is required, the Company shall pay the Executive the required Gross-Up
Payment within ten business days after receipt of such determination and
calculations. If the Firm determines that no Excise Tax is payable by the
Executive, it shall, at the same time as it makes such determination, furnish
the Executive with an opinion that the Executive has substantial authority not
to report any Excise Tax on the Executive's federal income tax return. Any
determination by the Firm as to the amount of the Gross-Up Payment shall be
binding upon the Executive and the Company. As a result of the uncertainty in
the application of Section 4999 of the Internal Revenue Code of 1986 (or any
successor provision thereto) at the time of the initial determination by the
Firm hereunder, it is possible that Gross-Up Payments which will not have been
made by the Company should have been made (an "Underpayment"). In the event that
the Company exhausts its remedies pursuant to Section V.A.(5) hereof and the
Executive thereafter
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<PAGE> 25
is required to make a payment of any Excise Tax, the Executive may direct the
Firm to determine the amount of the Underpayment (if any) that has occurred and
to submit its determination and detailed supporting calculations to both the
Executive and the Company as promptly as possible. Any such Underpayment shall
be promptly paid by the Company to the Executive, or for the Executive's
benefit, within ten business days after receipt of such determination and
calculations.
(3) The Executive and the Company shall each provide the Firm
access to and copies of any books, records and documents in the possession of
the Company or the Executive, as the case may be, reasonably requested by the
Firm, and otherwise cooperate with the Firm in connection with the preparation
and issuance of the determination contemplated by Section V.A.(2) hereof.
(4) The fees and expenses of the Firm for its services in
connection with the determinations and calculations contemplated by Section
V.A.(2) hereof shall be borne by the Company. If such fees and expenses are
initially paid by the Executive, the Company shall reimburse the Executive the
full amount of such fees and expenses within ten business days after receipt
from the Executive of a statement therefor and reasonable evidence of the
Executive's payment thereof.
(5) The Executive agrees to notify the Company in writing of
any claim by the Internal Revenue Service that, if successful, would require the
payment by the Company of a Gross-Up Payment. Such notification shall be given
as promptly as practicable but no later than ten (10) business days after the
Executive actually
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<PAGE> 26
receives notice of such claim. The Executive agrees to further apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid (in each case, to the extent known by the Executive). The
Executive agrees not to pay such claim prior to the earlier of (a) the
expiration of the 30-calendar-day period following the date on which the
Executive gives such notice to the Company and (b) the date that any payment
with respect to such claim is due. If the Company notifies the Executive in
writing at least five business days prior to the expiration of such period that
it desires to contest such claim, the Executive agrees to:
(a) provide the Company with any written records or documents
in the Executive's possession relating to such claim reasonably
requested by the Company;
(b) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time,
including without limitation accepting legal representation with
respect to such claim by an attorney competent in respect of the
subject matter and reasonably selected by the Company;
(c) cooperate with the Company in good faith in order
effectively to contest such claim; and
(d) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless, on an after-tax
basis, from and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and
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<PAGE> 27
expenses. Without limiting the foregoing provisions of this Section V.A.(5), the
Company shall control all proceedings taken in connection with the contest of
any claim contemplated by this Section V.A.(5) and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim (provided,
however, that the Executive may participate therein at the Executive's own cost
and expense) and may, at its option, either direct the Executive to pay the tax
claimed and sue for a refund or contest the claim in any permissible manner, and
the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay the tax claimed and sue for a refund, the
Company shall advance the amount of such payment to the Executive on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax, including interest or
penalties with respect thereto, imposed with respect to such advance; and
provided further, however, that any extension of the statute of limitations
relating to payment of taxes for the Executive's taxable year with respect to
which the contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of any such contested claim
shall be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be
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<PAGE> 28
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(6) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section V.A.(5) hereof, the Executive
receives any refund with respect to such claim, the Executive agrees (subject to
the Company's complying with the requirements of Section V.A.(5) hereof) to
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after any taxes applicable thereto). If, after
the Executive's receipt of an amount advanced by the Company pursuant to Section
V.A.(5) hereof, a determination is made that the Executive is not entitled to
any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior to the
expiration of thirty (30) calendar days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid pursuant to this Section V.A.
VI. Security
--------
To secure payment of the benefits provided for in this
Agreement, the Company agrees forthwith to establish an irrevocable escrow
account (the "Escrow Account") at National City Bank (the "Escrow Agent"),
Cleveland, Ohio, or, in the event that National City Bank shall resign, any
other financial institution satisfactory to the Company and the Executive (or
the Executive's executor or other personal
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<PAGE> 29
representative) or appointed by a court of competent jurisdiction and to keep on
deposit in the Escrow Account such amount, if any, as shall at all times be at
least equal to the required security hereinafter provided for. The maximum
amount of required security to be kept on deposit at any time shall be (A) the
sum of $657,800 (the "Maximum Amount") or (B) if there has been determination
with the Executive's written consent or by a final arbitral award rendered in
accordance with this Agreement that a specific lesser amount fully secures the
Company's obligations under this Agreement, then such specific lesser amount or,
in the case that the Company has fully performed its obligations under this
Agreement, nothing. Subject to the provisions hereof, the Maximum Amount of
required security shall be kept on deposit at all times after (i) the expiration
of five days following the occurrence of a "potential change in control of the
Company" or (ii) a "change in control of the Company" (as such terms are
hereinafter defined), whichever occurs earlier. For purposes of this Agreement,
a "change in control of the Company" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have been
satisfied:
(1) Any "person" (as that term is used in Sections 13(d) and
14(d)(2) of the Exchange Act) is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing twenty-five percent (25%)
or more of the combined voting power of the Company's then outstanding voting
securities; or
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<PAGE> 30
(2) During any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors of the
Company and any new director (other than a director designated by a person who
has entered into an agreement or arrangement with the Company to effect a
transaction described in clause (1) or (3) of this sentence) whose appointment,
election, or nomination for election by the Company's shareholders, was approved
by a vote of at least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose appointment,
election or nomination for election was previously so approved, cease for any
reason to constitute a majority of the Board of Directors of the Company; or
(3) There is consummated a merger or consolidation of the
Company or a subsidiary thereof with or into any other corporation, other than a
merger or consolidation which would result in the holders of the voting
securities of the Company outstanding immediately prior thereto holding
securities which represent immediately after such merger or consolidation more
than fifty (50%) of the combined voting power of the voting securities of either
the Company or the other entity which survives such merger or consolidation or
the parent of the entity which survives such merger or consolidation; or
(4) There is consummated a sale or disposition by the Company
of all or substantially all the Company's assets.
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<PAGE> 31
For purposes of this Agreement, a "potential change in control of the Company"
shall be deemed to have occurred if the conditions set forth in any one of the
following paragraphs shall have been satisfied:
(a) any person is or becomes the beneficial owner,
directly or indirectly, of securities of the Company
representing twenty percent (20%) or more of the
combined voting power of the Company's then
outstanding voting securities; or
(b) the Company enters into an agreement, the
consummation of which would result in the occurrence
of a change in control of the Company; or
(c) any person publicly announces an intention to take or
to consider taking actions which, if consummated,
would constitute or result in a change in control of
the Company; or
(d) any person commences a solicitation (as defined in
Rule 14a-1 of the General Rules and Regulations under
the Exchange Act) of proxies or consents which has
the purpose of effecting or would (if successful)
result in a change in control of the Company; or
(e) a tender or exchange offer for voting securities of
the Company, made by a person (other than the
Company, any subsidiary thereof, any employee benefit
plan of the Company or any person organized,
appointed or established by the Company for or
pursuant to the terms of any such plan), is first
published or sent or given (within the meaning of
Rule 14d-2(a) of the General Rules and Regulations
under the Exchange Act).
Until the Maximum Amount of required security is required to be kept on
deposit, the Company shall only be obliged to maintain on deposit in the Escrow
Account an amount (the "Required Security") at least equal to sixty percent
(60%) of the Maximum Amount of required security; provided, however, that if a
potential change in control of the Company shall occur prior to a change in
control of the
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Company and if a change in control of the Company does not occur within twelve
months after the most recent occurrence of a potential change in control of the
Company, the Escrow Agent shall be entitled, upon receipt of a written request
by the Company, to return to the Company any amounts in excess of the Required
Security (or reduce the amount of any letter of credit to an amount equal to the
Required Security). Except as provided in the immediately preceding sentence and
in the penultimate paragraph of this Section VI, amounts deposited in the Escrow
Account shall be paid out by the Escrow Agent only to the Executive, in such
amounts as the Executive shall certify to the Escrow Agent as amounts that the
Company is in default in paying the Executive under this Agreement, or to the
Company, to the extent that the amount on deposit exceeds the maximum amount of
required security as specified in joint written instructions from the Executive
and the Company to the Escrow Agent or in a final arbitral award rendered
pursuant to Section VII hereof.
The Company shall have the right, at any time and from time to time, to
instruct the Escrow Agent to invest all or any or any part of the funds in the
Escrow Account in time deposits or certificates of deposit with, or repurchase
or other obligations of, National City Bank, in its individual corporate
capacity, or any of its domestic or foreign branches, or any other "bank" (as
determined by the Company), or obligations issued or guaranteed by the United
States or any of its agencies or instrumentalities, provided that no such
investment shall be for a period in excess of ninety (90) days. The Escrow Agent
shall have no liability whatsoever for following the instructions of
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the Company regarding any such investment, or for any loss in value of the
Escrow Account as a consequence of any such investment or the liquidation
thereof.
The Company may meet its obligation to keep amounts on deposit in the
Escrow Account through (a) deposits of assets; (b) one or more letters of credit
deposited in escrow; or (c) any combination of the foregoing. The Company shall
have right, at any time and from time to time, to substitute one form of
permitted deposit in the Escrow Account for another form of permitted deposit in
the Escrow Account.
Intending that the Escrow Agent and its successors and assigns shall
have the right to rely hereon, the Executive consents to the agreement
pertaining to the Escrow Account to be maintained pursuant to this Section VI
(the "Escrow Agreement") substantially in the form attached hereto as Exhibit A,
and consents to the amendment and restatement, pursuant to the Escrow Agreement,
of all prior escrow agreements which have been made between the Company and
National City Bank (in any capacity) and of which the Executive is a
beneficiary. The Executive further consents to amendments, modifications,
restatements and clarifications of the Escrow Agreement from time to time, so
long as, after giving effect to each such amendment, modification, restatement
or clarification, the then aggregate amount (whether in the form of cash,
investments which the Company has instructed the Escrow Agent to make as
hereinbefore provided (the amount of which shall be determined, in each case, at
the time of the investment), amounts available to be drawn by the Escrow Agent
under one or more letters of credit, or any combination of the foregoing)
credited to
-34-
<PAGE> 34
the Escrow Account by the Escrow Agent would not be less than the
required security provided for in this Section VI. The Escrow Agent and its
successors and assigns shall have the right to rely upon such consent of the
Executive.
VII. Arbitration
-----------
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in Cleveland, Ohio in
accordance with the rules of the American Arbitration Association then in
effect; provided that all arbitration expenses shall be borne by the Company.
Judgment may be entered on the arbitrators' award in any court having
jurisdiction; provided, however, that the Executive shall be entitled to seek
specific performance of his right to be paid until the Date of Termination
during the pendency of any dispute or controversy arising under or in connection
with this Agreement.
VIII. Miscellaneous
-------------
A. Successors, Binding Agreement
-----------------------------
The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, by agreement in form and substance
satisfactory to the Executive, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement
-35-
<PAGE> 35
and shall entitle the Executive to compensation from the Company in the same
amount and on the same terms as would apply if the Executive terminated his
employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid that executes and delivers the agreement provided for in
this section or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law. This Agreement shall inure to the benefit of
and be enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amount payable hereunder remains
unpaid, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Executive's devisee, legatee,
or other designee or, if there be no such designee, to his estate.
B. Notice
------
Notices and all other communications provided for in this Agreement
shall be in writing and shall be deemed to have been duly given when delivered
by United States registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Company shall be directed to the
attention of the Secretary of the Company, or to
-36-
<PAGE> 36
such other address as either party may have furnished to the other in writing in
accordance herewith.
C. Waiver and Amendment; Governing Law
-----------------------------------
No provisions of this Agreement may be modified, waived or discharged
unless such modification, waiver or discharge is agreed to in writing signed by
the Executive and such officer as may be specifically designated by the Board
(which shall in any event include the Company's Chief Executive Officer). No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreement or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not set forth expressly in this Agreement, and this Agreement constitutes
the entire agreement between the parties with respect to the subject matter
hereof. Without limiting the generality of the foregoing, this Agreement
supersedes and replaces in its entirety any prior agreement relating to the
subject matter hereof (other than agreements between the Executive and the
Company which constitute Benefit Plans). The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Ohio.
D. Release and Reaffirmation
-------------------------
-37-
<PAGE> 37
In connection with any termination of the Executive's employment prior
to a change in control of the Company (as defined in Section VI hereof), the
Company may, as a condition to the payment by the Company to the Executive of
any post-employment benefits under this Agreement, condition such payment upon
the execution and delivery by the Executive to the Company of:
(1) A release, in form reasonably acceptable to the Company,
releasing the Company from any further obligations to the Executive, except for
obligations under Benefit Plans which remain in favor of the Executive and any
other remaining obligations under the specific terms of this Agreement or any
other written agreement in effect between the Company and the Executive; and
(2) A reaffirmation by the Executive of his obligations under
this Agreement and any other agreement theretofore in effect between the
Executive and the Company relating to confidentiality, restrictions on
competition or intellectual property rights.
This Section VIII.D. shall not apply in connection with any termination
of the Executive's employment on or after the date on which a change in control
of the Company (as defined in Section VI hereof) shall have occurred.
E. Validity
--------
The invalidity or unenforceability of any one or more provisions of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
-38-
<PAGE> 38
F. Certain Obligations of the Company
----------------------------------
All obligations of the Company to make payments and provide benefits
under this Agreement shall survive the expiration of the Contract Term.
G. Termination of Prior Agreements
-------------------------------
The Executive and the Company had been party to an Amended and Restated
Executive Employment Agreement effective as of July 28, 1995 (the "Prior
Agreement"). The Company gave Notice of Termination of the Prior Agreement on
March __, 1998 and thereafter the rights and obligations of both parties
continued for a specified period of time as provided in the Prior Agreement. The
Executive and the Company hereby agree that this Agreement supersedes the Prior
Agreement and that upon the execution hereof neither the Executive nor the
Company has any rights or obligations under the Prior Agreement.
H. Counterparts
------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
FERRO CORPORATION
BY:
---------------------------------
------------------------------------
-39-
<PAGE> 1
EXHIBIT 11
FERRO CORPORATION AND SUBSIDIARIES
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
3 Months 3 Months
(Dollars in thousands, except per share data) March March
1998 1997
<S> <C> <C>
BASIC:
Weighted Average Common Shares Outstanding 37,388,190 38,384,681
Net Income 17,055 $15,194
Less Preferred Stock Dividend, Net of Tax (944) (941)
------------ ------------
Net Income Available to Common Shareholders $16,111 $14,253
BASIC EARNINGS PER COMMON SHARE $0.43 $0.37
DILUTED:
Weighted Average Common Shares Outstanding 37,388,190 38,384,681
Adjustments for assumed conversion of convertible
preferred stock and common stock options 4,403,857 3,980,022
------------ ------------
41,792,047 42,364,703
Net Income $17,055 $15,194
Additional ESOP Contribution, Net of Tax (412) (470)
------------ ------------
Adjusted Net Income $16,643 $14,724
DILUTED EARNINGS PER SHARE $0.40 $0.35
</TABLE>
<PAGE> 1
EXHIBIT 12
FERRO CORPORATION AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
MARCH MARCH
(Dollars in Thousands) 1998 1997
----------- -----------
<S> <C> <C>
Earnings:
Pre-Tax Income 27,317 24,486
Add: Fixed Charges 3,932 3,776
Less: Interest Capitalization (116) (132)
----------- -----------
Total Earnings 31,133 28,130
=========== ===========
Fixed Charges:
Interest Expense 3,106 3,030
Interest Capitalization 116 132
Interest Portion of Rental Expense 710 614
----------- -----------
Total Fixed Charges 3,932 3,776
=========== ===========
Total Earnings 31,133 28,130
Divided By:
Total Fixed Charges 3,932 3,776
----------- -----------
Ratio 7.92 7.45
</TABLE>
Note: Preferred dividends are excluded. Amortization of debt expense and
discounts and premiums were deemed immaterial to the above calculation.
Interest portion of rental expense includes conservative estimates
based on calculations from prior years.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000035214
<NAME> FERRO CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 70,941
<SECURITIES> 0
<RECEIVABLES> 247,485
<ALLOWANCES> 0
<INVENTORY> 129,536
<CURRENT-ASSETS> 500,409
<PP&E> 568,020
<DEPRECIATION> 325,952
<TOTAL-ASSETS> 860,374
<CURRENT-LIABILITIES> 290,422
<BONDS> 156,860
0
0
<COMMON> 47,323
<OTHER-SE> 234,862
<TOTAL-LIABILITY-AND-EQUITY> 860,374
<SALES> 339,763
<TOTAL-REVENUES> 339,763
<CGS> 249,622
<TOTAL-COSTS> 308,997
<OTHER-EXPENSES> 343
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,106
<INCOME-PRETAX> 27,317
<INCOME-TAX> 10,262
<INCOME-CONTINUING> 17,055
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,055
<EPS-PRIMARY> .43
<EPS-DILUTED> .40
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<CIK> 0000035214
<NAME> FERRO CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 14,026
<SECURITIES> 0
<RECEIVABLES> 214,131
<ALLOWANCES> 0
<INVENTORY> 149,343
<CURRENT-ASSETS> 39,022
<PP&E> 683,129
<DEPRECIATION> 375,746
<TOTAL-ASSETS> 870,468
<CURRENT-LIABILITIES> 252,333
<BONDS> 105,308
0
0
<COMMON> 31,549
<OTHER-SE> 493,658
<TOTAL-LIABILITY-AND-EQUITY> 870,468
<SALES> 1,355,685
<TOTAL-REVENUES> 1,355,685
<CGS> 1,023,401
<TOTAL-COSTS> 1,249,919
<OTHER-EXPENSES> 4,528
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,031
<INCOME-PRETAX> 88,207
<INCOME-TAX> 33,621
<INCOME-CONTINUING> 54,586
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 54,586
<EPS-PRIMARY> 1.29
<EPS-DILUTED> 1.21
<FN>
Restate earnings per share in accordance with FAS 128
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<CIK> 0000035214
<NAME> FERRO CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 16,695
<SECURITIES> 0
<RECEIVABLES> 230,742
<ALLOWANCES> 0
<INVENTORY> 155,253
<CURRENT-ASSETS> 432,366
<PP&E> 653,352
<DEPRECIATION> 346,064
<TOTAL-ASSETS> 875,948
<CURRENT-LIABILITIES> 257,308
<BONDS> 104,910
0
0
<COMMON> 31,549
<OTHER-SE> 350,601
<TOTAL-LIABILITY-AND-EQUITY> 875,948
<SALES> 1,322,954
<TOTAL-REVENUES> 1,322,954
<CGS> 1,003,638
<TOTAL-COSTS> 1,226,739
<OTHER-EXPENSES> 16,056
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,226
<INCOME-PRETAX> 80,159
<INCOME-TAX> 30,905
<INCOME-CONTINUING> 49,254
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 49,254
<EPS-PRIMARY> 1.10
<EPS-DILUTED> 1.04
<FN>
Restate earnings per share in accordance with FAS 128
</FN>
</TABLE>
<PAGE> 1
CONDENSED CONSOLIDATED BALANCE SHEETS EXHIBIT 99
FERRO CORPORATION AND SUBSIDIARIES
MARCH 31, 1998 AND DECEMBER 31, 1997
<TABLE>
<CAPTION>
(Unaudited) (Audited)
(Dollars in Thousands) 1998 1997
- ---------------------- --------- ---------
ASSETS
- ------
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $ 70,941 $ 16,337
Net Receivables 247,485 232,927
Inventories 129,536 127,175
Other Current Assets 52,447 50,591
-------- --------
Total Current Assets $500,409 $427,030
Unamortized Excess of Cost Over Net Assets Acquired 53,002 54,355
Other Assets 64,895 64,114
Net Plant & Equipment 242,068 240,180
$860,374 $785,679
======== ========
LIABILITIES
- -----------
Current Liabilities:
Notes and Loans Payable $ 21,385 $ 23,269
Accounts Payable, Trade 114,621 109,958
Income Taxes 12,871 6,563
Accrued Payrolls 15,626 17,501
Accrued Expenses and Other Current Liabilities 125,919 120,416
-------- --------
Total Current Liabilities $290,422 $277,707
Long-Term Debt 156,860 102,020
ESOP Loan Guarantee 11,201 13,815
Postretirement Liabilities 46,205 45,643
Other Liabilities 73,501 73,343
Shareholders' Equity 282,185 273,151
-------- --------
$860,374 $785,679
======== ========
</TABLE>
<PAGE> 2
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FERRO CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three Months Ended
March 31
(Unaudited) (Unaudited)
(Dollars in Thousands) 1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Segment Sales
Coatings, Colors, and Ceramics $199,331 $202,545
Plastics 60,849 59,241
Chemicals 79,583 80,411
------------ ------------
Total Net Sales $339,763 $342,197
Cost of Sales 249,622 255,770
Selling, Administrative and General Expenses 59,375 57,845
Other Charges (Credits):
Interest Expense 3,106 3,030
Net Foreign Currency (Gain) (680) (1,397)
Other Expense - Net 1,023 2,463
------------ ------------
Income Before Taxes 27,317 24,486
Taxes on Income 10,262 9,292
------------ ------------
Net Income 17,055 15,194
Dividend on Preferred Stock, Net of Tax 944 941
------------ ------------
Net Income Available to Common Shareholders $ 16,111 $ 14,253
============ ============
Per Common Share Data:
Basic Earnings $0.43 $0.37
Diluted Earnings $0.40 $0.35
Shares Outstanding:
Average Outstanding 37,388,190 38,384,681
Average Diluted 41,792,047 42,364,703
Actual End of Period 37,432,486 38,393,904
</TABLE>
<PAGE> 3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FERRO CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three Months Ended
March 31
(Unaudited) (Unaudited)
(Dollars in Thousands) 1998 1997
==================================================================================================================
<S> <C> <C>
Net Cash Provided from Operating Activities $24,855 $28,434
Cash Flow from Investing Activities:
Capital Expenditures for Plant and Equipment (13,544) (9,048)
Other Investing Activities (380) 516
- ------------------------------------------------------------------------------------------------------------------
Net Cash Used for Investing Activities (13,924) (8,532)
Cash Flow from Financing Activities:
Net (Payments) Under Short-Term Lines (1,883) (6,234)
Proceeds from Long-Term Debt 53,888 0
Purchase of Treasury Stock (4,032) (5,751)
Cash Dividend Paid (4,494) (5,053)
Other Financing Activities 1,678 807
- ------------------------------------------------------------------------------------------------------------------
Net Cash (Used for) Provided by Financing Activities 45,157 (16,231)
Effect of Exchange Rate Changes on Cash (1,484) (806)
- ------------------------------------------------------------------------------------------------------------------
Increase in Cash and Cash Equivalents 54,604 2,865
Cash and Cash Equivalents at Beginning of Period 16,337 14,026
- ------------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period $70,941 $16,891
==================================================================================================================
Cash Paid During the Period for:
Interest, net of amounts capitalized $1,199 $1,504
Income Taxes $3,277 $2,477
==================================================================================================================
</TABLE>
