U.S. Securities and
Exchange Commission
Washington, DC 20549
General Signal Corporation
1995 Form 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange
Act of 1934 For the Fiscal Year Ended December 31, 1995
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934
Commission File No. 1-996
General Signal Corporation
Box 10010 High Ridge Park, Stamford, Connecticut 06904
Telephone Number (203) 329-4100
IRS Employer Identification No. 16-0445660
State of Incorporation: New York
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
- --------------------------------------------------------------------------------
Common Stock New York Stock Exchange
par value $1.00
(Par value reduced Pacific Stock Exchange
from $6.67 effective
April 21, 1969)
5.75% Convertible New York Stock Exchange
Subordinated
Debentures due
June 1, 2002
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of voting stock held by non-affiliates as of March
15, 1996 was approximately $1.8 billion. As of March 15, 1996, there were 49.6
million shares of General Signal Corporation common stock outstanding.
Documents incorporated by reference Part
- --------------------------------------------------------------------------------
Annual Report to Shareholders for the
Fiscal Year Ended December 31, 1995 I, II, IV
Proxy Statement for 1996 Annual Meeting III
<PAGE>
Table of Contents
Item Page
1 Business ..................................................... 1
2 Properties ................................................... 4
3 Legal Proceedings ............................................ 4
4 Submission of Matters to a
Vote of Security Holders ..................................... 4
5 Market for the Registrant's Common
Stock and Related Shareholder Matters ........................ 4
6 Selected Financial Data ...................................... 4
7 Management's Discussion and
Analysis of Financial Condition
and Results of Operations .................................... 4
8 Financial Statements and
Supplementary Data ........................................... 4
9 Changes in and Disagreements
with Accountants on Accounting
and Financial Disclosure ..................................... 4
10 Directors and Executive Officers ............................. 4
11 Executive Compensation ....................................... 4
12 Security Ownership of Certain
Beneficial Owners and Management ............................. 4
13 Certain Relationships and
Related Transactions ......................................... 4
14 Exhibits, Financial Statements,
Schedules and Reports on Form 8-K ............................ 5
Note: Some of the information required in this Form 10-K report ("10-K") was
presented in the General Signal Corporation 1995 Annual Report to Shareholders
("Shareholders' Report") and is incorporated herein by reference. A complete
copy of the Shareholders' Report is bound on the outside of this 10-K to
facilitate reference. Except for those sections specifically referred to as
being incorporated herein by reference, the Shareholders' Report shall not be
deemed to be "filed" as part of this 10-K. The registrant is also referred to as
"the company."
<PAGE>
Part I
- ------
Item 1. Business
General Developments General Signal Corporation, incorporated in New York in
1904, is a manufacturer of equipment for the Process Controls, Electrical
Controls and Industrial Technology industries. The company's key Process
industry products include pumps, mixers, and valves for municipal water supply
and wastewater treatment, pulp, paper, food, pharmaceutical and chemical
manufacturing and ultra low-temperature freezers for life science research. In
the Electrical industry, key products include uninterruptible power supply and
conditioning equipment, power transformers, and fire detection systems. Products
serving the Industrial Technology industry include auto and bicycle components,
data networking equipment, and fare collection and vending equipment.
In November 1994, the company adopted a plan to sell Leeds & Northrup, formerly
a part of the Process Controls business sector, and Dynapower/Stratopower,
formerly a part of the Industrial Technology business sector. In 1995, the
Company sold the majority of these businesses. The remainder are expected to be
sold or shut down in 1996.
During the last five years, the company invested approximately $440 million in
cash and 4.4 million shares of common stock to acquire 20 businesses and/or
product lines. The notes to the financial statements on pages 32 and 33 of the
Shareholders' Report provide additional information for significant acquisitions
during the last three years and are incorporated herein by reference.
Financial Information about Business Segments Selected business segment
information for the last five fiscal years is summarized on page 35 of the
Shareholders' Report and is incorporated herein by reference. There were no
classes of similar products or services that exceeded 10 percent of consolidat
ed sales.
A summary of information by geographic area for the last five fiscal years is
included on page 36 of the Shareholders' Report and is incorporated herein by
reference.
Narrative Description of Business
Major Markets and Products and Method of Distribution A description of the
registrant's business is included on pages 6 and 7 of the Shareholders' Report
and is incorporated herein by reference. The company's products are sold by its
own sales organization and through distributors and manufacturers'
representatives.
Materials and Supplies The company manufactures many of the components used in
its products, but it also purchases a variety of basic materials and component
parts. Although some basic materials and components have been and may be in
short supply from time to time, the company believes that generally it will be
able to obtain adequate supplies of major items or reasonable substitutes.
Patents The company holds many patents and has continued to secure other patents
that cover many of its products. While patents are important in the aggregate to
the company's competitive position, the loss of any single patent, patent
application or patent license agreement, or group thereof, would not materially
affect the conduct of its business as a whole. The company is both a licensor
and licensee of patents.
Working Capital A discussion of working capital is included on pages 19 and 20
of the Shareholders' Report and is incorporated herein by reference.
Backlog The amount of unfilled orders was approximately $435.8 million as of
December 31, 1995 and $307.2 million as of December 31, 1994 (excluding unfilled
orders of businesses sold or discontinued). All unfilled orders are expected to
be filled within the next succeeding year.
Competition Although the businesses of the company are highly competitive, the
competitive position cannot be determined accurately in the aggregate or by
segment since none of its competitors offers all of the same product lines or
serves all of the same markets, nor are reliable comparative figures available
for its competitors. In most product groups, competition comes from numerous
concerns, both large and small. The principal methods of competition are price,
service, product performance and technical innovation. These methods vary with
the type of product sold. The company believes that it can compete effectively
on the basis of each of these factors as they apply to the various products
offered.
Research and Development Research and development information for the last three
years is included on page 36 of the Shareholders' Report and is incorporated
herein by reference.
Environmental Matters The company is involved in various stages of investigation
and remediation relative to environmental protection matters, arising from its
own initiative, from indemnification of purchasers of divested operations, or
from legal or administrative proceedings, some of which involve waste disposal
sites. The company has a comprehensive environmental compliance program which
includes environmental audits conducted by internal and outside independent
environmental professionals and regular communications with the company's
operating units regarding environmental compliance requirements and anticipated
regulations.
Pursuant to the Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), the company has been notified that it has been
named as a potentially responsible party ("PRP") at 34 CERCLA sites which are
listed on the National Priorities List ("NPL") maintained by the U.S.
Environmental Protection Agency ("EPA"). The law governing CERCLA sites provides
that PRPs may be jointly and severally liable for the total costs of
investigation and remediation. Based on information available to the company, at
five of these sites (Byron Barrell in Byron, NY; Iron Horse Park in Billerica,
MA; M.T. Richards in Crossville, IL; Doepke-Holliday in Holliday, KS; and North
Penn Water Authority in Montgomery Co., PA), the company believes that its
aggregate probable remaining liability will not exceed $3.0 million. At five
sites (Berks Associates in Douglasville, PA;
1
<PAGE>
Commercial Oil Services in Oregon, OH; West KL in Kalamazoo, MI; Spectron in
Elkton, MD; and Stringfellow in Riverside, CA) the company is of the opinion,
based on information currently available, that it contributed less than one
percent of the total volume, weight or other allocation criteria at each site
and the company believes its aggregate probable remaining liability for these
sites will not exceed $350,000. At 16 of the remaining 24 CERCLA NPL sites, the
company has resolved its liability by entering into de minimis settlements or
buy-out agreements with either the EPA or PRP groups and paying its
proportionate share of costs of site investigation and remediation (at an
aggregate cost to the company of less than $600,000). The company believes,
based on information currently available, that it has no liability at seven
CERCLA NPL sites since the company's investigation has not revealed either a
record of its having transported or arranged for disposal of hazardous
substances to such sites or verifiable evidence of its responsibility for the
release or threatened release of hazardous substances at these sites, but the
company believes that it could incur future costs (including legal expenses)
related to the foregoing which would not exceed approximately $100,000 in the
aggregate. Finally, the company received a contractual indemnification claim
with respect to a CERCLA NPL site (Cork Street, Kalamazoo Co., MI). No
information regarding the company's involvement at such site is currently
available.
The company has also received requests for information from the EPA at nine NPL
sites for which the company believes, based on its investigation of such
matters, that its potential aggregate remaining liability will not exceed
$200,000.
The company recently received a notification of potential liability from the EPA
under the Toxic Substances Control Act of 1976 with respect to a multi-party
site, which is not a CERCLA site, based on the company's alleged generation of
toxic substances present at the site. The company's liability, based on
currently available information, is estimated to be approximately $100,000. At
six sites which are not CERCLA NPL sites, the company has been cited by the EPA
with respect to removal actions. The company has entered into settlements and
paid its proportionate share of costs at five of these sites, and the company
believes that its probable remaining liability at the sixth site is less than
$50,000.
The company has received notices of potential liability from various state
environmental authorities pursuant to state environmental laws regarding ten
multi-party sites based on the company's alleged generation of hazardous
materials present at those sites. The company's liability has been resolved and
satisfied at two sites and, based on the company's investigation, the company
believes that its aggregate probable remaining liability at the eight other
sites will not exceed $2.5 million. Although the company has received requests
for information from state environmental authorities at two additional sites,
the company's investigation has revealed no record of its having disposed of
hazardous substances at, or arranged for transportation of hazardous substances
to, such sites.
The company is engaged in site investigation and/or remediation at the following
sites presently or formerly owned by the company:
New York Air Brake Landfill/Kelsey Creek Site In February 1990, the company
entered into a consent order with the New York State Department of Environmental
Conservation ("NYSDEC") to conduct an investigation and remediation at the
company's discontinued New York Air Brake facility in Watertown, New York. On
March 30, 1994, NYSDEC issued a Record of Decision ("ROD") with respect to site
remediation. The remedial action will consist of consolidation of contamination
in the existing industrial landfill, capping the landfill, collecting
contaminated groundwater downgradient of the landfill, and the removal of
certain sediments in Kelsey Creek and a tributary creek. The future cost
estimated by the company for site remediation is approximately $11 million. The
company has filed litigation against the City of Watertown to challenge an
increase in sewer discharge fees for leachate at the landfill and believes that
it will ultimately prevail in such litigation.
Hevi-Duty Facility In August 1990, the EPA placed this manufacturing facility of
the company, located in Goldsboro, North Carolina, on the NPL; subsequently, the
company challenged the listing and the EPA delisted the facility in June 1993.
Following the delisting, the company investigated site contamination at this
facility and conducted limited initial remediation. The company is participating
in a voluntary clean-up program of the state of North Carolina and has entered
into an Administrative Order on Consent with the North Carolina Department of
Environmental Health and Natural Resources. The company currently believes that
the probable aggregate remaining liability for clean-up of this site will be
approximately $3 million.
2
<PAGE>
Fairbanks Morse Facility On December 2, 1994, the company acquired Fairbanks
Morse, Inc. Based on the company's pre-acquisition environmental assessment and
site testing performed at the Fairbanks Morse facility located in Kansas City,
Kansas, the company determined that there is soil and groundwater contamination
at the site. The company has entered into an Interim Agreement with the Kansas
Department of Environment and Health with respect to additional site
investigation. The company believes that up to $5 million could be required to
investigate and remediate contaminated soil and groundwater at the site. The
company is accounting for the foregoing, and for any liability of Fairbanks
Morse at the Doepke-Holliday and Stringfellow sites discussed above, under
purchase accounting.
The company has reported site contamination to environmental authorities with
respect to eight sites which the company formerly owned or operated. The company
is undertaking site investigations and remediations at seven of those sites and
site investigations at one site. The company believes that the probable
aggregate remaining liability for investigation and remediation will not exceed
approximately $1.4 million. At one present manufacturing facility and two former
manufacturing facilities, the company is performing voluntary site investigation
and remediation at a remaining cost not estimated to exceed approximately
$600,000, based on information currently available.
It is the company's policy not to offset expected insurance recoveries against
expected obligations when determining the amount of environmental accruals.
The potential costs related to the matters described above and the possible
impact on future operations are uncertain due in part to the complexity of
government laws and regulations and their interpretations, the varying costs and
effectiveness of clean-up technologies, the uncertain level of insurance or
other types of recovery, and the questionable level of the company's
responsibility. In management's opinion, after considering reserves established
for such purposes, remedial actions for compliance with the present laws and
regulations governing the protection of the environment are not expected to have
a material adverse impact on the company's results of operations or financial
position.
Employees At December 31, 1995, the company had approximately 12,900 employees,
excluding employees of businesses held for sale. Approximately 2,600 employees
are represented by 33 different collective bargaining units. The company has
generally experienced satisfactory labor relations at its various locations.
Executive Officers of the Registrant
Name, Position, Age at December 31 and Other Information Age
- --------------------------------------------------------------------------------
Michael D. Lockhart...................................................... 46
Chairman and Chief Executive Officer since October 19, 1995. Previously
President and Chief Operating Officer since October 3, 1994. Prior to joining
the company, Vice President and General Manager of General Electric's Commercial
Engines and Services division, along with several other key executive positions
at GE. Prior to joining GE, served as vice president and director, The Boston
Consulting Group.
Terence D. Martin........................................................ 52
Executive Vice President and Chief Financial Officer since February 2, 1995.
Previously, Chief Financial Officer of American Cyanamid Company since 1991
and Treasurer since 1988.
Elizabeth D. Conklyn..................................................... 48
Senior Vice President Human Resources since December 14, 1995. Previously,
Senior Vice President, Human Resources and Organization for Mobile
Telecommunications Technologies since 1994. Served in various human resource
management positions with IBM from 1977 to 1994.
William W. Clark......................................................... 54
Vice President - Sourcing since June 15, 1995. Previously, Vice President -
Operations of Tau-tron unit since 1992. Served in various management
positions with Eastman Kodak Company from 1968 to 1992.
Nino J. Fernandez........................................................ 54
Vice President - Investor Relations since May 1, 1987. Previously, Director
of Communications since 1974.
Terry J. Mortimer........................................................ 50
Vice President and Controller since May 25, 1990. Previously Director Finance
and Chief Accountant for Apple Computer since June, 1988. Previously with Becton
Dickinson and Company from January, 1981 to June, 1988, most recently as Medical
Sector Controller.
Edgar J. Smith, Jr....................................................... 61
Vice President, General Counsel, and Secretary since April 19, 1984, and Vice
President and General Counsel since January 1, 1980. Previously, Assistant
General Counsel since 1967.
Thomas E. Taylor......................................................... 49
Vice President - Taxes since September 1, 1993. Previously with Elf
Aquitaine, Inc. as Vice President - Taxes since 1985.
Julian B. Twombly........................................................ 49
Vice President and Treasurer since December 17, 1991. Prior to joining the
company, associated with United Dominion Industries, Ltd. since 1974, most
recently as Senior Vice President and Treasurer.
3
<PAGE>
The executive officers are elected annually by the Board of Directors.
There are no family relationships between any of the directors or executive
officers of the company.
Item 2. Properties
The Process Controls sector's operations consist of 27 manufacturing facilities
in 11 states and eight foreign countries, containing approximately 2.9 million
square feet, of which 91 percent is owned and nine percent is leased. The
Electrical Controls sector's operations consist of 39 manufacturing facilities
in 14 states and seven foreign countries, containing approximately 3.4 million
square feet, of which approximately 72 percent is owned and 28 percent is
leased. The Industrial Technology sector's operations consist of 11
manufacturing facilities in four states, containing approximately 0.9 million
square feet, of which approximately 88 percent is owned and 12 percent is
leased.
In addition to manufacturing plants, the company as lessee occupies executive
offices in Stamford, Connecticut, and various sales and service locations
throughout the world. All of these properties, as well as the related machinery
and equipment, are considered to be well maintained, suitable and adequate for
their intended purposes. Assets subject to lien are not significant.
As a result of business divestitures and restructuring activities, the company
holds 1.7 million square feet of idle facilities and facilities related to
discontinued operations for sale or sublease.
Item 3. Legal Proceedings
The company and certain of its subsidiaries are defendants in legal proceedings
incidental to its business. Although the ultimate disposition of these
proceedings is not presently determinable, management does not expect the
outcome to have a material adverse impact on the company's financial position.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Part II
- -------
Item 5. Market for Registrant's Common Stock and Related Shareholder Matters
The company's common stock is listed on the New York and Pacific stock exchanges
under the symbol "GSX". Information as to quarterly prices for the last two
years, and dividends paid is included on pages 24 and 37 of the Shareholders'
Report and is incorporated herein by reference. There were approximately 14,400
holders of record of the company's common stock on March 15, 1996.
Item 6. Selected Financial Data
Selected financial data of the company for the last five fiscal years are
incorporated herein by reference to pages 38 and 39 of the Shareholders' Report.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" appears on pages 17 through 20 of the Shareholders' Report and is
incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The financial statements and related notes are incorporated herein by reference
to pages 22 through 37 of the Shareholders' Report. Quarterly financial
information is incorporated herein by reference to page 37 of the Shareholders'
Report. The Report of Independent Auditors, dated January 25, 1996, except for
the capital stock note to the financial statements, as to which the date is
February 1, 1996, is incorporated herein by reference to page 21 of the
Shareholders' Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
Part III
- --------
Item 10. Directors and Executive Officers
This information is incorporated herein by reference to pages 5 through 10 of
the Proxy Statement for the 1996 annual meeting of shareholders. Also see page 3
of this 10-K as to information related to executive officers.
Item 11. Executive Compensation
This information is incorporated by reference to pages 11 through 20 of the
Proxy Statement for the 1996 annual meeting of shareholders.
Item 12. Security Ownership of Certain Beneficial Owners and Management
This information is incorporated by reference to pages 2 through 4 of the Proxy
Statement for the 1996 annual meeting of shareholders.
Item 13. Certain Relationships and Related Transactions
Not applicable.
4
<PAGE>
Part IV
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Item 14. Exhibits, Financial Statements, Schedules, and Reports on Form 8-K
(a) (1) Financial Statements and Other Financial Data.
The financial statements of the company and consolidated subsidiaries
are incorporated herein by reference to pages 22 through 37 of the
Shareholders' Report. The Independ-ent Auditors' Report of Ernst & Young
LLP, dated January 25, 1996, except for the capital stock note to the
financial statements, as to which the date is February 1, 1996, is
incorporated herein by reference to page 21 of the Shareholders' Report.
Page
(2) Schedule II Valuation and Qualifying Accounts...................... 8
All other schedules are omitted as the required information is not
applicable or the information is presented in the financial statements
or related notes.
(3) Exhibits.
3.1 Restated Certificate of Incorporation of General Signal Corporation,
as amended through April 21, 1994 incorporated herein by reference
to Exhibit 3.1 of the registrant's 1994 10-K filed March 21, 1995.
3.2 By-laws of General Signal Corporation, as amended through February
1, 1996.
4.1 Copies of the instruments with respect to the company's long-term
debt are available to the Securities and Exchange Commission upon
request.
4.2 Copies of the Credit Agreements among General Signal Corporation and
Various Commercial Banking Institutions, through June 1, 1995, as
described in the Notes to Financial Statements incorporated herein
by reference in (a)(1) above, are available to the Securities and
Exchange Commission upon request.
10.1 Description of General Signal Corporation Incentive Compensation
Plan is incorporated herein by reference to Exhibit 10.1 of the
registrant's 1991 Form 10-K filed March 25, 1992.
10.2 Retirement Plan for Directors of General Signal Corporation is
incorporated herein by reference to Exhibit 10.7 of the registrant's
1988 Form 10-K filed March 17, 1989.
10.3 General Signal Corporation Change in Control Severance Pay Plan, as
amended, is incorporated herein by reference to Exhibit 10.8 of the
registrant's 1989 Form 10-K filed March 16, 1990.
10.4 General Signal Corporation Deferred Compensation Plan, dated
October 14, 1993, is incorporated herein by reference to Exhibit
10.4 of the registrant's 1993 Form 10-K filed March 21, 1994.
10.5 General Signal Corporation Benefit Equalization Plan as amended and
restated October 14, 1993, is incorporated herein by reference to
Exhibit 10.5 of the registrant's 1993 Form 10-K filed March 21,
1994.
10.6 General Signal Corporation 1992 Stock Incentive Plan as amended and
restated July 7, 1993, is incorporated herein by reference to
Exhibit 10.6 of the registrant's 1993 Form 10-K filed March 21,
1994.
10.7 General Signal Corporation 1989 Stock Option and Incentive Plan as
amended July 7, 1993, is incorporated herein by reference to Exhibit
10.7 of the registrant's 1993 Form 10-K filed March 21, 1994.
10.8 General Signal Corporation 1985 Stock Option Plan as amended and
restated July 7, 1993, is incorporated herein by reference to
Exhibit 10.8 of the registrant's 1993 Form 10-K filed March 21,
1994.
10.9 General Signal Corporation 1981 Stock Option Plan as amended and
restated July 7, 1993, is incorporated herein by reference to
Exhibit 10.9 of the registrant's 1993 Form 10-K filed March 21,
1994.
10.10 Employment agreement between Michael D. Lockhart and the
registrant dated October 3, 1994 is incorporated herein by reference
to exhibit 10.12 of the registrant's 1994 Form 10-K filed March 21,
1995.
10.11 Employment agreement between Terence D. Martin and the registrant
dated February 2, 1995 is incorporated herein by reference to
exhibit 10.13 of the registrant's 1994 Form 10-K filed March 21,
1995.
10.12 Severance agreement between Edmund M. Carpenter and the registrant
dated October 19, 1995.
10.13 Severance agreement between Joel S. Friedman and the registrant
dated December 21, 1995.
5
<PAGE>
10.14 Severance agreement between George Falconer and the registrant
dated November 7, 1995.
10.15 Shareholder Rights Plan dated February 1, 1996.
11.0 Computation of Earnings per Share. See page 9 of this report.
12.0 Calculation of Ratios of Earnings to Fixed Charges. See page 10 of
this report.
13.0 1995 Annual Report to Shareholders. Except for those portions
specifically incorporated herein by reference, the company's 1995
Annual Report to Shareholders is furnished for the information of
the Commission and is not deemed to be "filed." Pages 17 through 39,
including the Independent Auditors' Report on page 21, are
specifically incorporated herein by reference.
21.0 Subsidiaries. See pages 10 through 12 of this report.
23.0 Consent of Ernst & Young LLP. See page 13.
27 Financial Data Schedule (EDGAR version only)
(b) Reports on Form 8-K
A report on Form 8-K was filed on November 2, 1995, reporting the
resignation of Edmund M. Carpenter as chairman, chief executive officer and
director of the registrant.
6
<PAGE>
Signatures
Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
General Signal Corporation
/s/ Michael D. Lockhart
- ------------------------------
(Michael D.Lockhart, Chairman) March 21, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
/s/ Michael D. Lockhart
- ------------------------------
(Michael D. Lockhart) March 21, 1996
Chairman and Director (Principal Executive Officer)
/s/ Terence D. Martin
- ------------------------------
(Terence D. Martin) March 21, 1996
Executive Vice President and Chief Financial Officer
/s/ Terry J. Mortimer
- ------------------------------
(Terry J. Mortimer) March 21, 1996
Vice President and Controller (Chief Accounting Officer)
/s/ Ralph E. Bailey
- ------------------------------
(Ralph E. Bailey) March 21, 1996
Director
/s/ Van C. Campbell
- ------------------------------
(Van C. Campbell) March 21, 1996
Director
/s/ Ursula F. Fairbairn
- ------------------------------
(Ursula F. Fairbairn) March 21, 1996
Director
/s/ Ronald E. Ferguson
- ------------------------------
(Ronald E. Ferguson) March 21, 1996
Director
/s/ John P. Horgan
- ------------------------------
(John P. Horgan) March 21, 1996
Director
/s/ Roland W. Schmitt
- ------------------------------
(Roland W. Schmitt) March 21, 1996
Director
/s/ John R. Selby
- ------------------------------
(John R. Selby) March 21, 1996
Director
7
<PAGE>
<TABLE>
Schedule II Valuation and Qualifying Accounts
<CAPTION>
- ----------------------------------------------------------------------------
General Signal Corporation and Consolidated Subsidiaries
Years Ended December 31, 1995, 1994 and 1993 (In millions)
Additions
charged
Balance at (credited) Balance at
beginning to cost and end of
of period expense Deductions period
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995
Reserves deducted from assets:
Allowance for doubtful accounts ..... $ 10.7(7) $ 4.9 $ (5.0)(1) $ 10.6
Assets held for sale ................ $ 8.6 59.5 (0.2)(2) $ 67.9
Dispositions and special items:
Consolidation of operations and other $ 15.9 40.4 (31.6)(1) 24.7
Acquisition related ................. 0.6 5.6 (2.1)(4) 4.1
Semiconductor ....................... 18.1 -- (14.9)(4) 3.2
Restructuring ....................... 2.5 -- (1.8)(4) 0.7
- ---------------------------------------------------------------------------------------------
$ 37.1 $ 46.0 $ (50.4) $ 32.7
- ---------------------------------------------------------------------------------------------
1994
Reserves deducted from assets:
Allowance for doubtful accounts ..... $ 10.5 $ 4.5 $ (4.9)(1) $ 10.1
- ---------------------------------------------------------------------------------------------
Assets held for sale ................ $ 14.4 $ 8.6 $ (14.4)(3) $ 8.6
- ---------------------------------------------------------------------------------------------
Dispositions and special items:
Consolidation of operations and other $ -- $ 19.3 $ (3.4)(4) $ 15.9
Acquisition related ................. 8.8 (1.5) (6.7)(4) 0.6
Semiconductor ....................... 13.3 (0.6) 5.4(4),(5) 18.1
Restructuring ....................... 13.0 (3.5) (7.0)(4) 2.5
- ---------------------------------------------------------------------------------------------
$ 35.1 $ 13.7 $ (11.7) $ 37.1
- ---------------------------------------------------------------------------------------------
1993
Reserves deducted from assets:
Allowance for doubtful accounts ..... $ 8.9 $ 4.6 $ (3.0)(1) $ 10.5
- ---------------------------------------------------------------------------------------------
Assets held for sale ................ $ 18.6 $ -- $ (4.2)(3) $ 14.4
- ---------------------------------------------------------------------------------------------
Dispositions and special items:
Acquisition related ................. $ -- $ 13.2 $ (4.4)(4) $ 8.8
Semiconductor ....................... 57.3 (53.2) 9.2(4),(6) 13.3
Restructuring ....................... -- 30.5 (17.5)(4) 13.0
- ---------------------------------------------------------------------------------------------
$ 57.3 $ (9.5) $ (12.7) $ 35.1
- ---------------------------------------------------------------------------------------------
<FN>
(1) Write-off of bad debts, net of recoveries. Includes reclassifications in
1994 of discontinued operations to assets held for sale.
(2) Reflects reclassification to accruals.
(3) Charges to reserve related to businesses divested during 1993 and 1994.
(4) Charges to reserve for related costs incurred during the year.
(5) Includes reclassification of $8.4 credit balance of GS Japan's
cumulative translation adjustment as of December 31, 1994.
(6) Includes $47.6 of excess proceeds on disposal of businesses divested
during 1993.
(7) Includes $0.6 of reserves recorded by Data Switch which were
consolidated effective January 1, 1995.
</TABLE>
8
<TABLE>
Computation of Earnings Per Share Exhibit (11.0)
<CAPTION>
General Signal Corporation and Consolidated Subsidiaries
(In millions, except per-share data) Year Ended December 31, 1995 1994 1993
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
I. Earnings (loss) per share of common
stock (used for financial reporting):
Continuing operations .............................................. $ 100.1 $ 104.1 $ 98.1
Earnings (loss) from discontinued operations ....................... -- 2.4 (31.5)
Loss on disposal of discontinued operations ........................ (64.0) (25.8) --
Extraordinary charges .............................................. -- -- (6.6)
Cumulative effect of accounting changes ............................ -- -- (25.3)
- --------------------------------------------------------------------------------------------------------
Net Earnings (loss) ................................................ $ 36.1 $ 80.7 $ 34.7
- --------------------------------------------------------------------------------------------------------
Average number of common shares outstanding(a) ..................... 49.2 47.3 45.2
- --------------------------------------------------------------------------------------------------------
Earnings (loss) per average share of common stock:
Continuing operations .......................................... $ 2.03 $ 2.20 $ 2.17
Earnings (loss) from discontinued operations ................... -- 0.05 (0.70)
Loss on disposal of discontinued operations .................... (1.30) (0.54) --
Extraordinary charges .......................................... -- -- (0.14)
Cumulative effect of accounting changes ........................ -- -- (0.56)
- --------------------------------------------------------------------------------------------------------
$ 0.73 $ 1.71 $ 0.77
- --------------------------------------------------------------------------------------------------------
II. Primary earnings per share(b)
(including common stock equivalents):
Average number of common shares outstanding ........................ 49.2 47.3 45.2
Dilutive effect of outstanding options
(as determined by application of the treasury stock method) .... 0.2 0.3 0.3
- --------------------------------------------------------------------------------------------------------
Total shares used in calculation of primary earnings per share ..... 49.4 47.6 45.5
- --------------------------------------------------------------------------------------------------------
Primary earnings (loss) per share:
Continuing operations .............................................. $ 2.03 $ 2.19 $ 2.16
Earnings (loss) from discontinued operations ....................... -- 0.05 (0.69)
Loss on disposal of discontinued operations ........................ (1.30) (0.54) --
Extraordinary charges .............................................. -- -- (0.15)
Cumulative effect of accounting changes ............................ -- -- (0.56)
- --------------------------------------------------------------------------------------------------------
$ 0.73 $ 1.70 $ 0.76
- --------------------------------------------------------------------------------------------------------
III. Fully diluted earnings per share(b):
Average number of shares used in calculation of primary
earnings per share above ....................................... 49.4 47.6 45.5
Additional dilutive effect of outstanding options
(as determined by application of the treasury stock method) .... -- -- --
- --------------------------------------------------------------------------------------------------------
Total shares used in calculation of fully diluted earnings per share 49.4 47.6 45.5
- --------------------------------------------------------------------------------------------------------
Fully diluted earnings (loss) per share:
Continuing operations .......................................... $ 2.03 $ 2.19 $ 2.16
Earnings (loss) from discontinued operations ................... -- 0.05 (0.69)
Loss on disposal of discontinued operations .................... (1.30) (0.54) --
Extraordinary charges .......................................... -- -- (0.15)
Cumulative effect of accounting changes ........................ -- -- (0.56)
- --------------------------------------------------------------------------------------------------------
$ 0.73 $ 1.70 $ 0.76
- --------------------------------------------------------------------------------------------------------
<FN>
(a) Excludes common stock equivalents in accordance with provisions of APB
Opinion No. 15 because such equivalent shares result in dilution of less
than 3%.
(b) This calculation is presented in accordance with Regulation S-K although the
effect of the options deemed to be common stock equivalents is antidilutive
in 1992.
9
</TABLE>
<TABLE>
Calculations of Ratios of Earnings to Fixed Charges Exhibit (12.0)
<CAPTION>
General Signal Corporation and Consolidated Subsidiaries
Year Ended December 31, (Dollars in millions)
1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Earnings
Earnings (loss) before income taxes $ 156.4 $ 160.3 $ 139.1 $ 9.5 $ 97.4
Added fixed charges ............... 34.7 20.2 22.6 35.3 39.3
- -------------------------------------------------------------------------------------------
$ 191.1 $ 180.5 $ 161.7 $ 44.8 $ 136.7
- -------------------------------------------------------------------------------------------
Fixed charges
Interest expense (gross) .......... $ 27.7 $ 14.4 $ 18.0 $ 28.6 $ 31.8
One-third of rent expense ......... 7.0 5.8 4.6 6.7 7.5
- -------------------------------------------------------------------------------------------
$ 34.7 $ 20.2 $ 22.6 $ 35.3 $ 39.3
- -------------------------------------------------------------------------------------------
Ratio ................................. 5.51 8.94 7.15 1.27 3.48
- -------------------------------------------------------------------------------------------
</TABLE>
Subsidiaries of Registrant
1. Consolidated Subsidiaries Exhibit (21.0)
Percent Organized Under
Owned the Laws of
- --------------------------------------------------------------------------------
Aurora/Hydromatic Pumps, Inc. 100 Delaware
Borri Elettronica Industriale S.p.A 100 Italy
DeZurik of Australia Proprietary Ltd. 100 Australia
DeZurik Vertriebsgesellschaft mbH 100 Austria
Data Switch Corporation 100 Delaware
Data Switch Intellectual Property, Inc. 100 Delaware
Data Switch Subsidiary Stock Corporation 100 Delaware
Data Switch Collections, Inc. 100 Delaware
Data Switch, Inc. 100 Canada
Data Switch Italia,S.r.L 100 Italy
Data Switch GmbH 100 Germany
Data Switch Limited 100 England
Data Switch (UK) Limited 100 England
Fairbanks Morse Pump Corporation 100 Kansas
Subsidiary of Fairbanks Morse Pump Corporation:
Fairbanks Morse Limited (India) 100 India
GCA International Corporation 100 New Jersey
GSR Merger Sub., Inc. 100 Delaware
G.S. Building Corporation 100 Connecticut
Subsidiaries of G.S. Building Corporation:
Dual Lite Manufacturing, Inc. 100 Delaware
General Signal FSC, Inc. 100 Virgin Islands
General Signal Holding Company 100 Delaware
Subsidiaries of General Signal Holding Company:
General Signal Technology Corporation 100 Delaware
Subsidiaries of General Signal Technology Corporation:
General Farebox of Atlanta, Inc. 100 Delaware
General Signal Limited 100 Canada
General Signal S.E.G - Asia, Ltd. 100 Hong Kong
General Signal S.E.G. SARL 100 France
General Signal Power Systems, Inc. 100 Wisconsin
Subsidiaries of General Signal Power Systems, Inc.:
Best Power Technology of Canada Limited 100 Canada
Best Power Technology SARL (France) 100 France
Best Power Technology GmbH (Germany) 100 Germany
Best Power Technology Mexico SA 100 Mexico
10
<PAGE>
Percent Organized Under
Owned the Laws of
- --------------------------------------------------------------------------------
Best Power Technology Limited (UK) 100 England
Best Power Technology Export Corp. 100 Barbados
Best Power Asia Trading Co., Ltd. 100 Taiwan
Best Power Technology Asia Limited 100 Taiwan
Best Power Technology Pte. Limited 100 Singapore
India Best Power Technology Pvt. Limited 100 India
General Signal UK Limited 100 England
Subsidiaries of General Signal UK Limited:
Dezurik International Limited 100 England
GCA Limited 100 England
G.S. Iona Ltd. 100 England
General Signal SEG, Ltd. 100 England
Leeds & Northrup Limited 100 England
Lightnin (Europe) Limited 100 England
General Signal Europe Limited (formerly
Lightnin Mixers Limited) 100 England
Subsidiaries of General Signal Europe Limited:
General Signal Verwaltungsgesellschaft GmbH 90 Germany
(Remaining l0% owned by General Signal
Corporation)
General Signal GmbH & Co KG 100 Germany
Deutsche Lightnin GmbH 100 Germany
Tau-Tron (UK) Limited 100 England
Telenex Europe Limited 100 England
Lightnin Mixers Limited 100 England
Leeds & Northrup Company 100 Delaware
Subsidiaries of Leeds & Northrup Company:
Leeds & Northrup GmbH 100 Germany
Leeds & Northrup Mexicanna, S.A 100 Mexico
Leeds & Northrup S.A 100 Spain
LDN, Ltd. 100 Delaware
Subsidiaries of LDN,Ltd:
Leeds & Northrup S.A.R.L 100 France
L.D.N. Netherlands, B.V 100 Netherlands
L&N Singapore, Pte., Ltd. 100 Singapore
L&N Products Pty Ltd. 100 Australia
Subsidiaries of L&N Products Pty Ltd:
Leeds & Northrup (New Zealand) Ltd 100 New Zealand
Leeds & Northrup Italy, S.p.A 53 Italy
(Remaining 47% owned by Leeds & Northrup Company)
Lightnin China Mixers Co. Ltd. 100 China
Lightnin Mixers Pty. Ltd. 60 Australia
(Remaining 40% owned by General Signal Ltd)
Lightnin Private Limited 100 Singapore
Metal Forge Company, Inc. 100 Delaware
Shenyang Stock Electric Power Equipment
Company, Limited 100 China
Sola Australia, Limited 100 Australia
Sola Electric AG 100 Switzerland
Subsidiary of Sola Electric AG:
Sola Stromversorgunanlagen GmbH 100 Germany
Stock Japan, Ltd. 100 Japan
Telenex Corporation 100 New Jersey
11
<PAGE>
2. Other Subsidiaries
The following minor foreign subsidiaries and the investment of 50 percent or
less owned companies, which are not material individually or in the aggregate in
relation to the financial statements are carried at cost plus equity in
undistributed earnings since acquisition.
Subsidiaries of General Signal Corporation:
DeZurik - India 40
India
DeZurik Japan Co., Ltd. 48 Japan
DeZurik Mexico, S.A. de C.V 49 Mexico
General Signal Corporation 100 Delaware
General Signal International Corporation 100 Delaware
HMS Ventures Ltd 14 California
High Ridge Company, Limited 100 Bermuda
Industrias Sola Basic, S.A 49 Mexico
Koyo Lindberg Ltd. 50
Japan
New Signal, Inc. 100
Delaware
Solamex, S.A. de C.V 48 Mexico
Subsidiary of Solamex S.A. de C.V.:
Inmobiliaria S-Tres, S.A. de C.V 99 Mexico
Inmobiliaria S-Dos, S.A. de C.V 99 Mexico
Inmobiliaria Solamex, S.A. de C.V 99 Mexico
Productora Y Maquiladora Queretana 99 Mexico
S.A. de C.V
Teraski Nelson Ltd. 50
Japan
Maquiladora Solamex S.A. de C.V 48 Mexico
12
Consent of Ernst & Young LLP Exhibit (23.0)
The Board of Directors and Shareholders General Signal Corporation
We consent to the incorporation by reference in this Annual Report (Form 10-K)
of General Signal Corporation of our report dated January 25,1996, except for
the capital stock note to the financial statements, as to which the date is
February 1, 1996, included in the 1995 Annual Report to Shareholders of General
Signal Corporation.
Our audits also included the financial statement schedule of General Signal
Corporation and consolidated subsidiaries listed in Item 14(a). This schedule is
the responsibility of the company's management. Our responsibility is to express
an opinion based on our audits. In our opinion, the financial statement schedule
referred to above, when considered in relation to the basic financial statements
taken as a whole, presents fairly in all material respects, the information set
forth therein.
We also consent to the incorporation by reference in the Registration Statements
(Form S-3 No. 33-33929) pertaining to the universal shelf registration dated
May, 1994, (Form S-8 No. 33-46613) pertaining to the General Signal Corporation
Savings and Stock Ownership Plan, (Form S-8 No. 33-47495) pertaining to General
Signal Corporation's stock incentive plans, (Form S-4 No. 33-62437) pertaining
to the merger agreement with Data Switch Corporation, (Form S-8 to Form S-4 No.
33-62437-01) pertaining to stock options assumed as a result of the merger with
Data Switch Corporation, (Form S-3 to Form S-4 No. 33-62437-02) pertaining to
the outstanding stock warrants as a result of the merger with Data Switch
Corporation and related prospectuses of our report dated January 25,1996, except
for the capital stock note to the financial statements, as to which the date is
February 1, 1996, with respect to the financial statements incorporated herein
by reference, and our report included in the preceding paragraph with respect to
the financial statement schedule included in this Annual Report (Form 10-K) of
General Signal Corporation.
/s/ Ernst & Young LLP
Stamford, Connecticut
March 21, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<CIK> 0000040834
<NAME> GENERAL SIGNAL CORP.
<MULTIPLIER> 1,000,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS 6-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995 DEC-31-1995 DEC-31-1995
<PERIOD-END> DEC-31-1995 SEP-30-1995 JUN-30-1995 MAR-31-1995
<CASH> 1 16 16 12
<SECURITIES> 1 1 2 2
<RECEIVABLES> 339 334 321 298
<ALLOWANCES> 16 15 17 15
<INVENTORY> 235 250 246 231
<CURRENT-ASSETS> 721 735 791 778
<PP&E> 718 710 687 648
<DEPRECIATION> 405 394 379 360
<TOTAL-ASSETS> 1613 1618 1609 1421
<CURRENT-LIABILITIES> 432 367 371 332
<BONDS> 429 525 509 330
0 0 0 0
0 0 0 0
<COMMON> 78 78 78 78
<OTHER-SE> 578 479 481 512
<TOTAL-LIABILITY-AND-EQUITY> 1613 1618 1609 1421
<SALES> 1863 1362 880 434
<TOTAL-REVENUES> 1863 1362 880 424
<CGS> 1308 959 623 309
<TOTAL-COSTS> 1683 1219 790 387
<OTHER-EXPENSES> 0 0 0 0
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 24 17 10 5
<INCOME-PRETAX> 156 125 81 43
<INCOME-TAX> 56 45 28 15
<INCOME-CONTINUING> 100 80 53 28
<DISCONTINUED> (64) (64) (50) 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 36 16 3 28
<EPS-PRIMARY> 0.73 0.55 0.50 0.57
<EPS-DILUTED> 0.73 0.55 0.50 0.57
</TABLE>
GENERAL SIGNAL CORPORATION
and
First Chicago Trust Company of New York, Rights Agent
RIGHTS AGREEMENT
Dated as of February 1, 1996
<PAGE>
TABLE OF CONTENTS
Page
RIGHTS AGREEMENT
Section 1. Certain Definitions . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent . . . . . . . . . 7
Section 3. Issue of Right Certificates . . . . . . . . . 7
Section 4. Form of Right Certificates. . . . . . . . . . 9
Section 5. Countersignature and Registration . . . . . . 11
Section 6. Transfer, Split Up, Combination and
Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen
Right Certificates. . . . . . . . . . . . . . 12
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights . . . . . . . . . . 13
Section 8. Cancellation and Destruction of
Right Certificates. . . . . . . . . . . . . . 15
Section 9. Reservation and Availability of
Shares of Common Stock. . . . . . . . . . . . 16
Section 10. Common Stock Record Date. . . . . . . . . . . 18
Section 11. Adjustment of Purchase Price, Number
of Shares or Number of Rights . . . . . . . . 18
Section 12. Certificate of Adjusted Purchase
Price or Number of Shares . . . . . . . . . . 28
Section 13. Combination, Consolidation, Merger
or Sale or Transfer of Assets or
Earning Power . . . . . . . . . . . . . . . . 28
Section 14. Fractional Rights and Fractional
Shares. . . . . . . . . . . . . . . . . . . . 31
Section 15. Rights of Action. . . . . . . . . . . . . . . 32
Section 16. Agreement of Right Holders. . . . . . . . . . 33
Section 17. Right Certificate Holder Not Deemed a
Shareholder . . . . . . . . . . . . . . . . . 34
Section 18. Concerning the Rights Agent . . . . . . . . . 34
Section 19. Merger or Consolidation or Change of
Name of Rights Agent. . . . . . . . . . . . . 35
Section 20. Duties of Rights Agent. . . . . . . . . . . . 36
Section 21. Change of Rights Agent. . . . . . . . . . . . 39
Section 22. Issuance of New Right Certificates. . . . . . 40
Section 23. Redemption and Termination. . . . . . . . . . 40
Section 24. Exchange. . . . . . . . . . . . . . . . . . . 42
Section 25. Notice of Certain Events. . . . . . . . . . . 43
Section 26. Notices . . . . . . . . . . . . . . . . . . . 44
Section 27. Supplements and Amendments. . . . . . . . . . 45
Section 28. Successors. . . . . . . . . . . . . . . . . . 46
Section 29. Determinations and Actions by the
Board of Directors, etc.. . . . . . . . . . . 46
Section 30. Benefits of This Agreement. . . . . . . . . . 46
Section 31. Severability. . . . . . . . . . . . . . . . . 46
Section 32. Governing Law . . . . . . . . . . . . . . . . 47
Section 33. Counterparts. . . . . . . . . . . . . . . . . 47
Section 34. Descriptive Headings. . . . . . . . . . . . . 47
Exhibit A - Form of Right Certificate . . . . . . . . . . A-1
- Form of Assignment. . . . . . . . . . . . . . A-5
- Certificate . . . . . . . . . . . . . . . . . A-6
- Notice. . . . . . . . . . . . . . . . . . . . A-7
- Form of Election to Purchase. . . . . . . . . A-8
- Certificate . . . . . . . . . . . . . . . . . A-9
- Notice. . . . . . . . . . . . . . . . . . . . A-9
Exhibit B - Summary of Rights to Purchase
Common Stock. . . . . . . . . . . . . . . . . B-1
<PAGE>
RIGHTS AGREEMENT
Rights Agreement, dated as of February 1, 1996 (the
"Agreement"), between GENERAL SIGNAL CORPORATION, a New York
corporation (the "Company"), and FIRST CHICAGO TRUST COMPANY OF NEW
YORK, a New York corporation (the "Rights Agent").
W I T N E S S E T H :
WHEREAS, the Board of Directors of the Company on
February 1, 1996 (the "Rights Dividend Declaration Date")
authorized and declared a dividend distribution (the
"Distribution") of one Right for each outstanding share of the
Common Stock, $1.00 par value, of the Company (the "Common Stock")
outstanding at the close of business on March 21, 1996 (the "Record
Date") and has authorized the issuance of one Right (as such number
may hereinafter be adjusted pursuant to the provisions of Section
11(i) hereof) in respect of each share of Common Stock issued
(whether originally issued or delivered from the Company's treasury
shares) between the Record Date and the earlier of the Distribution
Date or the Expiration Date (as such terms are hereinafter
defined), each Right initially representing the right to purchase,
under certain circumstances, one share of the Common Stock, upon
the terms and subject to the conditions hereinafter set forth (the
"Rights");
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereby agree as
follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such
term is hereinafter defined) who or which, together with all
Affiliates (as such term is hereinafter defined) and
Associates (as such term is hereinafter defined) of such
Person, shall be the Beneficial Owner (as such term is
hereinafter defined) of securities of the Company constituting
a Substantial Block (as such term is hereinafter defined), but
shall not include (i) the Company, any Subsidiary (as such
term is hereinafter defined) of the Company, any employee
benefit plan of the Company or of any Subsidiary of the
Company or any Person organized, appointed or established by
the Company or any Subsidiary of the Company for or pursuant
to the terms of any such plan, (ii) any Person who or which,
together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of a Substantial Block solely as
a result of a change in the aggregate number of shares of the
Common Stock or other voting securities of the Company
outstanding since the last date on which such Person acquired
Beneficial Ownership of any securities of the Company
constituting such Substantial Block, or (iii) any Person who
or which, together with all Affiliates and Associates of such
Person, becomes the Beneficial Owner of a Substantial Block in
the good faith belief that such acquisition would not (x)
cause such Person and its Affiliates and Associates to become
the Beneficial Owner of a Substantial Block and such Person
relied in good faith in computing the percentage of its voting
power on publicly filed reports or documents of the Company
which are inaccurate or out-of-date or (y) otherwise cause a
Distribution Date or the adjustment provided for in Section
11(a) to occur. Notwithstanding clause (iii) of the prior
sentence, if any Person that is not an Acquiring Person due to
such clause (iii) does not cease to be the Beneficial Owner of
a Substantial Block by the close of business on the last
Business Day of a period to be determined by the Board of
Directors of the Company and specified in a notice from the
Company that such Person is the Beneficial Owner of a
Substantial Block, such Person shall, at the end of such
specified period, become an Acquiring Person (and such clause
(iii) shall no longer apply to such Person). No failure by
the Board of Directors of the Company to give such notice for
a period of time, and no notice specifying a particular time
period by which such Person must cease to be the Beneficial
Owner of a Substantial Block, shall be deemed a waiver of the
right of the Board of Directors to subsequently give or modify
such notice. For purposes of this definition, the
determination whether any Person acted in "good faith" shall
be conclusively determined by the Board of Directors of the
Company, acting by a vote of those directors of the Company
whose approval would be required to redeem the Rights under
Section 23 hereof.
(b) "Act" shall have the meaning set forth in
Section 9(c) hereof.
(c) "Adjustment Shares" shall have the meaning set forth
in Section 11(a)(ii) hereof.
(d) "Affiliate" and "Associate" shall have the
respective meanings ascribed to such terms in Rule 12b-2 of
the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as in
effect on the date hereof.
(e) "Agreement" shall have the meaning set forth in the
introduction hereto.
(f) A Person shall be deemed the "Beneficial Owner" of
and shall be deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's
Affiliates or Associates has, directly or indirectly, the
right to acquire (whether such right is exercisable
immediately or only after the passage of time or upon the
occurrence of an event) pursuant to any agreement,
arrangement or understanding (whether or not in writing),
or upon the exercise of conversion rights, exchange
rights, rights, warrants or options, or otherwise,
provided, however, that a Person shall not be deemed the
"Beneficial Owner" of, or to "beneficially own,"
(1) securities tendered pursuant to a tender or exchange
offer made by such Person or any of such Person's
Affiliates or Associates until such tendered securities
are accepted for purchase or exchange, (2) securities
issuable upon exercise of Rights at any time prior to the
occurrence of a Triggering Event or (3) securities
issuable upon exercise of Rights from and after the
occurrence of a Triggering Event (as such term is
hereinafter defined), which Rights were acquired by such
Person or any of such Person's Affiliates or Associates
prior to the Distribution Date or pursuant to Section
3(a) hereof ("Original Rights") or pursuant to Section
11(i) or Section 22 hereof in connection with an
adjustment made with respect to Original Rights; or
(ii) which such Person or any of such Person's
Affiliates or Associates has, directly or indirectly, the
right to vote or dispose of or has "beneficial ownership"
of (as determined pursuant to Rule 13d-3 of the General
Rules and Regulations under the Exchange Act), including
pursuant to any agreement, arrangement or understanding
(whether or not in writing), provided, however, that a
Person shall not be deemed the Beneficial Owner of, or to
"beneficially own," any security under this subparagraph
(ii) if the agreement, arrangement or understanding to
vote such security (1) arises solely from a revocable
proxy given in response to a public proxy or consent
solicitation made pursuant to, and in accordance with,
the applicable rules and regulations of the Exchange Act
and (2) is not then reportable on Schedule 13D under the
Exchange Act (or any comparable or successor report);
(iii) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or
any of such Person's Affiliates or Associates has any
agreement, arrangement or understanding (whether or not
in writing) for the purpose of acquiring, holding, voting
(except pursuant to a revocable proxy as described in the
proviso to subparagraph (ii) of this paragraph (f)) or
disposing of any securities of the Company; or
(iv) which are directly, indirectly or
constructively owned by such Person or any of such
Person's Affiliates or Associates, within the meaning of
Section 958 of the Internal Revenue Code of 1986, as
amended.
Notwithstanding the foregoing, nothing contained in this
definition shall cause a Person ordinarily engaged in business
as an underwriter of securities to be the "Beneficial Owner"
of, or to "beneficially own," any securities acquired in a
bona fide firm commitment underwriting pursuant to an
underwriting agreement with the Company.
(g) "Business Day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in
the State of New York are authorized or obligated by law or
executive order to close.
(h) "Certification" shall have the meaning set forth in
Section 18 hereof.
(i) "close of business" on any given date shall mean
5:00 P.M., New York City time, on such date, provided,
however, if such date is not a Business Day it shall mean 5:00
P.M. on the next succeeding Business Day.
(j) "Company" shall have the meaning set forth in the
introduction hereto.
(k) "Current Value" shall have the meaning set forth in
Section 11(a)(iii) hereof.
(l) "Distribution" shall have the meaning set forth in
the recitals hereto.
(m) "Distribution Date" shall have the meaning set forth
in Section 3(a) hereof.
(n) "equivalent shares of common stock" shall have the
meaning set forth in Section 11(b) hereof.
(o) "Exchange Act" shall have the meaning set forth in
the definitions of "Affiliate" and "Associate" above.
(p) "Exchange Ratio" shall have the meaning set forth in
Section 24(a) hereof.
(q) "Expiration Date" shall have the meaning set forth
in Section 7(a) hereof.
(r) "Final Expiration Date" shall have the meaning set
forth in Section 7(a) hereof.
(s) "Independent Director" shall mean any member of the
Board of Directors of the Company, while such person is a
member of the Board, who is not an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, or a
representative or nominee of an Acquiring Person or of any
such Affiliate or Associate, and was a member of the Board
prior to the time that any Person becomes an Acquiring Person,
and any successor of an Independent Director while such
successor is a member of the Board, who is not an Acquiring
Person or an Affiliate or Associate of an Acquiring Person, or
a representative or nominee of an Acquiring Person or of any
such Affiliate or Associate, and is recommended or elected to
succeed the Independent Director by a majority of the
Independent Directors.
(t) "common stock equivalent" shall have the meaning set
forth in Section 11(a)(iii).
(u) "Common Stock" when used with reference to the
Company shall mean the Common Stock, $1.00 par value, of the
Company. "Common Stock" when used with reference to any
Person other than the Company shall mean the capital stock
with the greatest voting power of such Person or the equity
securities or other equity interest having power to control or
direct the management of such Person.
(v) "Original Rights" shall have the meaning set forth
in the definition of "Beneficial Owner" above.
(w) "Person" shall mean any individual, firm,
corporation, partnership or other entity, including any
"group" within the meaning of Section 13(d)(3) of the Exchange
Act and the General Rules and Regulations thereunder.
(x) "Principal Party" shall have the meaning set forth
in Section 13(b) hereof.
(y) "Purchase Price" shall have the meaning set forth in
Section 4(a) hereof.
(z) "Record Date" shall have the meaning set forth in
the recitals hereto.
(aa) "Redemption Price" shall have the meaning set forth
in Section 23(a) hereof.
(bb) "Right Certificate" shall have the meaning set forth
in Section 3(a) hereof.
(cc) "Rights" shall have the meaning set forth in the
recitals hereto.
(dd) "Rights Agent" shall have the meaning set forth in
the introduction hereto.
(ee) "Rights Dividend Declaration Date" shall have the
meaning set forth in the recitals hereto.
(ff) "Section 11(a)(ii) Event" shall mean any event
described in Section 11(a)(ii).
(gg) "Section 11(a)(ii) Trigger Date" shall have the
meaning set forth in Section 11(a)(iii).
(hh) "Section 13 Event" shall mean any event described in
Section 13(a).
(ii) "Shares Acquisition Date" shall mean the first date
of public announcement (which, for purposes of this
definition, includes a report filed pursuant to Section 13(d)
of the Exchange Act) by the Company or an Acquiring Person
that an Acquiring Person has become such.
(jj) "Spread" shall have the meaning set forth in Section
11(a)(iii) hereof.
(kk) "Subsidiary" shall mean, with reference to any
Person, any company (or other entity) of which an amount of
voting securities (or comparable ownership interests)
sufficient to elect at least a majority of the directors (or
comparable persons) of such company (or other entity) is
beneficially owned or otherwise controlled, directly or
indirectly, by such Person.
(ll) "Substantial Block" shall mean a number of shares of
the Common Stock equal to or in excess of 20% of the number of
shares of the Common Stock then outstanding.
(mm) "Substitution Period" shall have the meaning set
forth in Section 11(a)(iii) hereof.
(nn) "Summary of Rights" shall have the meaning set forth
in Section 3(b) hereof.
(oo) "Trading Day" shall have the meaning set forth in
Section 11(d) hereof.
(pp) "Triggering Event" shall mean any Section 11(a)(ii)
Event or Section 13 Event.
Section 2. Appointment of Rights Agent. The Company
hereby appoints the Rights Agent to act as agent for the Company in
accordance with the terms and conditions hereof, and the Rights
Agent hereby accepts such appointment. The Company shall act as
Co-Rights Agent and may from time to time appoint such other Co-
Rights Agents as it may deem necessary or desirable upon ten
calendar days' written notice to the Rights Agent. In no event
shall the Rights Agent have any duty to supervise or in any way be
liable for such Co-Rights Agents.
Section 3. Issue of Right Certificates. (a) Until the
earlier of (i) the close of business on the tenth calendar day
after the Shares Acquisition Date (or, if the tenth day after the
Shares Acquisition Date occurs before the Record Date, the close of
business on the Record Date) or (ii) the close of business on the
tenth calendar day after the date of the commencement of, or first
public announcement of the intent of any Person to commence, a
tender or exchange offer if, upon consummation thereof, such Person
would be an Acquiring Person (the earlier of the dates in
subsection (i) and (ii) hereof being herein referred to as the
"Distribution Date"), (x) the Rights will be evidenced (subject to
the provisions of paragraph (b) of this Section 3) by the
certificates for the Common Stock registered in the names of the
holders of the Common Stock (which certificates for the Common
Stock shall be deemed also to be Right Certificates) and not by
separate Right Certificates, and (y) the right to receive Right
Certificates will be transferable only in connection with the
transfer of the Common Stock. As soon as practicable after receipt
by the Rights Agent of written notice from the Company of the
Distribution Date, the Rights Agent, at the Company's expense, will
send by first-class, postage prepaid mail, to each record holder of
the Common Stock as of the close of business on the Distribution
Date, at the address of such holder shown on the records of the
Company, a Right Certificate, in substantially the form of
Exhibit A hereto, evidencing one Right for each share of the Common
Stock so held, subject to adjustment as provided herein. As of the
Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
(b) As soon as practicable following the Record Date,
the Company will send a copy of a Summary of Rights to Purchase
Common Stock, in substantially the form attached hereto as Exhibit
B (the "Summary of Rights"), by first-class, postage prepaid mail,
to each record holder of the Common Stock as of the close of
business on the Record Date, at the address of such holder shown on
the records of the Company. With respect to certificates for the
Common Stock outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such
certificates for the Common Stock, and the registered holders of
the Common Stock shall also be the registered holders of the
associated Rights. Until the Distribution Date (or earlier
redemption or expiration of the Rights), the surrender for transfer
of any of the certificates for the Common Stock outstanding on the
Record Date shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate.
(c) Rights shall be issued in respect of all shares of
Common Stock issued after the Record Date but prior to the earlier
of the Distribution Date or the Expiration Date (as such term is
defined in Section 7), or, in certain circumstances provided in
Section 22 hereof, after the Distribution Date. Certificates
representing such shares of Common Stock shall have impressed on,
printed on, written on or otherwise affixed to them the following
legend:
This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in a Rights
Agreement between GENERAL SIGNAL CORPORATION and FIRST
CHICAGO TRUST COMPANY OF NEW YORK dated as of February 1,
1996 (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of
which is on file at the principal executive offices of
GENERAL SIGNAL CORPORATION. Under certain circumstances,
as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be
evidenced by this certificate. GENERAL SIGNAL
CORPORATION will mail to the holder of this certificate
a copy of the Rights Agreement (as in effect on the date
of mailing) without charge promptly after receipt of a
written request therefor. Under certain circumstances,
Rights which are or were beneficially owned by Acquiring
Persons or their Affiliates or Associates (as such terms
are defined in the Rights Agreement) and any subsequent
holder of such Rights may become null and void.
After the due execution of any supplement or amendment to this
Agreement in accordance with the terms hereof, the reference to
this Agreement in the foregoing legend shall mean the Agreement as
so supplemented or amended. Until the Distribution Date, the
Rights associated with the Common Stock represented by certificates
containing the foregoing legend shall be evidenced by such
certificates alone, and the surrender for transfer of any of such
certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate.
Section 4. Form of Right Certificates. (a) The Right
Certificates (and the forms of election to purchase shares and of
assignment to be printed on the reverse thereof) shall be
substantially the same as Exhibit A hereto and may have such marks
of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any
rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Rights may from time
to time be listed, or to conform to usage. The Right Certificates
shall be in machine-printable format and in a form reasonably
satisfactory to the Rights Agent. Subject to the provisions of
Section 11 and Section 22 hereof, the Right Certificates, whenever
distributed, shall be dated as of the Record Date, shall show the
date of countersignature, and on their face shall entitle the
holders thereof to purchase such number of shares of the Common
Stock (or following a Triggering Event, other securities, cash or
other assets, as the case may be) as shall be set forth therein at
the price per share set forth therein (the "Purchase Price"), but
the number of such shares and the Purchase Price shall be subject
to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section
3(a) or 22 hereof that represents Rights beneficially owned by:
(i) an Acquiring Person or any Associate or Affiliate of an
Acquiring Person, (ii) a transferee of an Acquiring Person (or of
any such Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring
Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding (whether or not
in writing) regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company has determined is part
of a plan, arrangement or understanding (whether or not in writing)
which has as a primary purpose or effect avoidance of Section 7(e)
hereof, and any Right Certificate issued pursuant to Section 6 or
11 hereof upon transfer, exchange, replacement or adjustment of any
other Right Certificate referred to in this sentence, shall contain
(to the extent feasible) the following legend:
The Rights represented by this Right Certificate are or
were beneficially owned by a Person who was or became an
Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights
Agreement). Accordingly, this Right Certificate and the
Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of such
Agreement.
Section 5. Countersignature and Registration. The Right
Certificates shall be executed on behalf of the Company by one of
its authorized officers, either manually or by facsimile signature.
The Right Certificates shall be countersigned by an authorized
signatory of the Rights Agent either manually or by facsimile
signature and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have
signed any of the Right Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates,
nevertheless may be countersigned by the Rights Agent, issued and
delivered with the same force and effect as though the person who
signed such Right Certificates had not ceased to be such officer of
the Company; and any Right Certificate may be signed on behalf of
the Company by any person who, at the actual date of the execution
of such Right Certificate, shall be a proper officer of the Company
to sign such Right Certificate, although at the date of the
execution of this Rights Agreement any such person was not such an
officer.
In case any authorized signatory of the Rights Agent who
shall have countersigned any of the Right Certificates shall cease
to be such signatory before delivery by the Company, such Right
Certificates, nevertheless, may be issued and delivered by the
Company with the same force and effect as though the person who
countersigned such Right Certificates had not ceased to be such
signatory; and any Right Certificates may be countersigned on
behalf of the Rights Agent by any person who, at the actual date of
the countersignature of such Right Certificate, shall be a proper
signatory of the Rights Agent to countersign such Right
Certificate, although at the date of the execution of this Rights
Agreement any such person was not such a signatory.
Following the Distribution Date, the Rights Agent will
keep or cause to be kept, at its office designated for such
purpose, books for registration and transfer of the Right
Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates
issued hereunder. Such books shall show the names and addresses of
the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates, the
date of each of the Right Certificates and the date of
countersignature of each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange
of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates. Subject to the provisions of Section 14 hereof, at
any time after the close of business on the Distribution Date, and
at or prior to the close of business on the Expiration Date, any
Right Certificate or Certificates may be transferred, split up,
combined or exchanged for another Right Certificate or Right
Certificates, entitling the registered holder to purchase a like
number of shares of the Common Stock (or following a Triggering
Event, other securities, cash or other assets, as the case may be)
as the Right Certificate or Right Certificates surrendered then
entitled such holder (or former holder in the case of a transfer)
to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificates shall make such request
in writing delivered to the Rights Agent, and shall surrender the
Right Certificate or Right Certificates to be transferred, split
up, combined or exchanged at the office of the Rights Agent
designated for such purpose, along with a signature guarantee and
such other and further documentation as the Rights Agent may
reasonably request. Neither the Rights Agent nor the Company shall
be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Right Certificate until the
registered holder shall have completed and signed the certificate
contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional evidence,
as the Company shall reasonably request of the identity of the
Beneficial Owner, Affiliates or Associates of such Beneficial Owner
or holder, or of any other Person with which such holder or any of
such holder's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) for the
purpose of acquiring, holding, voting or disposing of securities of
the Company. Thereupon the Rights Agent shall, subject to
Section 14 and Section 20(k) hereof, countersign and deliver to the
Person entitled thereto a Right Certificate or Right Certificates,
as the case may be, as so requested. The Company may require
payment from a Right Certificates holder of a sum sufficient to
cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of
Right Certificates.
Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft,
destruction or mutilation of a Right Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, along with a signature guarantee and such
other and further documentation as the Rights Agent may reasonably
request, and if requested by the Company, reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental
thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and
deliver a new Right Certificate of like tenor to the Rights Agent
for delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price;
Expiration Date of Rights. (a) Subject to Section 7(e) hereof,
the registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein
including, without limitation, the restrictions on exercisability
set forth in Sections 9(c), 11(a)(iii), 23(a) and 24(b) hereof) in
whole or in part at any time after the Distribution Date upon
surrender of the Right Certificate, with the form of election to
purchase on the reverse side thereof duly executed, to the Rights
Agent at the designated office of the Rights Agent, together with
payment of the aggregate Purchase Price for the total number of
shares of the Common Stock (or other securities, cash or other
assets, as the case may be) as to which the Rights are then
exercisable, at or prior to the earliest of (i) the close of
business on March 21, 2006 (the "Final Expiration Date"), or
(ii) the time at which the Rights are redeemed as provided in
Section 23 hereof or (iii) the time at which all exercisable Rights
are exchanged as provided in Section 24 hereof (such earliest date
being herein referred to as the "Expiration Date").
(b) The Purchase Price for each share of the Common
Stock pursuant to the exercise of a Right shall initially be
$150.00, shall be subject to adjustment from time to time as
provided in Sections 11 and 13 hereof and shall be payable in
lawful money of the United States of America in accordance with
paragraph (c) below.
(c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and the
certificate duly executed and completed accompanied by payment of
the Purchase Price for the number of shares of the Common Stock (or
other securities, cash or other assets, as the case may be) to be
purchased and an amount equal to any applicable transfer tax, the
Rights Agent shall thereupon, subject to Section 20(k), promptly
(i) requisition from the Company certificates for the number of
shares of the Common Stock to be purchased, (ii) if the Company
shall have elected to deposit the total number of shares of the
Common Stock issuable upon exercise of the Rights hereunder with a
depositary agent, requisition from the depositary agent depositary
receipts representing such number of shares of the Common Stock as
are to be purchased (in which case certificates for the shares of
the Common Stock represented by such receipts shall be deposited by
the transfer agent with the depositary agent) and the Company
hereby directs the depositary agent to comply with such request,
(iii) when appropriate, requisition from the Company the amount of
cash to be paid in lieu of issuance of fractional shares in
accordance with Section 14, (iv) promptly after receipt of such
certificates or depositary receipts, cause the same to be delivered
to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated
by such holder and (v) when appropriate, after receipt promptly
deliver such cash to or upon the order of the registered holder of
such Right Certificate. The payment of the then Purchase Price
must be made in cash or by certified bank check or bank draft or
money order payable to the order of the Company or the Rights
Agent. In the event that the Company is obligated to issue
securities, distribute property or pay cash pursuant to Section
11(a)(iii) hereof, the Company will make all arrangements necessary
so that cash, property or securities are available for issuance,
distribution or payment by the Rights Agent, if and when
appropriate.
(d) In case the registered holder of any Right
Certificate shall exercise less than all the Rights evidenced
thereby, a new Right Certificate evidencing Rights equivalent to
the Rights remaining unexercised shall be issued by the Rights
Agent to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14
hereof.
(e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section
11(a)(ii) Event, any Rights beneficially owned by (i) an Acquiring
Person or an Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of
any such Associate or Affiliate) who becomes a transferee prior to
or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or
not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person which
whom the Acquiring Person has any continuing agreement, arrangement
or understanding (whether or not in writing) regarding the
transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or
understanding (whether or not in writing) which has as a primary
purpose or effect the avoidance of this Section 7(e), shall become
null and void without any further action and no holder of such
Rights shall have any rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise.
The Company shall use all reasonable efforts to insure that the
provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of Right
Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person, or any of its
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth
in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of
election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner,
Affiliates or Associates of such Beneficial Owner or holder, or of
any other Person with which such holder or any of such holder's
Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing) for the purpose of
acquiring, holding, voting or disposing of any securities of the
Company as the Company shall reasonably request.
Section 8. Cancellation and Destruction of Right
Certificates. All Right Certificates surrendered for the purpose
of exercise, transfer, split up, combination or exchange shall, if
surrendered to the Company or to any of its agents, be delivered to
the Rights Agent for cancellation or in cancelled form, or, if
surrendered to the Rights Agent, shall be cancelled by it, and no
Right Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Rights
Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel
and retire, any other Right Certificate purchased or acquired by
the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Right Certificates to the
Company, or shall, at the written request of the Company, destroy
such cancelled Right Certificates, and in such case shall deliver
a certificate of destruction thereof to the Company.
Section 9. Reservation and Availability of Shares of
Common Stock. (a) The Company covenants and agrees that it will,
subject to Section 11(a)(iii), prior to the Distribution Date, seek
to cause to be reserved and kept available out of its authorized
and unissued Common Stock (and following the occurrence of a
Triggering Event, out of its authorized and unissued other
securities) or out of its authorized and issued Common Stock (and,
following the occurrence of a Triggering Event, out of its
authorized and issued other securities) held in its treasury, the
number of shares of the Common Stock (and, following the occurrence
of a Triggering Event, Common Stock and other securities) that will
be sufficient to permit the exercise in full of all outstanding
Rights (it being understood that any of the foregoing shares or
securities may also be reserved for other purposes) or will take
such other steps as are appropriate to assure that the number of
such shares or securities (or their equivalents) sufficient to
permit the exercise in full of all outstanding Rights will be
available upon such exercise.
(b) So long as the Common Stock (and, following the
occurrence of a Triggering Event, other securities) issuable upon
the exercise of Rights may be listed on any national securities
exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable (but only to the
extent that it is reasonably likely that the Rights will be
exercised), all shares reserved for such issuance to be listed on
such exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file,
as soon as practicable following the first occurrence of a Section
11(a)(ii) Event, or as soon as required by law, as the case may be,
a registration statement under the Securities Act of 1933, as
amended (the "Act"), with respect to the securities purchasable
upon exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable
after such filing, and (iii) cause such registration statement to
remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities, and
(B) the Expiration Date. The Company will also take such action as
may be appropriate under the blue sky laws of the various states.
The Company may temporarily suspend, for a period of time not to
exceed ninety (90) days after the date set forth in clause (i) of
the first sentence of this Section 9(c), the exercisability of the
Rights in order to prepare and file such registration statement and
permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement and shall give
simultaneous written notice to the Rights Agent stating that the
exercisability of the Rights has been temporarily suspended, as
well as a public announcement and notice to the Rights Agent at
such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary,
the Rights shall not be exercisable in any jurisdiction unless the
requisite qualifications in such jurisdiction shall have been
obtained.
(d) The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all shares of
the Common Stock (and following the occurrence of a Triggering
Event, other securities) delivered upon exercise of Rights shall,
at the time of delivery of the certificates for such shares
(subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable.
(e) The Company further covenants and agrees that it
will pay when due and payable any and all federal and state
transfer taxes and charges which may be payable in respect of the
issuance or delivery of the Right Certificates or of any shares of
the Common Stock (or other securities, as the case may be) upon the
exercise of Rights. The Company shall not, however, be required
(a) to pay any transfer tax which may be payable in respect of any
transfer involved in the transfer or delivery of Right Certificates
or the issuance or delivery of certificates for the shares of the
Common Stock (or other securities, as the case may be) in a name
other than that of the registered holder of the Right Certificate
evidencing Rights surrendered for exercise or (b) to issue or
deliver any certificates for shares of the Common Stock (or other
securities, as the case may be) upon the exercise of any Rights
until any such tax shall have been paid (any such tax being payable
by the holder of such Right Certificate at the time of surrender)
or until it has been established to the Company's satisfaction that
no such tax is due.
Section 10. Common Stock Record Date. Each person in
whose name any certificate for shares of the Common Stock (or other
securities, as the case may be) is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder
of record of such whole and/or fractional shares of the Common
Stock (or other securities, as the case may be) represented thereby
on, and such certificate shall be dated the date upon which the
Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes)
was made and shall show the date of countersignature; provided,
however, that if the date of such surrender and payment is a date
upon which the Common Stock (or other securities, as the case may
be) transfer books of the Company are closed, such person shall be
deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on
which the Common Stock (or other securities, as the case may be)
transfer books of the Company are open. Prior to the exercise of
the Rights evidenced thereby, the holder of a Right Certificate
shall not be entitled to any rights of a stockholder of the Company
with respect to shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of
Shares or Number of Rights. The Purchase Price, the number of
shares covered by each Right and the number of Rights outstanding
are subject to adjustment from time to time as provided in this
Section 11.
(a) (i) In the event the Company shall at any time
after the date of this Agreement (A) declare a dividend on the
Common Stock payable in shares of the Common Stock, (B) subdivide
the outstanding Common Stock, (C) combine the outstanding Common
Stock into a smaller number of shares or (D) issue any share
capital in a reclassification of the Common Stock (including any
such reclassification in connection with a combination,
consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this
Section 11(a) and Section 7(e) hereof, the Purchase Price in effect
at the time of the record date for such dividend or of the
effective date of such subdivision, combination or
reclassification, and the number and kind of shares of the Common
Stock or share capital, as the case may be, issuable on such date,
shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive upon payment
of the Purchase Price then in effect the aggregate number and kind
of share capital which, if such Right had been exercised
immediately prior to such date and at a time when the Common Stock
(or other securities) transfer books of the Company were open, he
would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii),
the adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior, to any adjustment required
pursuant to Section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement, in the
event any Person, alone or together with its Affiliates and
Associates, becomes at any time after the Rights Dividend
Declaration Date, an Acquiring Person except as the result of a
transaction set forth in Section 13(a) hereof, then, (x) prior to
the date on which the Company's right of redemption pursuant to
Section 23(a) expires (as the same may be extended pursuant to
Section 27) with respect to an event described in this Section
11(a)(ii), proper provision shall be made so that each holder of a
Right, except as provided in Section 7(e) hereof, shall thereafter
have a right to receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, such
number of shares of the Common Stock of the Company as shall equal
the result obtained by (x) multiplying the then current Purchase
Price by the number of shares of the Common Stock for which a Right
is then exercisable and dividing that product by (y) 50% of the
current market price per share of the Common Stock of the Company
(determined pursuant to Section 11(d)) on the date of the
occurrence of any one of the events listed above in this
subparagraph (ii) (such number of shares is hereinafter referred to
as the "Adjustment Shares"), provided that the Purchase Price and
the number of Adjustment Shares shall be further adjusted as
provided in this Agreement to reflect any events occurring after
the date of such first occurrence.
(iii) In the event that the number of shares of the Common
Stock which are authorized by the Company's certificate of
incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights is not sufficient
to permit the exercise in full of the Rights in accordance with the
foregoing subparagraphs (i) and (ii), the Company shall
(A) determine the excess of (1) the value of the Adjustment Shares
issuable upon the exercise of a Right (the "Current Value") over
(2) the Purchase Price (such excess, the "Spread"), and (B) with
respect to each Right, make adequate provision to substitute for
the Adjustment Shares, upon exercise of the Rights and payment of
the applicable Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) other equity securities of the Company
(including, without limitation, preference shares, or units of
preference shares, which a majority of the Independent Directors
and the Board of Directors of the Company have deemed to have the
same value as the Common Stock (such preference shares, "common
stock equivalents")), (4) debt securities of the Company, (5) other
assets, or (6) any combination of the foregoing, having an
aggregate value equal to the Current Value, where such aggregate
value has been determined by a majority of the Independent
Directors and the Board of Directors of the Company based upon the
advice of a nationally recognized investment banking firm selected
by the Board of Directors of the Company; provided, however, if the
Company shall not have made adequate provision to deliver value
pursuant to clause (B) above within thirty (30) days following the
later of (x) the first occurrence of a Section 11(a)(ii) Event and
(y) the date on which the Company's right of redemption pursuant to
Section 23(a) expires, as the same may be extended pursuant to
Section 27 (the later of (x) and (y) being referred to herein as
the "Section 11(a)(ii) Trigger Date"), then the Company shall be
obligated to deliver, upon the surrender for exercise of a Right
and without requiring payment of the Purchase Price, shares of the
Common Stock (to the extent available) and then, if necessary,
cash, which shares and/or cash have an aggregate value equal to the
Spread. If the Board of Directors of the Company shall determine
in good faith that it is likely that sufficient additional shares
of the Common Stock could be authorized for issuance upon exercise
in full of the Rights, the thirty (30) day period set forth above
may be extended to the extent necessary, but not more than ninety
(90) days after the Section 11(a)(ii) Trigger Date, in order that
the Company may seek shareholder approval for the authorization of
such additional shares (such period, as it may be extended, the
"Substitution Period"). To the extent that the Company determines
that some action need be taken pursuant to the first and/or second
sentences of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 7(e) hereof, that such action shall
apply uniformly to all outstanding Rights, and (y) may suspend the
exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to
determine the value thereof. In the event of any such suspension,
the Company shall issue a public announcement and shall give
concurrent written notice to the Rights Agent stating that the
exercisability of the Rights has been temporarily suspended, as
well as a public announcement and notice to the Rights Agent at
such time as the suspension is no longer in effect. For purposes
of this Section 11(a)(iii), the value of the shares of the Common
Stock shall be the current market price (as determined pursuant to
Section 11(d) hereof) per share on the Section 11(a)(ii) Trigger
Date and the value of any "common stock equivalent" shall be deemed
to be the same as the value of the Common Stock on such date. The
Company shall give the Rights Agent notice of the selection of any
"common stock equivalent" under this Section 11(a)(iii).
(b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of the
Common Stock entitling them (for a period expiring within 45
calendar days after such record date) to subscribe for or purchase
the Common Stock (or securities having substantially the same
rights, privileges and preferences as the Common Stock ("equivalent
common stock") or convertible into the Common Stock or equivalent
common stock) at a price per share or equivalent common stock (or
having a conversion price per share, if a security convertible into
the Common Stock or equivalent common stock) less than the current
market price (as defined in Section 11(d) per share or equivalent
common stock, as the case may be) on such record date, the Purchase
Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, of which the numerator shall be the
number of shares of the Common Stock outstanding on such record
date plus the number of shares of the Common Stock or equivalent
common stock which the aggregate offering price of the total number
of shares of the Common Stock or equivalent common stock so to be
offered (and/or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such
current market price and of which the denominator shall be the
number of shares of the Common Stock outstanding on such record
date plus the number of additional shares of the Common Stock
and/or equivalent common stock to be offered for subscription or
purchase (or into which the convertible securities so to be offered
are initially convertible). In case such subscription price may be
paid by delivery of consideration part or all of which shall be in
a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with
the Rights Agent. Shares of the Common Stock owned by or held for
the account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed; and in the event
that such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the
making of a distribution to all holders of the Common Stock
(including any such distribution made in connection with a
combination, consolidation or merger in which the Company is the
continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular periodic cash dividend or a
dividend payable in the Common Stock) or subscription rights or
warrants (excluding those referred to in Section 11(b)), the
Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, of which the numerator
shall be the current market price per share of the Common Stock (as
defined in Section 11(d)) on such record date, less the fair market
value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement
filed with the Rights Agent) of the portion of the assets or
evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one share of the
Common Stock and of which the denominator shall be such current
market price per share of the Common Stock. Such adjustments shall
be made successively whenever such a record date is fixed; and in
the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would
then be in effect if such record date had not been fixed.
(d) For the purpose of any computation hereunder, other
than computations made pursuant to Section 11(a)(iii), the "current
market price" per share of the Common Stock on any date shall be
deemed to be the average of the daily closing prices per share of
such Common Stock for the thirty (30) consecutive Trading Days (as
such term is hereinafter defined in this paragraph (d)) immediately
prior to such date and, for purposes of computations made pursuant
to Section 11(a)(iii) hereof, the "current market price" per share
of the Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock for the
ten (10) consecutive Trading Days immediately following such date;
provided, however, that in the event that the current market price
per share of the Common Stock is determined during the period
following the announcement by the issuer of such Common Stock of
(A) a dividend or distribution on such Common Stock payable in
shares of such Common Stock or securities convertible into such
Common Stock (other than the Rights) or (B) any subdivision,
combination or reclassification of such Common Stock, and prior to
the expiration of the requisite 30 Trading Day or 10 Trading Day
period, as set forth above, after the ex-dividend date for such
dividend or distribution or the record date for such subdivision,
combination or reclassification, then, and in each such case, the
current market price shall be appropriately adjusted to take into
account ex-dividend trading. The closing price for each day shall
be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock
Exchange or, if the shares of the Common Stock are not listed or
admitted to trading on the New York Stock Exchange, as reported in
the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities
exchange on which the shares of the Common Stock are listed or
admitted to trading or, if the shares of the Common Stock are not
listed or admitted to trading on any national securities exchange,
the last quoted price, or, if not so quoted, the average of the
high bid and low asked prices in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc.
Automated Quotation System ("NASDAQ") or such other system then in
use, or, if on any such date the shares of the Common Stock are
not quoted by such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a
market in the shares of the Common Stock selected by the Board of
Directors of the Company. If on any such date no market maker is
making a market in the shares of the Common Stock, the fair value
of such shares on such date shall be as determined in good faith by
the Independent Directors if the Independent Directors constitute
a majority of the Board of Directors or, in the event the
Independent Directors do not constitute a majority of the Board of
Directors, by an independent investment banking firm selected by
the Board of Directors, whose determination shall be described in
a statement filed with the Rights Agent and shall be conclusive for
all purposes. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the shares of the
Common Stock are listed or admitted to trading is open for the
transaction of business or, if the shares of the Common Stock are
not listed or admitted to trading on any national securities
exchange, a Monday, Tuesday, Wednesday, Thursday or Friday on which
banking institutions in the State of New York, are not authorized
or obligated by law or executive order to close. If the Common
Stock is not publicly held or not so listed or traded, "current
market price" per share shall mean the fair value per share as
determined in good faith by the Independent Directors if the
Independent Directors constitute a majority of the Board of
Directors or, in the event the Independent Directors do not
constitute a majority of the Board of Directors, by an independent
investment banking firm selected by the Board of Directors, whose
determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no
adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in
such price; provided, however, that any adjustments which by reason
of this Section 11(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations under this Section 11 shall be made to the nearest
cent or to the nearest ten-thousandth of a share. Notwithstanding
the first sentence of this Section 11(e), any adjustment required
by this Section 11 shall be made no later than the earlier of
(i) three years from the date of the transaction which mandates
such adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to
Section 11(a) or Section 13(a), the holder of any Right thereafter
exercised shall become entitled to receive any share capital other
than shares of the Common Stock, thereafter the number of such
other shares so receivable upon exercise of any Right and the
Purchase Price thereof shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the shares contained in
Section 11(a) through (p), inclusive, and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the shares of the
Common Stock shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company
subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase
Price, the number of shares of the Common Stock purchasable from
time to time hereunder upon exercise of the Rights, all subject to
further adjustment as provided herein.
(h) Unless the Company shall have exercised its election
as provided in Section 11(i), upon each adjustment of the Purchase
Price as a result of the calculations made in Section 11(b) and
(c), each Right outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase, at the
adjusted Purchase Price, that number of shares (calculated to the
nearest ten-thousandth) obtained by (i) multiplying (x) the number
of shares covered by a Right immediately prior to this adjustment
by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in
substitution for any adjustment in the number of shares of the
Common Stock purchasable upon the exercise of a Right. Each of the
Rights outstanding after such adjustment of the number of Rights
shall be exercisable for the number of shares of the Common Stock
for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of
the number of Rights shall become that number of Rights (calculated
to the nearest ten-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after the
adjustment of the Purchase Price. The Company shall make a public
announcement and shall give simultaneous written notice to the
Rights Agent of its election to adjust the number of Rights,
indicating the record date for the adjustment to be made. This
record date may be the date on which the Purchase Price is adjusted
or any day thereafter, but, if the Right Certificates have been
issued, shall be at least 10 days later than the date of the public
announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i),
the Company shall, as promptly as practicable, cause to be
distributed to holders of Right Certificates on such record date
Right Certificates evidencing, subject to Section 14, the
additional Rights to which such holders shall be entitled as a
result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution
and replacement for the Right Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Right Certificates evidencing all the
Rights to which such holders shall be entitled after such
adjustment. Right Certificates so to be distributed shall be
issued, executed and countersigned in the manner provided for
herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders
of record of Right Certificates on the record date specified in the
public announcement.
(j) Irrespective of any adjustment or change in the
Purchase Price or the number of shares of the Common Stock issuable
upon the exercise of the Rights, the Right Certificates theretofore
and thereafter issued may continue to express the Purchase Price
per share and the number of shares which were expressed in the
initial Right Certificates issued hereunder.
(k) Before taking any action that would cause an
adjustment reducing the Purchase Price below the then par value, if
any, of the shares of the Common Stock issuable upon exercise of
the Rights, the Company shall take any corporate action which may,
in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue such number of fully paid and
nonassessable shares of such Common Stock at such adjusted Purchase
Price.
(l) In any case in which this Section 11 shall require
that an adjustment in the Purchase Price be made effective as of a
record date for a specified event, the Company may elect to defer
until the occurrence of such event the issuance to the holder of
any Right exercised after such record date of the shares of the
Common Stock and other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the shares of
the Common Stock and other share capital or securities of the
Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill
or other appropriate instrument evidencing such holder's right to
receive such additional shares upon the ocurrence of the event
requiring such adjustment.
(m) Anything in this Section 11 to the contrary
notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those adjustments
expressly required by this Section 11, as and to the extent that
the Board of Directors of the Company shall determine to be
advisable in order that any consolidation or subdivision of the
Common Stock, issuance wholly for cash of any of the Common Stock
at less than the current market price, issuance wholly for cash of
the Common Stock or securities which by their terms are convertible
into or exchangeable for Common Stock, dividends of shares or
issuance of rights, options or warrants referred to hereinabove in
this Section 11 hereafter made by the Company to holders of its
Common Stock shall not be taxable to such shareholders.
(n) The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Sections 23,
24 and 27 hereof, take (nor will it permit any of its Subsidiaries
to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will diminish substantially
or otherwise eliminate the benefits intended to be afforded by the
Rights.
(o) The Company covenants and agrees that it shall not,
at any time after a Section 11(a)(ii) Event, (i) combine or
consolidate with any other Person, (ii) merge with or into any
other Person, or (iii) sell or transfer (or permit any of its
Subsidiaries to sell or transfer), in one or more transactions,
assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its wholly-owned Subsidiaries
(taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions
each of which complies with Section 11(n)) if (x) at the time of or
immediately after such combination, consolidation, merger or sale
there are any rights, warrants or other instruments or securities
outstanding or agreements in effect which would substantially
diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or
immediately after such combination, consolidation, merger or sale,
the stockholders of the Person who constitutes, or would
constitute, the "Principal Party" for purposes of Section 13(a)
hereof shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates and Associates.
(p) Notwithstanding anything in this Agreement to the
contrary, prior to the Distribution Date, the Company may, in lieu
of making any adjustment to the Purchase Price, the number of
shares of the Common Stock eligible for purchase on exercise of
each Right or the number of Rights outstanding, which adjustment
would otherwise be required by Sections 11(a)(i), 11(b), 11(c),
11(h) or 11(i), make such other equitable adjustment or adjustments
thereto as the Board of Directors (whose determination shall be
conclusive) deems appropriate in the circumstances and not
inconsistent with the objectives of the Board of Directors in
adopting this Agreement and such Sections.
Section 12. Certificate of Adjusted Purchase Price or
Number of Shares. Whenever an adjustment is made as provided in
Sections 11 and 13, the Company shall (a) promptly prepare a
certificate setting forth such adjustment, and a brief statement of
the facts accounting for such adjustment and the adjusted Purchase
Price, (b) promptly file with the Rights Agent and with each
transfer agent for the Common Stock a copy of such certificate and
(c) mail a brief summary thereof to each holder of a Right
Certificate in accordance with Section 26. The Rights Agent shall
be fully protected in relying on any such certificate and on any
adjustment therein contained.
Section 13. Combination, Consolidation, Merger or Sale
or Transfer of Assets or Earning Power. (a) In the event that,
following a Section 11(a)(ii) Event, directly or indirectly,
(x) the Company shall combine or consolidate with, or merge with or
into, any other Person and the Company shall not be the continuing
or surviving corporation of such combination, consolidation or
merger, (y) any Person shall combine, consolidate or merge with or
into the Company and the Company shall be the continuing or
surviving corporation of such combination, consolidation or merger
and, in connection with such combination, consolidation or merger,
all or part of the Common Stock shall be changed into or exchanged
for shares or other securities of the Company of any other Person
or cash or any other property, or (z) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell
or otherwise transfer), in one or more transactions, assets or
earning power aggregating more than 50% of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to any
other Person or Persons (other than the Company or any of its
wholly-owned Subsidiaries in one or more transactions each of which
complies with Section 11(n) hereof), then, and in each such case,
proper provision shall be made so that (i) each holder of a Right
(except as provided in Section 7(e)) shall thereafter have the
right to receive, upon the exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, such
number of validly issued, fully paid, nonassessable and freely
tradeable Common Stock of the Principal Party (as hereinafter
defined), not subject to any liens, encumbrances, rights of call or
first refusal, or other adverse claims as shall be equal to the
result obtained by (1) multiplying the then current Purchase Price
by the number of shares of Common Stock for which a Right is then
exercisable immediately prior to the first occurrence of a Section
13 Event (or, if a Section 11(a)(ii) Event has occurred prior to
the first occurrence of a Section 13 Event, multiplying the number
of such shares for which a Right was exercisable immediately prior
to the first occurrence of a Section 11(a)(ii) Event by the
Purchase Price in effect immediately prior to such first
occurrence), and dividing that product (which, following the first
occurrence of a Section 13 Event, shall be referred to as the
"Purchase Price" for each Right and for all purposes of this
Agreement) by (2) 50% of the current market price per share of
Common Stock of such Principal Party (determined in the manner
described in Section 11(d)) on the date of consummation of such
combination, consolidation, merger, sale or transfer; (ii) the
Principal Party shall thereafter be liable for, and shall assume,
by virtue of such Section 13 Event, all the obligations and duties
of the Company pursuant to this Agreement; (iii) the term "Company"
shall thereafter be deemed to refer to such Principal Party, it
being specifically intended that the provisions of Section 11 shall
thereafter apply to such Principal Party, (iv) such Principal Party
shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock in
accordance with Section 9) in connection with such consummation as
may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in
relation to shares of its Common Stock thereafter deliverable upon
the exercise of the Rights; and (v) the provisions of Section
11(a)(ii) hereof shall be of no effect following the first
occurrence of any Section 13 Event.
(b) "Principal Party" shall mean
(1) in the case of any transaction described in (x) or
(y) of the first sentence of Section 13(a), the Person that is
the issuer of any securities into which shares of Common Stock
of the Company are converted in such merger, combination or
consolidation and, if no securities are so issued, the Person
that is the other party to the merger, combination or
consolidation; and
(2) in the case of any transaction described in (z) of
the first sentence in Section 13(a), the Person that is the
party receiving the greatest portion of the assets or earning
power transferred pursuant to such transaction or
transactions;
provided, however, that in any such case, (x) if the Common Stock
of such Person is not at such time and has not been continuously
over the preceding 12-month period registered under Section 12 of
the Exchange Act, and such Person is a direct or indirect
Subsidiary of another corporation the Common Stock of which are and
have been so registered, "Principal Party" shall refer to such
other corporation; and (y) if such Person is a Subsidiary, directly
or indirectly, of more than one corporation, the Common Stock of
two or more of which are and have been so registered, "Principal
Party" shall refer to whichever of such corporations is the issuer
of the Common Stock having the greatest market value.
(c) The Company shall not consummate any Section 13
Event unless the Principal Party shall have a sufficient number of
authorized shares of Common Stock which are neither outstanding nor
reserved for issuance to permit the exercise in full of the Rights
in accordance with this Section 13 and unless prior thereto the
Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing for the
terms set forth in paragraphs (a) and (b) of this Section 13 and
further providing that, as soon as practicable after the date of
any combination, consolidation, merger or sale of assets mentioned
in paragraph (a) of this Section 13, the Principal Party
(i) will prepare and file a registration statement under
the Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate
form, will use its best efforts to cause such registration
statement to become effective as soon as practicable after
such filing and will use its best efforts to cause such
registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Act) until the
Expiration Date; and
(ii) will deliver to holders of the Rights historical
financial statements for the Principal Party and each of its
Affiliates which comply in all respects with the requirements
for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to
successive Section 13 Events. In the event that a Section 13 Event
shall occur at any time after the occurrence of a Section 11(a)(ii)
Event, the Rights which have not theretofore been exercised shall
thereafter become exercisable in the manner described in Section
13(a).
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights
or to distribute Right Certificates which evidence fractional
Rights. In lieu of such fractional Rights, the Company shall pay
to the registered holders of the Right Certificates with regard to
which such fractional Rights would otherwise be issuable an amount
in cash equal to the same fraction of the current market value of
a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which
such fractional Rights would have been otherwise issuable. The
closing price for any day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average
of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New
York Stock Exchange or, if the Rights are not listed or admitted to
trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on
which the Rights are listed or admitted to trading or, if the
Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system
then in use, or, if on any such date the Rights are not quoted by
any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market
in the Rights selected by the Board of Directors of the Company.
If on any such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions
of shares or "common stock equivalents" upon exercise or exchange
of the Rights or to distribute certificates which evidence
fractional shares. In lieu of fractional shares, the Company may
pay to the registered holders of Right Certificates at the time the
Rights evidenced thereby are exercised or exchanged as herein
provided an amount in cash equal to the same fraction of the
current market value of one share or "common stock equivalent."
For purposes of this Section 14(b), the current market value of one
share of the Common Stock shall be the closing price of a share of
the Common Stock (as determined pursuant to Section 11(d)) for the
Trading Day immediately prior to the date of such exercise or
exchange, as the case may be, and the current market value of any
"common stock equivalent" shall be the same as the current market
value of a share of the Common Stock on such date.
(c) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any
fractional shares upon exercise or exchange of a Right, except as
otherwise permitted by this Section 14.
Section 15. Rights of Action. All rights of action in
respect of this Agreement are vested in the respective registered
holders of the Right Certificates (and, prior to the Distribution
Date, the registered holders of Common Stock); and any registered
holder of any Right Certificate (or, prior to the Distribution
Date, of the Common Stock), without the consent of the Rights Agent
or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and
for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or
otherwise act in respect of, his right to exercise the Rights
evidenced by such Right Certificate in the manner provided in such
Right Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have
an adequate remedy at law for any breach of this Agreement and will
be entitled to specific performance of the obligations hereunder
and injunctive relief against actual or threatened violations of
the obligations hereunder of any Person subject to this Agreement.
Section 16. Agreement of Right Holders. Every holder of
a Right by accepting the same consents and agrees with the Company
and the Rights Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the
Common Stock;
(b) after the Distribution Date, the Right Certificates
will be transferable only on the registry books of the Rights
Agent if surrendered at the office of the Rights Agent
designated for such purpose, duly endorsed or accompanied by
a proper instrument of transfer and with the appropriate forms
and certificates fully executed, along with a signature
guarantee and such other and further documentation as the
Rights Agent may reasonably request;
(c) subject to Section 6 and Section 7(f) hereof, the
Company and the Rights Agent may deem and treat the Person in
whose name the Right Certificate (or, prior to the
Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership
or writing on the Right Certificates or the associated Common
Stock certificate made by anyone other than the Company or the
Rights Agent) for all purposes whatever, and neither the
Company nor the Rights Agent shall be required to be affected
by any notice to the contrary;
(d) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have
any liability to any holder of a Right or other Person as a
result of its inability to perform any of its obligations
under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court
of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, that the
Company must use its best efforts to have any such order,
decree or ruling lifted or otherwise overturned as soon as
possible.
Section 17. Right Certificate Holder Not Deemed a
Shareholder. No holder, as such, of any Right Certificate shall be
entitled to vote, receive dividends or be deemed for any purpose
the holder of the Common Stock or any other securities of the
Company which may at any time be issuable on the exercise of the
Rights represented thereby, nor shall anything contained herein or
in any Right Certificate be construed to confer upon the holder of
any Right Certificate, as such, any of the rights of a shareholder
of the Company or any right to vote for the election of directors
or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or
to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 25), or to receive
dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Right Certificate shall have been
exercised or exchanged for Common Stock in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent. The Company
agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand
of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of
this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent
for, and to hold it harmless against, any loss, liability, or
expense, incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent (including the
reasonable fees and expenses of counsel), for anything done or
omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses
of defending against any claim of liability in the premises.
The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or
omitted by it in connection with its administration of this
Agreement in reliance upon any Right Certificate or certificate for
the Common Stock or for other securities of the Company, instrument
of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, instruction,
adjustment notice, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed
and, where necessary, verified or acknowledged, by the proper
Person or Persons.
In addition to the foregoing, the Rights Agent shall be
protected and shall incur no liability for, or in respect of, any
action taken or omitted by it in connection with its administration
of this Agreement in reliance upon (i) the proper execution of the
certification appended to the Form of Assignment and the Form of
Election to Purchase included as part of Exhibit A hereto (the
"Certification"), unless the Rights Agent shall have actual
knowledge that, as executed, the Certification is untrue or
(ii) the non-execution or failure to complete the Certification
including, without limitation, any refusal to honor any otherwise
permissible assignment or election by reason of such non-execution
or failure.
Section 19. Merger or Consolidation or Change of Name of
Rights Agent. Any corporation into which the Rights Agent or any
successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or
consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the
corporate trust business and/or the stock transfer business of the
Rights Agent or any successor Rights Agent, shall be the successor
to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible
for appointment as a successor Rights Agent under the provisions of
Section 21. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, any
such successor Rights Agent may adopt the countersignature of the
predecessor so countersigned; and in case at that time any of the
Right Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the
successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have
been countersigned but not delivered, the Rights Agent may adopt
the countersignature under its prior name and deliver Right
Certificates so countersigned; and in case at that time any of the
Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior
name or in its changed name; and in all such cases such Right
Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
Section 20. Duties of Rights Agent. The Rights Agent
undertakes the duties and obligations imposed by this Agreement
upon the following terms and conditions, by all of which the
Company and the holders of Right Certificates, by their acceptance
thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who
may be legal counsel for the Company), and the opinion of such
counsel shall be full and complete authorization and
protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter be proved or established by
the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by
any one of the Chairman of the Board, the President, any Vice
President, the Treasurer or the Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be
full authorization to the Rights Agent for any action taken or
suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for
its own negligence, bad faith or willful misconduct, and the
issuance or non-issuance of a Right Certificate or share of
the Common Stock or other security issued in lieu of Common
Stock in accordance with instructions given to the Rights
Agent by the Company pursuant to Section 20(k) hereof or in
accordance with the terms hereof shall not constitute
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by
reason of any of the statements of fact or recitals contained
in this Agreement or in the Right Certificates (except its
countersignature thereof) or be required to verify the same,
but all such statements and recitals are and shall be deemed
to have been made by the Company only.
(e) The Rights Agent shall not be under any
responsibility in respect of the validity of this Agreement or
the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained
in this Agreement or in any Right Certificate; nor shall it be
responsible for any adjustment required under the provisions
of Section 11 or 13 or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by
Right Certificates after actual notice of any such
adjustment); nor shall it by any act hereunder be deemed to
make any representation or warranty as to the authorization or
reservation of any shares of the Common Stock to be issued
pursuant to this Agreement or any Right Certificate or as to
whether any shares of the Common Stock will, when issued, be
validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts,
instruments and assurances as may reasonably be required by
the Rights Agent for the carrying out or performing by the
Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed
to accept instructions with respect to the performance of its
duties hereunder and certificates delivered pursuant to any
provision hereof from any one of the Chairman of the Board,
the President, any Vice President, the Secretary or the
Treasurer of the Company, and is authorized to apply to such
officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with
instructions of any such officer. An application by the
Rights Agent for instructions may set forth in writing any
action proposed to be taken or omitted by the Rights Agent
with respect to its duties and obligations under this
Agreement and the date on and/or after which such action shall
be taken, and the Rights Agent shall not be liable for any
action taken or omitted in accordance with a proposal included
in any such application on or after the date specified therein
(which date shall not be less than one Business Day after the
Company receives such application) without the consent of the
Company unless, prior to taking or omitting such action, the
Rights Agent has received written instructions in response to
an application specifying the actions to be taken or omitted.
(h) The Rights Agent and any shareholder, director,
officer or employee of the Rights Agent may buy, sell or deal
in any of the Rights or other securities of the Company or
become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to
the Company or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing herein
shall preclude the Rights Agent from acting in any other
capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty
hereunder either by itself or by or through its attorneys or
agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct;
provided, however, that reasonable care was exercised in the
selection thereof.
(j) No provision of this Agreement shall require the
Rights Agent to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its
duties hereunder or in the exercise of its rights if there
shall be reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
(k) If, with respect to any Right Certificate
surrendered to the Rights Agent for exercise or transfer, the
certificate attached to the form of assignment or form of
election to purchase, as the case may be, has either not been
completed or indicates an affirmative response, the Rights
Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting the
Company. The Company shall give the Rights Agent prompt
written instructions as to the action to be taken regarding
the Right Certificates involved. The Rights Agent shall not
be liable for acting in accordance with such instructions.
Section 21. Change of Rights Agent. The Rights Agent or
any successor Rights Agent may resign and be discharged from its
duties under this Agreement upon thirty (30) days' notice in
writing mailed to the Company by registered or certified mail, and,
at the Company's expense, to the holders of the Right Certificates
by first class mail. The Company may remove the Rights Agent or
any successor Rights Agent upon thirty (30) days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as
the case may be, and to each transfer agent of the Common Stock by
registered or certified mail, and to the holders of the Right
Certificates by first-class mail. If the Rights Agent shall resign
or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of
thirty (30) days after giving notice of such removal or after it
has been notified in writing of such resignation or incapacity by
the resigning or incapacitated Rights Agent or by the holder of a
Right Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Company), then the Company shall
become the temporary Rights Agent and the registered holder of any
Right Certificate may apply to any court of competent jurisdiction
for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall
be (a) a corporation organized and doing business under the laws of
the United States or of the State of New York (or of any other
state of the United States so long as such corporation is
authorized to do business as a banking institution in the State of
New York), in good standing, having a principal office in the State
of New York, which is authorized under such laws to exercise
corporate trust powers and/or stock transfer powers and is subject
to supervision or examination by federal or state authority or
which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $25 million or (b) a
subsidiary of the corporation described in clause (a) above. After
appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the
successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than
the effective date of any such appointment the Company shall file
notice thereof in writing with the predecessor Rights Agent and
each transfer agent of the Common Stock, and mail a notice thereof
in writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new
Right Certificates evidencing Rights in such form as may be
approved by its Board of Directors to reflect any adjustment or
change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale of
shares of the Common Stock following the Distribution Date and
prior to the redemption or expiration of the Rights, the Company
(a) shall, with respect to shares of the Common Stock so issued or
sold pursuant to the exercise of options or under any employee plan
or arrangement, or upon the exercise, conversion or exchange of
securities hereinafter issued by the Company, and (b) may, in any
other case, if deemed necessary or appropriate by the Board of
Directors of the Company, issue Right Certificates representing the
appropriate number of Rights in connection with such issuance or
sale; provided, however, that (i) no such Right Certificate shall
be issued if, and to the extent that, the Company shall be advised
by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to
whom such Right Certificate would be issued, and (ii) no such Right
Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance
thereof.
Section 23. Redemption and Termination. (a) The Board
of Directors of the Company may, at its option, at any time prior
to the earlier of (x) the close of business on the tenth day
following the Shares Acquisition Date (or if the Shares Acquisition
Date shall have occurred prior to the Record Date, the close of
business on the tenth day following the Record Date), or (y) the
Final Expiration Date, redeem all but not less than all of the then
outstanding Rights at a redemption price of $.01 per Right as
appropriately adjusted to reflect any stock split, dividend of
shares or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption
Price"), and the Company may, at its option, pay the Redemption
Price either in shares of the Common Stock (valued at their current
market price as defined in Section 11(d) on the date of the
redemption), other securities, cash or other assets; provided,
however, that if the Board of Directors of the Company authorizes
redemption of the Rights in either of the circumstances set forth
in clauses (x) or (y) below then there must be Independent
Directors in office and such authorization shall require the
concurrence of a majority of the Independent Directors: (x) such
authorization occurs on or after the Shares Acquisition Date or
(y) such authorization occurs on or after the date of a change
(resulting from a proxy or consent solicitation) in a majority of
the Directors of the Company in office at the commencement of such
solicitation if any Person who is a participant in such
solicitation has stated (or if upon the commencement of such
solicitation a majority of the directors of the Company has
determined in good faith) that such Person (or any of its
Affiliates or Associates) intends to take, or may consider taking,
any action which would result in such Person becoming an Acquiring
Person or which would cause the occurrence of a Triggering Event.
Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable after the first
occurrence of a Section 11(a)(ii) Event until such time as the
Company's right of redemption hereunder has expired, as the same
may be extended pursuant to Section 27.
(b) In deciding whether or not to exercise the Company's
right of redemption hereunder, the directors of the Company shall
act in good faith, in a manner they reasonably believe to be in the
best interests of the Company and with such care, including
reasonable inquiry, skill and diligence, as a person of ordinary
prudence would use under similar circumstances, and they may
consider the long-term and short-term effects of any action upon
employees, customers and creditors of the Company and upon
communities in which offices or other establishments of the Company
are located, and all other pertinent factors.
(c) Immediately upon the action of the Board of
Directors of the Company ordering the redemption of the Rights, and
without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of
the holders of Rights shall be to receive the Redemption Price for
each Right held. Within 10 days after the action of the Board of
Directors ordering the redemption of the Rights, the Company shall
give notice of such redemption to the holders of the then
outstanding Rights by mailing such notice to the Rights Agent and
to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution
Date, on the registry books of the Transfer Agent for the Common
Stock. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the
notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made. Neither
the Comany nor any of its Affiliates or Associates may redeem,
acquire or purchase for value any Rights at any time in any manner
other than that specifically set forth in this Section 23, and
other than in connection with the repurchase of Common Stock prior
to the Distribution Date.
Section 24. Exchange. (a) The Board of Directors of
the Company may, at its option (provided that there are then
Independent Directors in office and a majority of the Independent
Directors concur), at any time and from time to time on or after a
Section 11(a)(ii) Event, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights
that have become void pursuant to the provisions of Section 7(e)
hereof) for shares of the Common Stock at an exchange ratio of one
share of the Common Stock per Right, appropriately adjusted to
reflect any stock split, dividend of shares or similar transaction
occurring after the date of this Agreement (such exchange ratio
being hereinafter referred to as the "Exchange Ratio").
(b) Immediately upon the action of the Board of
Directors of the Company ordering the exchange of any Rights
pursuant to subsection (a) of this Section 24 and without any
further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of
such Rights shall be to receive that number of shares of the
Common Stock equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the
validity of such exchange. The Company promptly shall mail a
notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives
the notice. Each such notice of exchange will state the method by
which the exchange will be effected and, in the event of any
partial exchange, the number of Rights which will be exchanged.
Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to the
provisions of Section 7(e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the
Company, at its option, may substitute for any share of the Common
Stock exchangeable for a Right (i) "common stock equivalents,"
(ii) cash, (iii) debt securities of the Company, (iv) other assets,
or (v) any combination of the foregoing, having an aggregate value
which a majority of the Independent Directors and the Board of
Directors of the Company shall have determined in good faith to be
equal to the current market price of one share of the Common Stock
(determined pursuant to Section 11(d) hereof) on the Trading Date
immediately preceding the date of exchange pursuant to this
Section 24.
Section 25. Notice of Certain Events. In case the
Company shall propose at any time following the Distribution Date
(a) to pay any dividend payable in shares of any class to the
holders of its Common Stock or to make any other distribution to
the holders of its Common Stock (other than a regular periodic cash
dividend), or (b) to offer to the holders of its Common Stock
rights or warrants to subscribe for or to purchase any additional
shares of the Common Stock or share capital of any class or any
other securities, rights or options, or (c) to effect any
reclassification of its Common Stock (other than a reclassification
involving only the subdivision of outstanding Common Stock), or
(d) to effect any combination, consolidation or merger into or with
any other Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(n) hereof), or to effect
any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more
transactions, of more than 50% of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to, any other
Person or Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies
with Sections 11(n) hereof), or (e) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case,
the Company shall give to the Rights Agent and to each holders of
a Right, in accordance with Section 26, a notice of such proposed
action, which shall specify the record date for the purposes of
such dividend of shares, distribution of rights or Rights, or the
date on which such reclassification, combination, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding up is
to to take place and the date of participation therein by the
holders of its Common Stock, if any such date is to be fixed, and
such notice shall be so given in the case of any action covered by
clause (a) or (b) above at least twenty (20) days prior to the
record date for determining holders of its Common Stock for
purposes of such action, and in the case of any such other action,
at least twenty (20)) days prior to the date of the taking of such
proposed action or the date of participation therein by the holders
of its Common Stock, whichever shall be the earlier.
In case a Section 11(a)(ii) Event shall occur, then, in
any such case, the Company shall as soon as practicable thereafter
give to the Rights Agent and to each holder of a Right, to the
extent feasible and in accordance with Section 26, a notice of the
occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section
11(a)(ii) and all references in the preceding paragraph to Common
Stock shall be deemed to thereafter refer to other securities.
Section 26. Notices. Notices or demands authorized by
this Agreement to be given or made by the Rights Agent or by the
holder of any Right Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
General Signal Corporation
High Ridge Park, Box 10010
Stamford, Connecticut 06904
Attention: General Counsel
Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company or
by the holder of any Right Certificate to or on the Rights Agent
shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in
writing with the Company) as follows:
First Chicago Trust Company of New York
525 Washington Boulevard
Suite 4660
Jersey City, New Jersey 07310
Attention: Tenders and Exchanges Administration
Notices or demands authorized by this Agreement to be
given or made by the Company or the Rights Agent to the holder of
any Right Certificate shall be sufficiently given or made if sent
by first-class mail, postage prepaid, addressed to such holder at
the address of such holder as shown on the registry books of the
Company.
Section 27. Supplements and Amendments. Prior to the
earlier of the Distribution Date or the Shares Acquisition Date and
subject to the penultimate sentence of this Section 27, the Company
may from time to time supplement or amend this Agreement without
the approval of any holders of Right Certificates. From and after
the earlier of the Distribution Date or the Shares Acquisition
Date, and subject to the penultimate sentence of this Section 27,
the Company may from time to time supplement or amend this
Agreement without the approval of any holders of Right Certificates
in order (i) to cure any ambiguity, (ii) to correct or supplement
any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to lengthen
the time period during which the Rights may be redeemed following
the Shares Acquisition Date for up to an additional twenty days
beyond the time period set forth in Section 23(a) (provided,
however, that any such lengthening shall be effective only if there
are Independent Directors and shall require the concurrence of a
majority of such Independent Directors) or (iv) to change or
supplement the provisions hereunder in any manner which the Company
may deem necessary or desirable and which shall not adversely
affect the interests of the holders of Right Certificates (other
than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person). Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed
supplement or amendment is in compliance with the terms of this
Section 27, the Rights Agent shall execute such supplement or
amendment unless the Rights Agent shall have determined in good
faith that such supplement or amendment would adversely affect its
interests under this Agreement. Notwithstanding anything in this
Agreement to the contrary, no supplement or amendment shall be made
on or after the Distribution Date which changes the Redemption
Price, the Final Expiration Date, the Purchase Price or the number
of shares of the Common Stock for which a Right is then
exercisable. Prior to the earlier of the Shares Acquisition Date
or the Distribution Date, the interests of the holders of Rights
shall be deemed coincident with the interests of the holders of
Common Stock.
Section 28. Successors. All the covenants and
provisions of this Agreement by or for the benefit of the Company
or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 29. Determinations and Actions by the Board of
Directors, etc. For all purposes of this Agreement, any
calculation of the number of shares of Common Stock outstanding at
any particular time, including for purposes of determining the
particular percentage of such outstanding shares of Common Stock of
which any Person is the Beneficial Owner, shall be made in
accordance with the provisions of Rule 13d-3(d)(1)(i) of the
General Rules and Regulations under the Exchange Act. The Board of
Directors of the Company (and, where specifically provided for
herein, the Independent Directors) shall have the exclusive power
and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board or the Company
(or, as expressly provided, the Independent Directors), or as may
be necessary or advisable in the administration of this Agreement,
including, without limitation, the right and power to (i) interpret
the provisions of this Agreement, and (ii) make all determinations
deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the
Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for the purpose of
clause (ii) below, all omissions with respect to the foregoing)
which are done or made by the Board (or, as provided for, by the
Independent Directors) in good faith, shall (i) be final,
conclusive and binding on the Company, the Rights Agent, the
holders of the Right Certificates and all other parties, and
(ii) not subject the Board or the Independent Directors to any
liability to the holders of the Right Certificates.
Section 30. Benefits of This Agreement. Nothing in this
Agreement shall be construed to give to any Person other than the
Company, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common
Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders
of the Right Certificates (and, prior to the Distribution Date,
registered holders of the Common Stock).
Section 31. Severability. If any term, provision,
covenant, or restriction of this Agreement is held by a court of
competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants
and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement
to the contrary, if any such term, provision, covenant or
restriction is held by such court or authority to be invalid, void
or unenforceable and the Board of Directors of the Company
determines in its good faith judgment that severing the invalid
language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in
Section 23 hereof shall be reinstated and shall not expire until
the close of business on the tenth day following the date of such
determination by the Board of Directors.
Section 32. Governing Law. This Agreement and each
Right Certificate issued hereunder shall be deemed to be a contract
made under the laws of the State of New York and for all purposes
shall be governed by and construed in accordance with the laws of
such State applicable to contracts to be made and performed
entirely within such State.
Section 33. Counterparts. This Agreement may be
executed in any number of counterparts and each of such
counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the
same instrument.
Section 34. Descriptive Headings. Descriptive headings
of the several Sections of this Agreement are inserted for
convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement 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.
[SEAL]
GENERAL SIGNAL CORPORATION
Attest: /s/ Michael D. Lockhart
By:
Name: Michael D. Lockhart
Title: President and Chief
Operating Officer
/s/ Edgar J. Smith, Jr.
By: __________________________
Name: Edgar J. Smith, Jr.
Title: Vice President, General
Counsel and Secretary
[SEAL]
FIRST CHICAGO TRUST COMPANY
OF NEW YORK
Attest: /s/ Kebin Laurita
By:
Name: Kevin Laurita
Title: Assistant Vice
President
/s/ Thomas Ferrari
By: _____________________
Name: Thomas Ferrari
Title: Vice President
<PAGE>
EXHIBIT A
[Form of Right Certificate]
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER MARCH 21, 2006 OR EARLIER IF
NOTICE OF REDEMPTION OR EXCHANGE IS GIVEN. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF
THE COMPANY, AT $.01 PER RIGHT AND TO EXCHANGE ON
THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES RIGHTS MAY NOT BE
EXERCISABLE.
FIRST CHICAGO TRUST COMPANY
Right Certificate
This certifies that , or registered
assigns, is the registered owner of the number of Rights set forth
above, each of which entitles the owner thereof, subject to the
terms, provisions and conditions of the Rights Agreement dated as
of February 1, 1996 (the "Rights Agreement") between GENERAL SIGNAL
CORPORATION, a New York corporation (the "Company"), and FIRST
CHICAGO TRUST COMPANY OF NEW YORK, a New York corporation (the
"Rights Agent"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M. (New York City time) on March 21, 2006 at
the designated office of the Rights Agent, or its successors as
Rights Agent, in New York, New York, one fully paid and
nonassessable share of the Common Stock, $1.00 par value (the
"Common Stock"), of the Company, at a purchase price of $150.00 per
share (the "Purchase Price"), upon presentation and surrender of
this Right Certificate with the Form of Election to Purchase and
related certificate duly executed, along with a signature guarantee
and such other and further documentation as the Rights Agent may
reasonably request. The number of Rights evidenced by this Right
Certificate (and the number of shares which may be purchased upon
exercise thereof) set forth above, and the Purchase Price per share
set forth above, are the number and Purchase Price as of March 21,
1996, based on the shares of the Common Stock of the Company as
constituted at such date.
Upon the occurrence of a Section 11(a)(ii) Event (as such
term is defined in the Rights Agreement), if the Rights evidenced
by this Right Certificate are beneficially owned by (i) an
Acquiring Person or an Affiliate or Associate of any such Acquiring
Person (as such terms are defined in the Rights Agreement), (ii) a
transferee of any such Acquiring Person, Associate of Affiliate, or
(iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who after such transfer, became
an Acquiring Person, such Rights shall become null and void and no
holder hereof shall have any right with respect to such Rights from
and after the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price
and the number of shares of the Common Stock (or, in certain
circumstances, other securities) which may be purchased upon the
exercise of the Rights evidenced by this Right Certificate are
subject to modification and adjustment upon the happening of
certain events, including Triggering Events (as such term is
defined in the Rights Agreement).
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms,
provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder
of the Rights Agent, the Company and the holders of the Right
Certificates. Copies of the Rights Agreement are on file at the
above-mentioned office of the Rights Agent, and at the executive
offices of the Company.
This Right Certificate, with or without other Right
Certificates, upon surrender at the designated office of the Rights
Agent, along with a signature guarantee and such other and further
documentation as the Rights Agent may reasonably request, may be
exchanged for another Right Certificate or Right Certificates of
like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of shares of the Common Stock as
the Rights evidenced by the Right Certificate or Right Certificates
surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be
entitled to receive upon surrender hereof, along with a signature
guarantee and such other and further documentation as the Rights
Agent may reasonably request, another Right Certificate or Right
Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the
Rights evidenced by this Certificate (a) may be redeemed by the
Company at its option at a redemption price of $.01 per Right prior
to the earlier of the close of business on (i) the tenth day
following the Shares Acquisition Date and (ii) the Final Expiration
Date or (b) may be exchanged in whole or in part for shares of the
Common Stock, and/or other securities, cash or other assets of the
Company deemed to have the same value as shares of the Common
Stock, at any time after a Section 11(a)(ii) Event.
No fractional shares of the Common Stock (or other
securities) will be issued upon the exercise or exchange of any
Right or Rights evidenced hereby, but in lieu thereof a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to
vote or receive dividends or be deemed for any purpose the holder
of the Common Stock or of any other securities of the Company which
may at any time be issuable on the exercise hereof, nor shall
anything contained in the Rights Agreement or herein be construed
to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate
action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the
Right or Rights evidenced by this Right Certificate shall have been
exercised or exchanged for shares of the Common Stock as provided
in the Rights Agreement.
This Right Certificate shall not be valid or obligatory
for any purpose until it shall have been countersigned by the
Rights Agent.
<PAGE>
WITNESS the facsimile signature of the proper officers of
the Company and its corporate seal. Dated as of , .
[SEAL]
ATTEST: GENERAL SIGNAL CORPORATION
By: ________________________ By:
Name: Name:
Title: Title:
Countersigned:
FIRST CHICAGO TRUST COMPANY
OF NEW YORK,
as Rights Agent
By: _______________________
Authorized Signature
Date:
<PAGE>
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificates.)
FOR VALUE RECEIVED __________________________ hereby
sells, assigns and transfers unto
(please print name and address of transferee)
this Right Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
_____________ Attorney, to transfer the within Right Certificate on
the books of the within-named Company, with full power of
substitution.
Dated: _______________, ____
Signature
Signature Guaranteed:
(Signatures must be guaranteed.)
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the
appropriate box that:
Exercising this Right Certificate will not
enable the undersigned, its Affiliates, its Associates
and/or any other Person with which the undersigned or any of the
undersigned's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) for the
purpose of acquiring, holding, voting or disposing of securities of
the Company to obtain individually or in the aggregate in excess of
____ shares of the Common Stock of the Company.
Dated: __________, ____
Signature
Signature Guaranteed:
(Signatures must be guaranteed.)
<PAGE>
NOTICE
The signature to the foregoing Assignment and Certificate
must correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement
or any change whatsover.
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights evidenced by the Right Certificate.)
To General Signal Corporation:
The undersigned hereby irrevocably elects to exercise
__________________ Rights represented by this Right Certificate to
purchase the shares of the Common Stock issuable upon the exercise
of such Rights (or such other securities of the Company or of any
other Person which may be issuable upon the exercise of the Rights)
and requests that certificates for such shares be issued in the
name of:
Please insert social security or
other taxpayer identifying number
(Please print name and address)
If such number of Rights shall not be all the Rights
evidenced by this Right Certificate, a new Right Certificate for
the balance remaining of such Rights shall be registered in the
name of and delivered to:
Please insert social security or
other taxpayer identifying number
(Please print name and address)
Dated: ____________, ____
Signature
Signature Guaranteed:
(Signatures must be guaranteed.)
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the
appropriate box that:
Exercising the Rights evidenced by this Right Certificate
will not enable the undersigned, its Affiliates, its
Associates and/or any other Person with which the undersigned or
any of the undersigned's Affiliates or Associates has any
agreement, arrangement or understanding (whether or not in writing)
for the purpose of acquiring, holding, voting or disposing of
securities of the Company to obtain individually or in the
aggregate in excess of ____ shares of the Common Stock of the
Company.
Dated: ________________, ____ ________________________
Signature
NOTICE
The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face of
this Right Certificate in every particular, without
alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT B
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK
On February 1, 1996 the Board of Directors of GENERAL
SIGNAL CORPORATION (the "Company") declared a dividend distribution
of one Right for each outstanding share of Common Stock, $1.00 par
value (the "Common Stock"), of the Company. The distribution is
payable on March 21, 1996 (the "Record Date") to the shareholders
of record on the Record Date. Each Right entitles the registered
holder to purchase from the Company one share of the Common Stock
at a price of $150.00 per share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth
in a Rights Agreement (the "Rights Agreement") between the Company
and First Chicago Trust Company of New York, as Rights Agent (the
"Rights Agent").
Distribution Date; Transfer of Rights
Until the earlier to occur of (i) ten days following the
date (the "Shares Acquisition Date") of the public announcement
that a person or group of affiliated or associated persons (an
"Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of a number of shares of the Common Stock
equal to 20% or more of the outstanding shares of the Common Stock
or (ii) ten days following the commencement or announcement of an
intention to make a tender offer or exchange offer if, upon
consummation thereof, such person would be an Acquiring Person (the
earlier of such dates being called the "Distribution Date"), the
Rights will be evidenced, with respect to any of the Common Stock
certificates outstanding as of the Record Date, by such Common
Stock certificate. The Rights Agreement provides that, until the
Distribution Date, the Rights will be transferred with and only
with the Common Stock. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Stock
certificates issued after the Record Date upon transfer or new
issuance of the Common Stock will contain a notation incorporating
the Rights Agreement by reference. Until the Distribution Date (or
earlier redemption or expiration of the Rights), the surrender for
transfer of any of the Common Stock certificates outstanding as of
the Record Date will also constitute the transfer of the Rights
associated with the Common Stock represented by such certificate.
As soon as practicable following the Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be
mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution
Date. The Rights will expire at the close of business on March 21,
2006, unless earlier redeemed or exchanged by the Company as
described below.
Exercise of Rights for Shares of
the Common Stock of the Company_
In the event that a Person becomes an Acquiring Person at
any time following the Distribution Date, each holder of a Right
will thereafter have the right to receive, upon exercise, shares of
the Common Stock (or, in certain circumstances, cash, property or
other securities of the Company) having a value equal to two times
the Purchase Price of the Right then in effect. Notwithstanding
any of the foregoing, following the occurrence of the event set
forth in this paragraph, all Rights that are, or (under certain
circumstances specified in the Rights Agreement) were, beneficially
owned by any Acquiring Person will be null and void.
Exercise of Rights for Shares of the Acquiring Company
In the event that, at any time following a Section
11(a)(ii) Event, (i) the Company is acquired in a merger or other
business combination transaction, or (ii) 50% or more of the
Company's assets or earning power is sold or transferred, each
holder of a Right (except Rights which previously have been voided
as set forth above) shall thereafter have the right to receive,
upon exercise, ordinary shares of the acquiring company having a
value equal to two times the Purchase Price of the Right then in
effect. The events set forth in this paragraph and in the
preceding paragraph are referred to as the "Triggering Events."
Adjustments to Purchase Price
The Purchase Price payable, and the number of shares of
the Common Stock (or other securities, as the case may be) issuable
upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a dividend of shares
on, or a subdivision, combination or reclassification of, the
Common Stock, (ii) upon the grant to holders of the Common Stock of
certain rights or warrants to subscribe for shares of the Common
Stock or convertible securities at less than the current market
price of the Common Stock or (iii) upon the distribution to holders
of the Common Stock of evidences of indebtedness or assets
(excluding regular periodic cash dividends or dividends payable in
the Common Stock) or of subscription rights or warrants (other than
those referred to above). Prior to the Distribution Date, the
Board of Directors of the Company may make such equitable
adjustments as it deems appropriate in the circumstances in lieu of
any adjustment otherwise required by the foregoing.
With certain exceptions, no adjustment in the Purchase
Price will be required until the earlier of (i) three years from
the date of the event giving rise to such adjustment or (ii) the
time at which cumulative adjustments require an adjustment of at
least 1% in such Purchase Price. No fractional shares will be
issued and, in lieu thereof, an adjustment in cash will be made
based on the market price of the Common Stock on the last trading
date prior to the date of exercise.
Redemption and Exchange of Rights
At any time prior to 5:00 P.M. New York City time on the
tenth day following the Shares Acquisition Date, the Company may
redeem the Rights in whole, but not in part, at a price of $.01 per
Right (the "Redemption Price"). Under certain circumstances set
forth in the Rights Agreement, the decision to redeem shall require
the concurrence of a majority of the Independent Directors.
Immediately upon the action of the Board of Directors of the
Company electing to redeem the Rights with, if required, the
concurrence of the Independent Directors, the Company shall make
announcement thereof, and upon such action, the right to exercise
the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
At any time after the occurrence of any of the events set
forth under the heading "Exercise of Rights for shares of the
Common Stock of the Company" above, the Board of Directors may
exchange the Rights (other than Rights owned by an Acquiring
Person, which have become void), in whole or in part, at an
exchange ratio of one share of the Common Stock, and/or other
securities, cash or other assets deemed to have the same value as
one share of the Common Stock, per Right, subject to adjustment.
Until the Rights are exercised or exchanged for shares of
the Common Stock, the holders thereof, as such, will have no
rights as shareholders of the Company, including, without
limitation, the right to vote or to receive dividends.
Amendments to Terms of the Rights
Any of the provisions of the Rights Agreement may be
amended by the Board of Directors of the Company prior to the
Distribution Date. After the Distribution Date, the provisions of
the Rights Agreement may be amended by the Board in order to cure
any ambiguity, defect or inconsistency, or to make changes which do
not adversely affect the interests of holders of Rights (excluding
the interest of any Acquiring Person); provided, that no supplement
or amendment may be made on or after the Distribution Date which
changes those provisions relating to the principal economic terms
of the Rights. The Board may also, with the concurrence of a
majority of the Independent Directors, extend the redemption period
for up to an additional 20 days.
The term "Independent Directors" means any member of the
Board of Directors of the Company who was a member of the Board
prior to the time that any person becomes an Acquiring Person, and
any person who is subsequently elected to the Board if such person
is recommended or elected by a majority of the Independent
Directors, but shall not include an Acquiring Person or any
representative thereof.
A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration
Statement on Form 8-A dated February 7, 1996. A copy of the Rights
Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights
Agreement, which is hereby incorporated herein by reference.
<PAGE>
Financial Highlights
- --------------------------------------------------------------------------------
For the years ended December 31, (dollars in millions, except per share data)
1995 1994 1993
- --------------------------------------------------------------------------------
Net Sales ................................... $1,863.2 $1,527.7 $1,354.2
Earnings from continuing operations ......... $ 100.1 $ 104.1 $ 98.1
Net Earnings ................................ $ 36.1 $ 80.7 $ 34.7
Earnings per share from continuing operations $ 2.03 $ 2.20 $ 2.17
Earnings per common share ................... $ 0.73 $ 1.71 $ 0.77
Cash dividends per share .................... $ 0.96 $ 0.90 $ 0.90
Total assets ................................ $1,613.2 $1,357.9 $1,224.9
Shareholders' equity ........................ $ 578.1 $ 547.9 $ 525.2
Average common shares outstanding ........... 49.2 47.3 45.2
Return on average shareholders' equity ...... 6.3% 15.0% 7.7%
Long-term debt to capitalization ............ 42.6% 32.9% 26.7%
Employees (thousands) ....................... 12.9 12.2 11.2
- --------------------------------------------------------------------------------
Net Sales
(dollars in millions)
[GRAPH]
93: $1,354
94: $1,528
95: $1,863
Earnings from Continuing Operations
(dollars in millions)
[GRAPH]
93: $98
94: $104
95: $100
Earnings Per Share from Continuing Operations
(dollars)
[GRAPH]
93: $2.17
94: $2.20
95: $2.03
Return on Equity
(percent)
[GRAPH]
93: 7.7%
94: 15.0%
95: 6.3%
1
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in millions, except per-share data)
The following discussion should be read in conjunction with the company's
consolidated financial statements and notes thereto.
RESULTS OF OPERATIONS
The amounts in the table below were derived from the Consolidated Financial
Statements.
1995 1994 1993
Year ended December 31, REPORTED Reported Reported
- --------------------------------------------------------------------------------
Net sales ................................ $1,863.2 $1,527.7 $1,354.2
Gross margin ............................. 555.2 418.2 395.2
Selling, general and administrative
expenses ............................... 354.4 292.3 259.3
Transaction and consolidation charges,
merger break-up fee and other
special items .......................... 20.1 (46.2) (19.8)
Operating earnings ....................... 180.7 172.1 155.7
Earnings from continuing operations ...... 100.1 104.1 98.1
Net earnings ............................. 36.1 80.7 34.7
Earnings per share from continuing
operations ............................. 2.03 2.20 2.17
Earnings per share ....................... $ 0.73 $ 1.71 $ 0.77
- --------------------------------------------------------------------------------
Over the last three years, the company recorded the following charges and
credits in net earnings:
TRANSACTION AND CONSOLIDATION CHARGES: During 1995, the company recorded charges
of $20.1 for the acquisition of Best Power Technology Inc. (Best Power) and the
merger with Data Switch Corporation (Data Switch). The Best Power charge of $7.4
was primarily for severance and other consolidation costs related to the
combination of General Signal and Best Power locations. The Data Switch charge
of $12.7 was primarily for severance and balance sheet valuation adjustments.
During 1993, the company recorded a charge of $13.2 for transaction costs and
for consolidation of its Lindberg unit with Revco.
DISCONTINUED OPERATIONS: The company adopted a plan to sell Leeds & Northrup
company (L&N) and Dynapower/Stratopower (Dynapower) in November 1994. In 1995,
the company recorded net losses of $64.0 ($1.30 per share) in connection with
the divestiture of these businesses. During 1994 and 1993, the company recorded
net losses of $23.4 ($0.49 per share) and $31.5 ($0.70 per share), respectively,
for losses on the expected disposal and operating losses of these operations.
SPECIAL ITEMS:
RELIANCE MERGER BREAK-UP FEE - During the fourth quarter of 1994, the company's
planned merger with Reliance Electric was not successfully concluded, and, as a
result, the company received a break-up fee of $50.0.The company also incurred
$3.8 of net expenses related to the merger.
SEMICONDUCTOR EQUIPMENT OPERATIONS - During 1993, the company substantially
completed the divestiture of Semiconductor Equipment Operations with higher than
expected proceeds from the sale of these units and lower than expected severance
costs. As a result, $53.2 of excess reserves were returned to operating income.
At December 31, 1995, the SEO reserves remaining were $3.2, which the company
anticipates will be expended in 1996.
PREVIOUSLY DIVESTED BUSINESSES - In 1993, the company recognized a $5.2 charge
related to previously divested businesses.
RESTRUCTURING - In 1993, the company provided $15.0 primarily for factory and
administrative consolidation and rearrangement as well as product restructuring
and realignment, all related to continuing operations.
Net Sales
(Dollars in millions)
[GRAPH]
93: $1,354
94: $1,528
95: $1,863
17
<PAGE>
CONSOLIDATION OF OPERATIONS, ASSET VALUATIONS AND OTHER CHARGES: During the
fourth quarter of 1994, the company recorded $46.2 of charges for the
consolidation of certain operations ($11.8), asset valuations ($24.1) and
environmental and other issues ($10.3). During 1993, the company recorded a $4.4
charge to cost of sales to reflect permanent declines in the value of assets.
EXTRAORDINARY CHARGE: During 1993, the company extinguished certain
high-rate debt, resulting in an extraordinary charge of $6.6.
ADOPTION OF NEW ACCOUNTING STANDARD: Effective January 1, 1993, the company
adopted SFAS 112, "Employers' Accounting for Postemployment Benefits". The
impact of adopting this standard (shown as the cumulative effect of accounting
change in the statement of earnings) was a non-cash, after-tax charge of $25.3
in 1993.
To facilitate a more meaningful comparison, the charges and credits discussed
above have been excluded from the following discussion of results of operations.
1995 1994 1993
Year ended December 31, ADJUSTED(1) Adjusted(2) Adjusted(3)
- --------------------------------------------------------------------------------
Net sales ............................... $1,863.2 $1,527.7 $1,354.2
Gross margin ............................ 555.2 445.9 399.6
Selling, general and
administrative expenses ............... 354.4 276.2 259.3
Operating earnings ...................... 200.8 169.7 140.3
Earnings from continuing operations ..... 113.0 104.1 86.4
Earnings per share from continuing
operations ............................ $ 2.30 $ 2.20 $ 1.91
- --------------------------------------------------------------------------------
(1) Excludes transaction and consolidation charges related to the acquisition
of Best Power and the merger with Data Switch.
(2) Excludes Reliance merger break-up fee and consolidation of operations
charges.
(3) Excludes 1993 special items and transaction and consolidation charges
related to the merger with Revco.
1995 COMPARED WITH 1994 (ADJUSTED TO EXCLUDE NON-RECURRING CHARGES AND CREDITS)
REVENUES: Sales improved 22.0 percent over 1994 levels to $1,863.2, primarily
related to acquisitions with the remainder reflecting improved order activity.
International sales in 1995 totaled 22.3 percent of the company's net sales as
compared to 19.4 percent in 1994. Export sales increased 59 percent to $199.1,
reflecting greater export activity in Process and Electrical Controls and the
acquisitions of Fairbanks Morse Pump Corporation (Fairbanks), Best Power and
Data Switch. Price changes, volume changes, and acquisitions accounted for
approximately 10 percent, 6 percent, and 84 percent of the revenue increase,
respectively.
Process Controls sector sales increased 18.7 percent to $719.7 from increased
shipments of pumps, valves, industrial mixers, crystal growing furnaces and
laboratory equipment. The increased pump sales resulted primarily from the
acquisition of Fairbanks. The increased mixer business sales were primarily a
result of higher domestic sales.
Sales in the Electrical Controls sector rose 25.6 percent to $777.0. The
acquisitions of Best Power and MagneTek Electric Inc. (Waukesha Electric)
accounted for approximately 80 percent of the sector's increase. The remainder
resulted from improved volume in building and life safety products, broadcast
equipment and power transformers. These improvements were offset by lower volume
as a result of a major floor care customer's production curtailments.
Industrial Technology sector sales increased 21.1 percent to $366.5 due mainly
to the Data Switch merger, recorded effective January 1, 1995, which added $97.8
in revenue. This addition was partially offset by decreases in sales due to the
completion of the U.S. Postal Service stamp vending machine contract in early
1995 as well as declines in the telecommunications and OEM bicycle and
automotive component products.
COSTS AND EXPENSES: Gross profit as a percentage of sales improved from 29.2
percent to 29.8 percent. Higher margins at acquired companies as well as
improved cost structures at several operating units were the primary reasons for
the improvement. Margin improvements were strongest for valve, broadcast
equipment and telecommunication products. Margin improvements also were realized
as a result of the completion of the lower margin U.S. Postal Service contract.
Spending on research and development ranged from two to three percent of sales
in both years.
Gross Profit
(Dollars in millions)
[GRAPH]
93: $395
94: $418
95: $555
Net Interest Expense
(Dollars in millions)
[GRAPH]
93: $17
94: $12
95: $24
18
<PAGE>
Selling, general and administrative expenses as a percentage of sales increased
from 18.1 percent to 19.0 percent primarily due to higher operating
expenses-to-sales of acquired companies, which included $2.7 of integration
charges for Best Power and Waukesha Electric, as well as incremental spending
related to acquisitions. These higher expenses were offset by insurance
recoveries of $6.8 and gains on asset sales of $4.1. SG&A expenses included
pension credits of $9.3 in 1995 and $9.7 in 1994. These credits resulted from
the company's overfunded pension plans and favorable long-term investment
results. The company anticipates pension credits in 1996 to be lower than 1995
due primarily to an increase in the total number of employees added via
acquisitions and decreases in discount rates, offset by improved investment
return rates.
Net interest expense increased as a result of higher average debt levels
resulting from acquisitions, the addition of higher-rate debt from Data Switch
and an overall increase in borrowing rates.
The 1995 effective tax rate rose to 36 percent from 35 percent in 1994 for a
number of reasons, including an increase in non-deductible goodwill and a $7.0
reduction in the deferred tax valuation allowance (see reconciliation of federal
and effective tax rates on page 27). Without the reduction in the deferred tax
valuation allowance, the 1995 rate would have been approximately 40 percent.
1994 COMPARED WITH 1993 (ADJUSTED TO EXCLUDE NON-RECURRING CHARGES AND CREDITS)
REVENUES: Sales rose 12.8 percent from 1993 to $1,527.7. Domestic sales
increased 14.2 percent, reflecting the strength of the domestic economy. Exports
increased 13.2 percent, and foreign shipments increased 3.4 percent. Price
changes, volume changes and acquisitions accounted for approximately 5 percent,
61 percent and 34 percent of the revenue increase, respectively.
Sales in the Process Controls sector were $606.4, up 11.1 percent from 1993. The
sector saw increased sales in its vacuum pump lines and its non-ferrous and
heat-treat products. In addition, almost one-third of the increase was from the
late 1993 acquisition of Layne & Bowler, a municipal water pump manufacturer.
Sales in the Electrical Controls sector rose 13.1 percent to $618.6 in 1994,
primarily from higher shipments of life safety products, conduit fittings and
other electrical wholesale products, and electrical motors. 1994 acquisitions
contributed $20.0 of the growth in sales of conduit fittings and other
electrical wholesale products.
Industrial Technology sector sales grew 15.8 percent to $302.7. Accounting for
this growth were greater shipments of OEM automotive components and bus and rail
fare equipment. A significant portion of the increased sales in 1994 resulted
from the shipment of U.S. Postal Service stamp vending machines.
COSTS AND EXPENSES: In 1994, gross margins were flat at 29 percent of sales
(excluding unit consolidation, asset valuation and other charges in 1994 of
$27.7 and asset valuation charges in 1993 of $4.4).
The ratio of selling, general and administrative expenses to sales improved to
18.1 percent from 19.1 percent (excluding unit consolidation, asset valuation
and other charges in 1994 of $16.1). Contributing to the lower rate of SG&A
expenses to sales were the successful cost reduction efforts undertaken by the
company in 1993 and prior years. SG&A expenses included pension credits of $9.7
in 1994 and $8.6 in 1993.
Net interest expense of $11.8 decreased from 1993 because of the extinguishment
of higher-rate debt in 1993 and generally lower average debt levels in 1994.
The effective income tax rate was 35 percent in 1994 compared with 29.5 percent
in 1993. 1993 income taxes included benefits from adjustments of prior year tax
reserves and an increase in the company's deferred tax assets arising from 1993
tax legislation.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $160.7 in 1995 compared with
$115.7 in 1994. Included in 1994 cash from operations was the Reliance break-up
fee of $50.0 less net expenses of $3.8 incurred in connection with the planned
merger. 1995 operating cash flow improved primarily from better working capital
management along with proceeds from environmental insurance recoveries ($6.8).
Included in operating cash flows for 1995 and 1994 were expenditures of $40.8
and $47.6, respectively, related to previously divested operations and $7.5 and
$8.2, respectively, for severance pay.
Earnings from Continuing Operations
(Dollars in millions)
[GRAPH]
93: $98
94: $104
95: $100
Working Capital
(Dollars in millions)
[GRAPH]
93: $269
94: $349
95: $298
19
<PAGE>
Capital expenditures were $49.0 in 1995 compared with $74.8 in 1994. 1995
capital expenditures were primarily comprised of upgrades to manufacturing
facilities and purchases of MIS equipment. The company anticipates capital
expenditures in 1996 to approximate depreciation.
During 1995, the company acquired Best Power for $206.3 and Waukesha Electric
for $73.9. Cash paid for acquisitions in 1994 totaled $83.3. Proceeds from
dispositions were $53.4 in 1995 compared with $26.2 in 1994. Included in 1995
cash flow from investing activities were long-term receivable collections and
fixed asset sales totalling approximately $14.5. On January 11, 1996, the
company sold Kinney Vacuum Company (Kinney) for approximately $28.0 and expects
to record a pre-tax gain of approximately $21.0 in the first quarter of 1996.
Net cash provided from financing activities was $92.7 in 1995, which included
net borrowings of $139.2, offset by dividend payments of $45.6 and cash used to
repurchase common shares of $18.0. In 1994, net cash provided by financing
activities was $14.7, including net borrowings of $70.9, dividend payments of
$42.6, and repurchased shares of $18.5.
Long-term debt-to-capitalization increased to 42.6 percent at December 31, 1995
from 32.9 percent at December 31, 1994, principally as a result of the company's
acquisitions during 1995. The company expects to use the proceeds from the
disposition of Kinney and the remaining discontinued businesses to reduce debt.
At the end of 1995, the company had unused lines of credit of $621.6, consisting
primarily of committed borrowing facilities of $190.0 and $360.0 that expire in
1996 and 2000, respectively. The company has $300.0 of unissued securities under
a universal shelf registration with the Securities and Exchange Commission,
providing the flexibility to issue a broad variety of securities. The company
expects that cash provided from operations will be sufficient to provide for the
company's financing needs for the next year. Additional financing may be
undertaken as required.
At December 31, 1995, the company's balance sheet reflected net deferred tax
assets of $223.9 that are reduced by deferred tax liabilities of $107.2 and a
valuation allowance of $33.6. The carrying amount of the net deferred tax asset
was based on management's assessment of the realizability of the net operating
loss carryforwards and deductible items through future taxable earnings or
alternative tax planning strategies.
The company enters into forward foreign exchange contracts to mitigate the risks
of doing business in foreign currencies. The company hedges currency exposures
of firm commitments and specific assets and liabilities denominated in
non-functional currencies to protect against the possibility of diminished cash
flow and adverse impact on earnings. The company's currency exposures vary, but
are primarily concentrated in the Canadian dollar, British pound, Australian
dollar, German mark, French franc and Singapore dollar. Translation exposures
are rarely hedged.
ENVIRONMENTAL MATTERS
The company is involved in various stages of investigation and remediation
relative to environmental protection matters. A more detailed discussion of
environmental matters appears on page 30 of the Notes to the Financial
Statements.
ACCOUNTING CHANGES
In 1995, the Financial Accounting Standards Board issued Statement Nos. 121 and
123 that relate to accounting for impairment of long-lived assets and stock
compensation, respectively. The company plans to adopt these statements in 1996
and is currently studying their impact.
OTHER MATTERS
Since the company is a producer of capital goods and equipment, its results can
vary with the relative strength of the economy. Demand for products in the
Process Controls sector follows the demand for capital goods orders. The
Electrical Controls sector depends upon several markets, principally the
nonresidential construction and computer equipment industries. The Industrial
Technology sector depends on several markets, primarily automotive, mass
transportation, and telecommunications equipment. Mass transportation depends
upon continued federal and local government spending, and telecommunications is
dependent upon continued research and development and the continued success of
new products. While no one marketplace or industry has a major impact on the
company's operations or results, the inherent pace of technological changes
presents certain risks that the company monitors carefully. Success within all
of the company's businesses is dependent upon the timely introduction and
acceptance of new products.
Capital Expenditures and Research and Development
(Dollars in millions)
[GRAPH]
Research and Development Capital Expenditures
93: $53 $55
94: $50 $75
95: $47 $49
Capitalization
(Dollars in millions)
[GRAPH]
LTD-to-Cap Capitalization
93: 26.7% $717
94: 32.9% $817
95: 42.6% $1,007
20
<PAGE>
MANAGEMENT'S RESPONSIBILITY FOR
FINANCIAL STATEMENTS
Management is responsible for the preparation of the company's consolidated
financial statements and related information appearing in this annual report.
Management considers that the consolidated financial statements fairly reflect
the form and substance of transactions and that the financial statements
reasonably present the company's financial position and results of operations in
conformity with generally accepted accounting principles. Management also has
included in the company's financial statements amounts that are based on
estimates and judgments which it views as reasonable under the circumstances.
The independent auditors perform an audit of the company's consolidated
financial statements in accordance with generally accepted auditing standards
and provide an objective, independent review of the fairness of reported
operating results and financial position.
The Board of Directors of the company has an Audit Committee composed of four
non-management Directors. The Committee meets at least three times annually with
financial management, the internal auditors and the independent auditors to
review accounting, control, auditing and financial reporting matters.
/s/ Michael D. Lockhart
Michael D. Lockhart
Chairman and Chief Executive Officer
/s/ Terence D. Martin /s/ Terry J. Mortimer
Terence D. Martin Terry J. Mortimer
Executive Vice President and Vice President
Chief Financial Officer and Controller
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
General Signal Corporation
We have audited the accompanying balance sheet of General Signal Corporation and
consolidated subsidiaries as of December 31, 1995 and 1994, and the related
statements of earnings, shareholders' equity, and cash flow for each of the
three years in the period ended December 31, 1995. These financial statements
are the responsibility of the company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of General Signal Corporation and
consolidated subsidiaries at December 31, 1995 and 1994, and the results of
their operations and their cash flow for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
As discussed in the notes to the financial statements, in 1993 the company
changed its method of accounting for postemployment benefits.
/s/ Ernst & Young LLP
Stamford, Connecticut
January 25, 1996, except for the capital stock note to the financial statements,
as to which the date is February 1, 1996.
21
<PAGE>
<TABLE>
STATEMENT OF EARNINGS
<CAPTION>
General Signal Corporation and Consolidated Subsidiaries
Year ended December 31, (In millions, except per-share data) 1995 1994 1993
====================================================================================================================================
<S> <C> <C> <C>
NET SALES ............................................................................. $ 1,863.2 $ 1,527.7 $ 1,354.2
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of sales ......................................................................... 1,308.0 1,109.5 959.0
Selling, general and administrative expenses .......................................... 354.4 292.3 259.3
Transaction and consolidation charges ................................................. 20.1 -- 13.2
Merger break-up fee and other special items ........................................... -- (46.2) (33.0)
- ------------------------------------------------------------------------------------------------------------------------------------
Total operating costs and expenses .................................................... 1,682.5 1,355.6 1,198.5
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATING EARNINGS .................................................................... 180.7 172.1 155.7
Interest expense, net ................................................................. 24.3 11.8 16.6
- ------------------------------------------------------------------------------------------------------------------------------------
EARNINGS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES ............................... 156.4 160.3 139.1
Income taxes .......................................................................... 56.3 56.2 41.0
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations ................................................... 100.1 104.1 98.1
Earnings (loss) from discontinued operations, net of income taxes:
Operations ........................................................................ -- 2.4 (31.5)
Disposal .......................................................................... (64.0) (25.8) --
- ------------------------------------------------------------------------------------------------------------------------------------
EARNINGS BEFORE EXTRAORDINARY CHARGE AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE ....... 36.1 80.7 66.6
Extraordinary charge .................................................................. -- -- (6.6)
Cumulative effect of accounting change ................................................ -- -- (25.3)
- ------------------------------------------------------------------------------------------------------------------------------------
NET EARNINGS ...................................................................... $ 36.1 $ 80.7 $ 34.7
====================================================================================================================================
EARNINGS (LOSS) PER SHARE OF COMMON STOCK:
Continuing operations ............................................................. $ 2.03 $ 2.20 $ 2.17
Discontinued operations ........................................................... -- 0.05 (0.70)
Disposal of discontinued operations ............................................... (1.30) (0.54) --
Extraordinary charge .............................................................. -- -- (0.14)
Cumulative effect of accounting change ............................................ -- -- (0.56)
- ------------------------------------------------------------------------------------------------------------------------------------
NET EARNINGS ...................................................................... $ 0.73 $ 1.71 $ 0.77
====================================================================================================================================
AVERAGE COMMON SHARES OUTSTANDING ..................................................... 49.2 47.3 45.2
====================================================================================================================================
See accompanying notes to the financial statements.
22
<PAGE>
</TABLE>
<TABLE>
BALANCE SHEET
<CAPTION>
General Signal Corporation and Consolidated Subsidiaries
December 31, (In millions) 1995 1994
====================================================================================================================================
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents .............................................................. $ 1.0 $ 0.3
Accounts receivable .................................................................... 323.6 258.3
Inventories ............................................................................ 234.7 213.3
Prepaid expenses and other current assets .............................................. 30.1 44.5
Assets held for sale at estimated realizable value ..................................... 60.4 153.6
Deferred income taxes .................................................................. 71.6 47.2
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS ............................................................... 721.4 717.2
PROPERTY, PLANT AND EQUIPMENT .......................................................... 312.7 280.5
INTANGIBLES ............................................................................ 406.0 194.3
OTHER ASSETS ........................................................................... 161.6 149.8
DEFERRED INCOME TAXES .................................................................. 11.5 16.1
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS ....................................................................... $ 1,613.2 $ 1,357.9
====================================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings and current maturities of long-term debt ......................... $ 9.0 $ 2.2
Accounts payable ....................................................................... 158.1 152.9
Accrued expenses ....................................................................... 233.8 194.0
Income taxes ........................................................................... 31.2 18.9
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES .......................................................... 432.1 368.0
- ------------------------------------------------------------------------------------------------------------------------------------
LONG-TERM DEBT, LESS CURRENT MATURITIES ................................................ 428.6 269.1
ACCRUED POSTRETIREMENT AND POSTEMPLOYMENT OBLIGATIONS .................................. 146.9 161.2
OTHER LIABILITIES ...................................................................... 27.5 11.7
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL LONG-TERM LIABILITIES ........................................................ 603.0 442.0
- ------------------------------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY:
Common stock: authorized 150.0 shares; issued
64.3 in 1995 and 63.7 in 1994 ...................................................... 77.9 77.4
Additional paid-in capital ............................................................. 304.2 281.1
Retained earnings ...................................................................... 582.9 620.5
Cumulative translation adjustments ..................................................... (3.9) (12.1)
- ------------------------------------------------------------------------------------------------------------------------------------
961.1 966.9
Common stock in treasury, at cost: 15.0 shares in 1995 and 16.6 shares in 1994 ......... (383.0) (419.0)
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY ......................................................... 578.1 547.9
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ......................................... $ 1,613.2 $ 1,357.9
====================================================================================================================================
</TABLE>
See accompanying notes to the financial statements.
23
<PAGE>
<TABLE>
STATEMENT OF SHAREHOLDERS' EQUITY
<CAPTION>
Additional Cumulative Common
General Signal Corporation and Consolidated Subsidiaries Common Paid-In Retained Translation Stock In
(In millions, except per-share data) Stock Capital Earnings Adjustments Treasury
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1992 ................................................... $ 45.1 $ 262.8 $ 588.1 $ (9.0) $ (512.0)
Net earnings ................................................................... -- -- 34.7 -- --
Dividends declared ($0.90 per share) ........................................... -- -- (39.7) -- --
Sale of common stock ........................................................... -- 20.4 -- -- 102.9
Stock split .................................................................... 31.6 (31.6) -- -- --
Exercise of stock options and savings and stock ownership plan funding ......... 0.4 20.4 -- -- 10.6
Translation adjustments ........................................................ -- -- -- 0.5 --
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1993 ................................................... 77.1 272.0 583.1 (8.5) (398.5)
Net earnings ................................................................... -- -- 80.7 -- --
Dividends declared ($0.90 per share) ........................................... -- -- (43.3) -- --
Purchase of common stock ....................................................... -- -- -- -- (18.5)
Exercise of stock options and savings and stock ownership plan funding ......... 0.3 9.1 -- -- (2.0)
Translation adjustments ........................................................ -- -- -- (3.6) --
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1994 ................................................... 77.4 281.1 620.5 (12.1) (419.0)
Restatement for Data Switch merger ............................................. -- 4.8 (27.7) (0.1) 45.7
Net earnings ................................................................... -- -- 36.1 -- --
Dividends declared ($0.96 per share) ........................................... -- -- (46.0) -- --
Purchase of common stock ....................................................... -- -- -- -- (18.0)
Exercise of stock options and savings and stock ownership plan funding ......... 0.5 18.3 -- -- 8.3
Discontinued operations ........................................................ -- -- -- 7.4 --
Translation adjustments ........................................................ -- -- -- 0.9 --
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995 ................................................... $ 77.9 $ 304.2 $ 582.9 $ (3.9) $ (383.0)
====================================================================================================================================
</TABLE>
See accompanying notes to the financial statements.
24
<PAGE>
<TABLE>
STATEMENT OF CASH FLOW
<CAPTION>
General Signal Corporation and Consolidated Subsidiaries Increase (Decrease) in Cash and Cash Equivalents
Year ended December 31, (In millions) 1995 1994 1993
====================================================================================================================================
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Earnings from continuing operations ................................................... $ 100.1 $ 104.1 $ 98.1
Adjustments to reconcile earnings from continuing operations
to net cash from operating activities:
Discontinued operations ........................................................... -- 2.4 (31.5)
Transaction and consolidation charges ............................................. 20.1 -- 13.2
Deferred income taxes ............................................................. 32.0 36.8 (3.7)
Depreciation and amortization ..................................................... 62.8 48.4 46.4
Pension credits ................................................................... (9.3) (9.7) (8.6)
Extraordinary charge on early extinguishment of debt .............................. -- -- (6.6)
Other, net ........................................................................ 4.4 (0.2) 6.6
Changes in assets and liabilities, net of effects from acquisitions and
divestitures:
Accounts receivable ............................................................. (15.4) (25.2) 5.3
Inventories ..................................................................... 21.4 (26.8) 12.9
Prepaid expenses and other current assets ....................................... 18.1 (1.0) 5.4
Accounts payable ................................................................ (14.2) 29.5 (2.4)
Accrued expenses and other ...................................................... (71.6) (50.5) (78.4)
Income taxes .................................................................... 12.3 7.9 (13.7)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash from operating activities ................................................ 160.7 115.7 43.0
- ------------------------------------------------------------------------------------------------------------------------------------
CASH FLOW FROM INVESTING ACTIVITIES:
Divestitures ...................................................................... 53.4 26.2 97.6
Capital expenditures .............................................................. (49.0) (74.8) (55.1)
Acquisitions, net of cash acquired ................................................ (272.4) (83.3) (20.0)
Other, net ........................................................................ 15.3 0.5 (1.1)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash from investing activities ................................................ (252.7) (131.4) 21.4
- ------------------------------------------------------------------------------------------------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES:
Issuance of long-term debt ........................................................ 273.2 77.9 9.3
Redemption of long-term debt ...................................................... (134.0) (7.0) (189.8)
Purchase of common stock .......................................................... (18.0) (18.5) --
Issuance of common stock .......................................................... 17.1 4.9 138.8
Dividends paid .................................................................... (45.6) (42.6) (37.9)
- ------------------------------------------------------------------------------------------------------------------------------------
Net cash from financing activities ................................................ 92.7 14.7 (79.6)
- ------------------------------------------------------------------------------------------------------------------------------------
Net changes in cash and cash equivalents .......................................... 0.7 (1.0) (15.2)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR ........................................ 0.3 1.3 16.5
- ------------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR .............................................. $ 1.0 $ 0.3 $ 1.3
====================================================================================================================================
Interest paid ......................................................................... $ 27.3 $ 12.4 $ 23.6
====================================================================================================================================
Income taxes paid ..................................................................... $ 15.7 $ 21.5 $ 26.7
====================================================================================================================================
</TABLE>
See accompanying notes to the financial statements.
25
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS
(Dollars in millions, except per-share data)
ACCOUNTING POLICIES
CONSOLIDATION: The financial statements include the accounts of General Signal
Corporation and consolidated subsidiaries after elimination of intercompany
accounts and transactions. Investments in unconsolidated companies where
management exercises significant influence are accounted for using the equity
method.
CASH EQUIVALENTS: The company considers its highly liquid money market
investments with original maturities of three months or less to be cash
equivalents.
INVENTORIES: Inventories are stated at the lower of cost or market. Cost is
primarily determined using the first-in, first-out (FIFO) method. All other
inventories are valued using the last-in, first-out (LIFO) method.
PROPERTY: Property, plant and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation and amortization are provided using
the straight-line method over the estimated useful lives of assets. Leasehold
improvements are amortized over the life of the related asset or the life of the
lease, whichever is shorter.
INTANGIBLES: Intangible assets (primarily the excess of purchase price over the
fair value of net assets acquired) are amortized on a straight-line basis over
periods not exceeding 40 years. The company periodically reviews the carrying
value of intangibles for recoverability in relation to future undiscounted cash
flow.
REVENUE RECOGNITION: Revenues are primarily recognized as products are shipped
and services are rendered. The percentage-of-completion method of accounting is
followed for long-term contracts. Under this method, earnings accrue as
contracts progress toward completion, generally based on the percentage of costs
incurred or the units of product delivered.
ENVIRONMENTAL: The company's environmental accruals cover all anticipated costs,
including capital expenditures, investigation, remediation, and operation and
maintenance of clean-up sites. Environmental obligations generally are not
discounted and are not reduced by anticipated insurance recoveries.
STOCK COMPENSATION: The company accounts for the options granted under its stock
incentive program by recognizing as compensation any excess of quoted market
price over exercise price at the date of grant. The exercise price of General
Signal stock options granted equals the market value on the date of grant.
EARNINGS PER SHARE: Earnings per share of common stock was calculated by
dividing net earnings by the weighted average number of common shares
outstanding. There was no dilutive impact from stock options or convertible debt
securities outstanding during the periods.
MERGER AND ACQUISITION INCOME AND EXPENSES: The company recognizes costs
associated with potential mergers and acquisitions, along with proceeds from
break-up fee provisions, as components of operating income.
USE OF ESTIMATES: The preparation of financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
RECLASSIFICATIONS: Certain reclassifications were made to conform prior years'
data to the current presentation.
ACCOUNTS RECEIVABLE
Accounts receivable are net of allowances for doubtful accounts of $10.6 and
$10.1 at December 31, 1995 and 1994, respectively.
INVENTORIES
December 31, 1995 1994
================================================================================
Finished goods ................................. $ 73.9 $ 62.1
Work in process ................................ 66.5 68.0
Raw material and purchased parts ............... 117.6 106.4
- --------------------------------------------------------------------------------
Total FIFO cost ................................ 258.0 236.5
Excess of FIFO cost over LIFO
inventory value ............................ (23.3) (23.2)
- --------------------------------------------------------------------------------
$ 234.7 $ 213.3
================================================================================
Inventories valued using LIFO are approximately $69.4 and $66.4 at December 31,
1995 and 1994, respectively. During 1994, $3.9 of LIFO reserves related to
discontinued operations was reclassified to assets held for sale at estimated
realizable value.
Progress payments, netted against work in process at year-end, are $8.7 in 1995
and $4.7 in 1994.
26
<PAGE>
CONTRACTS IN PROGRESS
Prepaid expenses and other current assets include contracts in progress of $20.5
and $30.8 at December 31, 1995 and 1994, respectively. Contracts in progress
represent revenue recognized on a percentage-of-completion basis over related
progress billings of $83.7 and $72.6 at December 31, 1995 and 1994,
respectively. Substantially all contracts in progress at year-end are billed
during the subsequent year.
PROPERTY, PLANT AND EQUIPMENT
December 31, 1995 1994
================================================================================
Land ....................................... $ 14.1 $ 9.1
Buildings and leasehold
improvements ........................... 167.6 138.4
Machinery and equipment .................... 536.1 464.3
- --------------------------------------------------------------------------------
717.8 611.8
- --------------------------------------------------------------------------------
Accumulated depreciation
and amortization ....................... (405.1) (331.3)
- --------------------------------------------------------------------------------
$ 312.7 $ 280.5
================================================================================
INCOME TAXES
For financial reporting purposes, earnings from continuing operations before
income taxes includes the following components:
Year ended December 31, 1995 1994 1993
================================================================================
Pretax income:
United States .................. $ 151.5 $ 159.3 $ 137.9
Foreign ....................... 4.9 1.0 1.2
- --------------------------------------------------------------------------------
$ 156.4 $ 160.3 $ 139.1
================================================================================
The reconciliation of income tax from continuing operations computed at the U.S.
federal statutory tax rate to the company's effective income tax rate is as
follows:
Year ended December 31, 1995 1994 1993
================================================================================
Tax at U.S. federal statutory rate ...... 35.0% 35.0% 35.0%
State and local income taxes,
net of U.S. federal benefit ......... 5.5 3.4 2.7
Foreign sales corporation ............... (1.7) (1.4) (1.5)
Goodwill amortization ................... 2.1 1.0 1.3
Income from Puerto Rican operations ..... (0.7) (0.8) (0.7)
Foreign rates and foreign dividends ..... (1.4) (1.1) (0.9)
Reduction in valuation allowance ........ (4.5) -- --
Effect of enacted U.S.
federal rate change
on deferred taxes ................... -- -- (2.0)
Adjustments to prior
years' tax liabilities .............. -- -- (2.6)
Other ................................... 1.7 (1.1) (1.8)
- --------------------------------------------------------------------------------
36.0% 35.0% 29.5%
================================================================================
The components of the provision for income taxes are as follows:
Year ended December 31, 1995 1994 1993
================================================================================
Current:
Federal ........................ $ 14.2 $ 11.5 $ (1.1)
Foreign ........................ 3.4 4.6 (0.4)
State .......................... 6.7 3.3 0.5
- --------------------------------------------------------------------------------
Total current .................. 24.3 19.4 (1.0)
- --------------------------------------------------------------------------------
Deferred:
Federal ........................ (6.5) 51.5 9.9
Foreign ........................ (2.6) 0.4 (0.9)
State .......................... 5.2 9.5 3.0
- --------------------------------------------------------------------------------
Total deferred ................. (3.9) 61.4 12.0
- --------------------------------------------------------------------------------
$ 20.4 $ 80.8 $ 11.0
================================================================================
27
<PAGE>
Income tax expense is included in the financial statements as follows:
Year ended December 31, 1995 1994 1993
================================================================================
Continuing operations .............. $ 56.3 $ 56.2 $ 41.0
Discontinued operations ............ (35.9) 24.6 (13.2)
Extraordinary charge ............... -- -- (4.1)
Cumulative effect of
accounting change .............. -- -- (12.7)
- --------------------------------------------------------------------------------
$ 20.4 $ 80.8 $ 11.0
================================================================================
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the company's deferred tax assets and liabilities are as follows:
December 31, 1995 1994
================================================================================
Deferred tax assets:
Acquired tax benefits and basis differences ...... $ 45.1 $ 52.0
Other postretirement and
postemployment benefits ........................ 63.6 70.0
Losses on dispositions and restructuring ......... 22.4 21.0
Inventories ...................................... 15.7 15.1
NOL and credit carryforwards ..................... 42.9 46.0
Other ............................................ 34.2 24.1
- --------------------------------------------------------------------------------
Total deferred tax assets ...................... 223.9 228.2
Valuation allowance .............................. (33.6) (43.2)
- --------------------------------------------------------------------------------
Net deferred tax assets ........................ 190.3 185.0
Deferred tax liabilities:
Accelerated depreciation ......................... 32.5 28.8
Pension credits .................................. 36.2 34.0
Reliance gain .................................... 19.8 19.8
Discontinued operations .......................... -- 23.0
Other ............................................ 18.7 16.1
- --------------------------------------------------------------------------------
Total deferred tax liabilities ................ 107.2 121.7
- --------------------------------------------------------------------------------
$ 83.1 $ 63.3
================================================================================
Realization of deferred tax assets associated with the NOL and credit
carryforwards is dependent upon generating sufficient taxable income prior to
their expiration. Management believes that there is a risk that certain of these
NOL and credit carryforwards may expire unused and, accordingly, has established
a valuation allowance against them. Although realization is not assured for the
remaining deferred tax assets, management believes it is more likely than not
that they will be realized through future taxable earnings or alternative tax
strategies. However, the net deferred tax assets could be reduced in the near
term if management's estimates of taxable income during the carryforward period
are significantly reduced or alternative tax strategies are no longer viable. In
the event that the tax benefits relating to the valuation allowance are
realized, $1.0 of such benefits would reduce goodwill.
At December 31, 1995, the following net federal operating loss and tax credit
carryforwards are available:
Expiration Operating Tax
Dates Losses Credits
================================================================================
1996 - 1997 .............................. $-- $ 14.3
1998 - 1999 .............................. 2.7 14.4
2000 - 2001 .............................. 35.1 --
2002 - 2003 .............................. 11.4 --
No expiration ............................ -- 0.6
- --------------------------------------------------------------------------------
Undistributed earnings of the company's foreign subsidiaries amounted to
approximately $60.8 at December 31, 1995. Those earnings are considered to be
indefinitely reinvested and accordingly, no provision for U.S. federal and state
income taxes or foreign withholding taxes has been made. Upon distribution of
those earnings, the company would be subject to U.S. income taxes (subject to a
reduction for foreign tax credits) and withholding taxes payable to the various
foreign countries. Determination of the amount of unrecognized deferred U.S.
income tax liability is not practicable; however, unrecognized foreign tax
credit carryovers would be available to reduce some portion of the U.S.
liability. Withholding taxes of approximately $5.3 would be payable upon
remittance of all previously unremitted earnings at December 31, 1995.
DEBT
December 31, 1995 1994
================================================================================
5.75% Convertible Subordinated
Notes due 2002 (convertible at
approximately $39.50 per share) ................ $ 100.0 $ 100.0
Commercial paper
1995, 5.9%; 1994, 6.1% ......................... 249.0 85.7
Industrial Revenue Bonds due
2000-2014; no stipulated
principal repayments prior to
maturity (primarily variable rate) ............. 44.5 45.7
Other long-term borrowings ......................... 39.9 38.8
- --------------------------------------------------------------------------------
433.4 270.2
- --------------------------------------------------------------------------------
Less current maturities ............................ 4.8 1.1
- --------------------------------------------------------------------------------
$ 428.6 $ 269.1
================================================================================
Short-term notes payable to banks .................. $ 4.2 $ 1.1
================================================================================
Maturities of long-term debt through 2000 are: 1996-$4.8; 1997-$1.1; 1998-$1.0;
1999-$0.9; and 2000-$286.0.
28
<PAGE>
During 1993, a portion of the proceeds from the issuance of common stock and the
sale of SEO was used for the early extinguishment of higher-rate debt and swap
agreements, which resulted in an extraordinary charge of $10.7 ($6.6 after tax).
The company maintains credit arrangements with banks in the U.S. and abroad,
which aggregated $621.6 and $382.9 at December 31, 1995 and 1994, respectively.
At year-end 1995, the company had a committed revolving credit agreement of
$360.0 that matures on January 11, 2000 and a committed revolving credit
agreement of $190.0 that matures on May 31, 1996. The agreements permit domestic
and Eurodollar borrowings at interest rates offered to investment grade
customers. The agreements also are convertible int o one-year term loans at
maturity.
Commercial paper is classified as long-term debt as the company maintains
long-term committed credit agreements to support these borrowings and intends to
refinance them on a long-term basis either through continued commercial paper
borrowings or the issuance of medium-term notes.
In May 1994, the company established a $300.0 financing program under a
universal shelf registration that permits the issuance of debt, equity and
equity-linked securities, replacing an earlier shelf registration for only debt
securities that had been in place since April 1990. The universal shelf
registration permits the company to issue junior or senior debt, convertibles,
equity warrants, preferred shares and medium-term notes under one filing without
specifying any dollar amounts for any security. As of December 31, 1995, no
amounts have been issued under the shelf registration.
The company entered into an interest rate exchange agreement, expiring in 2000,
with a financial institution to limit exposure to interest rate volatility. The
agreement involved a transaction with a notional principal amount of $25.0 at
December 31, 1995 and 1994. The company monitors the risk of default by the swap
counterparty and does not anticipate non-performance.
FOREIGN EXCHANGE CONTRACTS
The company conducts its business in various foreign currencies. Accordingly,
the company is subject to the typical currency risks and exposures that arise as
a result of changes in the relative value of currencies. The risks are often
referred to as transactional, commitment, translational and economic currency
exposures. The company's policy stresses risk reduction and specifically
prohibits speculation. The policy's three basic objectives are to reduce
currency risk on a consolidated basis, to protect the functional currency value
of foreign currency-denominated cash flows, and to reduce the volatility that
changes in foreign exchange rates may present to operating income.
The company utilizes natural hedges and offsets to reduce exposures and also
combines positions to reduce the frictional cost of hedging. The company entered
into forward exchange contracts to hedge net consolidated currency transaction
exposure for periods consistent with the terms of the underlying transactions,
extending through September, 1996.
These contracts do not subject the company to currency risk from exchange rate
movements, as changes in value are deferred and offset against losses and gains
on the underlying transactions. At December 31, 1995, the company had
approximately $62.8 of such contracts outstanding, including $4.3 related to
discontinued operations.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash and cash equivalents, short- and long-term debt, and foreign currency and
interest rate exchange contracts had fair values, based upon quoted prices or
discounted cash flow analyses, that approximated their carrying amounts.
Financial guarantees and letters of credit were issued by the company in the
ordinary course of business and had a fair value of approximately $67.0 as of
December 31, 1995. The fair values of financial guarantees and letters of credit
were based on the face value of the underlyin g instruments and the related
amounts accrued.
CONTINGENCIES AND COMMITMENTS
LITIGATION: The company and certain of its subsidiaries are defendants in legal
proceedings incidental to its business. Although the ultimate disposition of
these proceedings is not presently determinable, management does not expect the
outcome to have a material adverse impact on the company's financial position or
results of operations.
LEASES: The future minimum rental payments under leases with remaining
noncancelable terms in excess of one year are:
Year ending December 31,
================================================================================
1996 ....................................................... $ 11.6
1997 ....................................................... 9.4
1998 ....................................................... 7.1
1999 ....................................................... 6.4
2000 ....................................................... 5.3
Subsequent to 2000 ......................................... 11.3
- --------------------------------------------------------------------------------
Total minimum payments ..................................... $ 51.1
================================================================================
Total rent expense in 1995, 1994, and 1993 was $21.1, $17.4, and $13.8,
respectively.
29
<PAGE>
ENVIRONMENTAL MATTERS
The company is involved in various stages of investigation and remediation
relative to environmental protection matters, arising from its own initiative,
from indemnification of purchasers of divested operations, or from legal or
administrative proceedings, some of which include waste disposal sites. In
certain instances, the company may be exposed to joint and several liability for
remedial action or damages. The company, along with several other entities, has
been named as a Potentially Responsible Party for remedial costs at certain
third-party sites listed on the National Priorities List under CERCLA.
The potential costs related to such matters and the possible impact on future
operations are uncertain due in part to the complexity of government laws and
regulations and their interpretations, the varying costs and effectiveness of
clean-up technologies, the uncertain level of insurance or other types of
recovery, and the questionable level of the company's responsibility. The
company estimates that clean-up costs will be $22.5 and has included this amount
in accrued expenses in the accompanying balance sheet. It is at least reasonably
possible, however, that a change in this estimate will occur. In management's
opinion, after considering reserves established for such purposes, remedial
actions for compliance with the present laws and regulations governing the
protection of the environment are not expected to have a material adverse impact
on the company's results of operations or financial position.
CAPITAL STOCK
PREFERRED STOCK: Ten million shares of cumulative preferred stock, par value
$1.00 per share, are authorized but unissued.
COMMON STOCK: The 1.96 million shares issued through 1969 have a par value of
$6.67 per share. Shares issued since then have a par value of $1.00 per share.
TREASURY STOCK:
Number of shares (In millions) 1995 1994 1993
================================================================================
Balance at beginning of year ................ 16.6 16.0 20.6
Restatement for
Data Switch merger ...................... (1.8) -- --
Common stock reacquired ..................... 0.5 0.6 --
Common stock sold ........................... -- -- (4.1)
Common stock issued
under the company's incentive
compensation and savings
and stock ownership plans ............... (0.3) -- (0.5)
- --------------------------------------------------------------------------------
Balance at end of year ...................... 15.0 16.6 16.0
================================================================================
In March 1994, the company's Board of Directors approved a program to repurchase
up to 3.4 percent or 1.6 million shares of the common stock outstanding at that
time. These shares have been purchased systematically in open market
transactions since the board's approval and have been used to offset dilution
from the increased exercise of employee stock options arising from the company's
executive stock ownership program. Through December 31, 1995, approximately 1.1
million shares have been repurchased under the program.
WARRANTS: In connection with the Data Switch merger, the company assumed 1,452
warrants that are redeemable at $34.83 per share and 14,357 warrants that are
redeemable at $16.54 per share.
SHAREHOLDER RIGHTS PLAN: On February 1, 1996, the company adopted a
substantially similar shareholder rights plan that replaces the 1986 plan which
expires on March 21, 1996. Under the new plan, a dividend distribution was
declared of one common stock purchase right for each share of common stock held
of record on March 21, 1996. The rights trade with the common stock and are not
currently exercisable. Each right entitles the shareholder to buy the company's
or the acquiring company's stock valued at $300 for a price of $150 upon the
occurrence of specific events. The company may redeem the rights for 10 days
(subject to a further 20-day extension) for one cent per right after a person
acquires 20 percent or more of the common stock. The provisions do not apply to
rights that are beneficially owned by the acquirer.
EMPLOYEE BENEFIT PLANS
PENSION PLANS: The company's pension plans cover substantially all salaried and
hourly paid employees, including certain employees in foreign countries. The
plans generally provide benefit payments using a formula based on an employee's
compensation and length of service or, in some cases, stated amounts for each
year of service. The company funds United States pension plans in amounts equal
to the minimum funding requirements of the Employee Retirement Income Security
Act of 1974, plus additional amounts that may be approved from time to time.
Substantially all plan assets are invested in cash and short-term investments or
listed stocks and bonds and real estate. Plan assets and obligations of non-U.S.
subsidiaries are not material. The periodic net pension income related to
continuing operations is comprised of the following:
30
<PAGE>
The periodic net pension income related to continuing operations is comprised of
the following:
Year ended December 31, 1995 1994 1993
================================================================================
Service cost-benefits
earned during the period ............... $ 8.9 $ 10.0 $ 9.6
Interest cost on projected
benefit obligation ..................... 32.6 23.6 24.4
Actual return on assets .................... (45.7) 9.6 (45.1)
Net amortization and deferral .............. (5.1) (52.9) 2.5
- --------------------------------------------------------------------------------
Net pension income ......................... $ (9.3) $ (9.7) $ (8.6)
================================================================================
The actuarial assumptions used were:
Discount rate .............................. 7.00% 8.75% 7.40%
Rate of increase in compensation levels .... 5.00% 5.00% 5.00%
Expected long-term rate of return
on assets .............................. 9.50% 9.50% 9.50%
- --------------------------------------------------------------------------------
The following table sets forth the plans' funded status and amounts recognized
in the balance sheet:
December 31, 1995 1994
- --------------------------------------------------------------------------------
Over Under Over Under
Funded Funded Funded Funded
================================================================================
Actuarial present value of
benefit obligations:
Vested benefit obligation ........... $ (314.2) $ (123.6) $ (300.0) $ (59.9)
- --------------------------------------------------------------------------------
Accumulated benefit obligation .......... $ (333.6) $ (127.7) $ (316.5) $ (62.0)
- --------------------------------------------------------------------------------
Fair value of plan assets ............... $ 449.9 $ 108.8 $ 450.1 $ 53.0
Projected benefit obligation ............ (355.2) (130.8) (333.8) (63.6)
- --------------------------------------------------------------------------------
Plan assets in excess of (less than)
projected benefit obligation ........ 94.7 (22.0) 116.3 (10.6)
Unrecognized net loss ................... 28.8 16.9 6.7 3.3
Prior service cost not yet
recognized in net
pension cost ........................ 5.7 3.3 6.9 2.1
Unrecognized net asset .................. (28.1) (17.1) (37.0) (3.8)
- --------------------------------------------------------------------------------
Prepaid (accrued) pension ............... $ 101.1 $ (18.9) $ 92.9 $ (9.0)
================================================================================
Under the Savings and Stock Ownership Plan and other supplemental plans, the
company matches employee contributions in cash and common stock equal to a
percentage of certain amounts contributed by employees. The company
contributions under these plans amounted to $8.2 in 1995, $7.9 in 1994, and $8.3
in 1993 and were invested in shares of the company's common stock. At December
31, 1995, 1.0 million shares were reserved for issuance under these plans.
NONPENSION RETIREMENT BENEFITS: The company and its U.S. subsidiaries have
postretirement plans that provide health and life insurance benefits for
retirees. Some of these plans require employee contributions at varying rates.
Not all employees are eligible to receive these benefits, with eligibility
governed by the plan in effect at a particular location.
The accumulated postretirement benefit obligation at December 31, 1995 was
determined using the terms of the company's various plans, together with
relevant actuarial assumptions and health care cost trend rates projected at
estimated annual rates ranging from 7.6 percent in 1995 and 7.1 percent in 1996
to 5.0 percent through the year 2004 and a weighted average discount rate of 7.0
percent. Generally, where applicable, the discount rate and the actuarial
assumptions used for pension plans also apply to the non-pension retirement
plans. A one-percent annual increase in these assumed cost trend rates would
increase the accumulated postretirement benefit obligation by approximately $1.6
and annual service costs by approximately $0.2. Certain of the company's
non-U.S. subsidiaries have similar plans for retirees. The company's obligations
for such plans are not material.
Effective January 1, 1993, the company adopted the accrual method (FAS 112) of
accounting for postemployment benefits, primarily severance and long-term
disability. Previously, the company had used the pay-as-you-go method. The
cumulative effect at January 1, 1993 of adopting FAS 112 reduced 1993 net income
by $25.3, net of $12.7 of income tax benefits.
The net periodic postretirement benefit cost related to continuing operations is
comprised of the following:
Year ended December 31, 1995 1994 1993
================================================================================
Service cost for benefits attributed
to service during the period ........... $ 0.4 $ 0.6 $ 0.8
Interest cost on the accumulated
postretirement benefit obligation ...... 4.5 4.7 5.8
Net amortization and deferral .............. (5.5) (6.2) (4.5)
- --------------------------------------------------------------------------------
Net periodic postretirement benefits ....... $ (0.6) $ (0.9) $ 2.1
================================================================================
The unrecognized prior service cost at December 31, 1995 and 1994 represents
unamortized amounts for plan amendments resulting from revisions to
company-sponsored health plans, which reduced benefit levels.
31
<PAGE>
The following table shows the plans' funded status and amounts recognized in the
balance sheet.
December 31, 1995 1994
- --------------------------------------------------------------------------------
HEALTH LIFE Health Life
================================================================================
Accumulated postretirement
benefit obligation:
Retirees .................... $ (59.5) $ (15.6) $ (68.7) $ (14.5)
Fully eligible active
plan participants ......... (3.5) (0.3) (2.3) (0.7)
Other active plan
participants .............. (10.6) (4.0) (10.4) (6.5)
- --------------------------------------------------------------------------------
Total ....................... (73.6) (19.9) (81.4) (21.7)
Unrecognized net (gain) loss ...... (16.3) (0.5) (12.3) 1.2
Unrecognized prior service cost ... (26.6) 0.1 (30.4) --
- --------------------------------------------------------------------------------
Accrued postretirement benefit cost (116.5) (20.3) (124.1) (20.5)
Less amounts classified
as current .................... 7.3 1.3 8.0 0.6
- --------------------------------------------------------------------------------
$ (109.2) $ (19.0) $ (116.1) $ (19.9)
================================================================================
STOCK INCENTIVE PROGRAM: The company has a stock incentive program whereby
executive officers and designated employees have been or may be granted
restricted stock and options to purchase shares of company common stock.
Restricted stock awards were granted during 1995 and 1994 for 168,700 shares and
22,850 shares of company common stock, respectively. The shares covered by the
restricted stock award granted in 1995 vest at certain rates over a three to
five-year period, or are based on performance criteria and time over a period
from September 1, 1995 to March 25, 2014. The awards granted in 1994 vest at a
rate of 33 1/3 percent per year over a three-year period. In addition,
non-employee directors may elect to defer all or part of their cash compensation
as a director and to receive in lieu thereof restricted stock. During 1995, four
non-employee directors received 3,829 shares of company common stock subject to
a five-year restriction period. Options under all the plans are exercisable
during specified dates at prices at least equal to 100 percent of the fair
market value on the date of grant. 2.7 million and 3.1 million shares of company
common stock are reserved for issuance as of December 31, 1995 and 1994,
respectively.
OPTION ACTIVITY: The following table shows the option activity for each of the
three years ended December 31, 1995. Options granted and exercised by Data
Switch prior to the merger date are included in the 1995 activity.
Shares Option Price
(In millions) per Share
================================================================================
Options outstanding at
December 31, 1992 ............................. 2.2 $19.44 - $36.20
Options granted ................................... 0.3 $32.25 - $34.88
Options exercised ................................. (0.6) $19.44 - $30.32
- --------------------------------------------------------------------------------
Options outstanding at
December 31, 1993 ............................. 1.9 $19.44 - $36.20
Options granted ................................... 0.6 $31.88 - $37.25
Options exercised ................................. (0.3) $19.44 - $32.25
- --------------------------------------------------------------------------------
Options outstanding at
December 31, 1994 ............................. 2.2 $19.44 - $37.25
Restatement for Data Switch merger ................ 0.2 $13.94 - $56.63
Options granted ................................... 0.7 $21.80 - $38.25
Options exercised ................................. (0.5) $13.94 - $35.38
Options terminated ................................ (0.2) $13.94 - $53.98
- --------------------------------------------------------------------------------
Options outstanding at
December 31, 1995 ............................. 2.4 $13.94 - $56.63
================================================================================
Options exercisable:
1995 .......................................... 1.1 $13.94 - $56.63
1994 .......................................... 1.0 $19.44 - $34.88
- --------------------------------------------------------------------------------
BUSINESS COMBINATIONS
During the three-year period ended December 31, 1995, the company acquired ten
entities for cash and common stock valued at $520.7 plus the assumption of
liabilities. The acquisitions, except Revco and Data Switch, were accounted for
as purchases and accordingly, the results of operations of the acquired
companies are included in the statement of earnings for the periods during which
they were owned by the company. Revco and Data Switch were accounted for as
pooling of interests. The following paragraphs discuss significant mergers and
acquisitions made during the three years ended December 31, 1995.
32
<PAGE>
On June 13, 1995, the company completed a cash tender offer for Best Power
Technology, Inc. Best Power is a manufacturer of uninterruptible power supply
products, which provide backup power to protect computers, information networks,
and other critical systems from power line disturbances. The aggregate purchase
price was $206.3, creating goodwill of $164.4. The purchase price was financed
through the issuance of commercial paper. The company recorded a $7.4 before-tax
charge ($4.8 after-tax) during the second quarter of 1995 primarily for
severance and other consolidation costs relating to the combination of General
Signal and Best Power locations.
On July 27, 1995, the company acquired MagneTek Electric Inc. (Waukesha
Electric) for $73.9, creating goodwill of $46.2. Waukesha Electric designs,
manufactures, and installs medium-power transformers and related products. The
purchase price was financed through the issuance of commercial paper.
Unaudited pro forma data giving effect to the acquisitions of Best Power and
Waukesha Electric as if they had been acquired at the beginning of 1994 are
shown below:
Year ended December 31, 1995 1994
================================================================================
Net sales .............................. $ 1,974.3 $ 1,773.4
Net earnings ........................... $ 36.2 $ 90.3
Earnings per share ..................... $ 0.74 $ 1.91
- --------------------------------------------------------------------------------
On November 9, 1995, the company merged with Data Switch Corporation by
exchanging 1.8 million shares of common stock and 0.2 million rights to receive
common stock for all of the outstanding common stock and related options and
warrants of Data Switch. Data Switch designs, develops, manufactures, markets
and services products for large scale data center networks. The company's
consolidated financial statements for 1995 have been restated to include results
of operations, financial position and cash flow of Data Switch. Data Switch's
financial position and results of operations are not material to the company for
any period presented. As a result of the merger, the company incurred
transaction and consolidation costs of $12.7 ($8.1 after tax). The transaction
costs included investment banker and other professional fees. The consolidation
costs included severance pay primarily for Data Switch and asset valuation
adjustments.
During 1993, the company merged with Revco Scientific, Inc. by exchanging 2.6
million shares of common stock for all of the outstanding common stock of Revco.
Revco manufactures low-temperature freezers, laboratory refrigerators, and CO2
incubators. As a result of the acquisition, the company incurred transaction and
consolidation costs of $13.2 ($9.3 after tax). The transaction costs included
investment banker and other professional fees. The consolidation costs included
provisions for streamlining marketing and distribution arrangements,
consolidation of field service and sales offices, relocation of certain product
lines and key personnel, and severance-related costs, primarily at the company's
locations existing prior to the merger.
DISCONTINUED OPERATIONS
In November 1994, the company adopted a plan to sell Leeds & Northrup Company
(L&N), formerly a part of the Process Controls sector, and
Dynapower/Stratopower, formerly a part of the Industrial Technology sector.
These operations have been accounted for as discontinued operations, and the
consolidated financial statements have reported separately their net assets and
operating results.
The 1994 loss on disposal of these operations of $25.8 included $23.4 of tax
charges primarily resulting from differences in carrying values for financial
reporting and tax purposes, and from adjustments related to tax planning
strategies that will not be utilized as a result of the planned disposal of the
operations. From the measurement date to the end of the year, the operations
incurred after-tax operating losses of $1.6. Sales of the discontinued
operations from January 1, 1994 to the measurement date and for the year ended
December 31, 1993 were $155.2 and $175.8, respectively.
In the second and third quarters of 1995, the company recorded a total of $99.9
before tax charges ($64.0 after tax) for additional expected losses relating to
the disposal of L&N and Dynapower. While it is at least reasonably possible that
the actual losses will differ from the recorded amounts, the provisions for
losses recorded represent management's best estimate of the likely outcome based
on contracts signed and current negotiations since the final sales proceeds are
subject to purchase price adjustments.
33
<PAGE>
During 1994, the company recognized as part of earnings from discontinued
operations $6.1 of before-tax curtailment gains related to L& N's nonpension
postretirement benefits plan.
During 1993, the company recorded a $14.4 before-tax charge related to the
remaining portion of the discontinued transportation businesses, primarily
Dynapower, and for environmental and contractual obligations retained related to
New York Air Brake and General Railway Signal. This provision was made primarily
to write these operations down to estimated realizable value and to recognize
1993 operating losses.
At December 31, 1995, other assets included claims amounting to $6.7 and
receivables amounting to $6.0 related to the estimated proceeds from contractual
obligations retained from previously discontinued operations. Actual proceeds
may differ from recorded amounts.
MERGER BREAK-UP FEE AND OTHER SPECIAL ITEMS
In August 1994, the company negotiated an agreement to merge with Reliance
Electric Company. However, subsequent to the consummation of the agreement,
Reliance was acquired by another company in a cash tender offer. Under the terms
of the merger agreement, the company received $50.0 for break-up fees and $5.2
for partial reimbursement of expenses. The company incurred $9.0 of transaction
costs in connection with the merger.
During the fourth quarter of 1994, the company recognized $46.2 of charges for
the consolidation of operations ($11.8), asset valuations ($24.1), environmental
matters ($4.9) and other issues ($5.4), all related to the continuing operations
of the company. The charges are included in cost of sales ($27.7), selling,
general and administrative expenses ($16.1), and income taxes ($2.4).
During 1993, $30.5 was provided for factory consolidation and rearrangement
($20.9), product restructuring and realignment ($6.8), and reorganization of
lines of distribution and administration ($2.8). The activities related to these
charges were substantially completed during 1994, and $3.5 of excess provisions
were returned to earnings. Included in this charge was $15.5 related to
operations discontinued in 1994.
During 1993, the company provided a $22.5 charge in cost of sales to reflect a
continuing review of worldwide assets to identify any permanent declines in the
value of assets. Included in this charge was $18.1 related to operations
discontinued in 1994.
Also in 1993, the company recorded a charge of $5.2 related to other previously
divested operations.
During 1993 and 1994, the company completed the sale of the semiconductor
businesses. In connection with these operations, the company incurred
approximately $13.8 in 1994 and $38.4 in 1993 of operating losses, severance
payments, idle facility costs, and restructuring costs. The company also
realized $53.2 in 1993 of excess provisions relating to the disposition of the
semiconductor equipment operations as a result of higher proceeds from the sale
of units and lower severance costs.
34
<PAGE>
BUSINESS SECTOR INFORMATION
The company manufactures industrial products and components in the process
control, electrical control, and industrial technology (primarily transportation
and telecommunication) industries. See pages 6 and 7 of the annual report for a
description of major products and markets served.
<TABLE>
<CAPTION>
PRODUCT SECTORS 1995 1994 1993 1992 1991
==============================================================================================================================
<S> <C> <C> <C> <C> <C>
Net sales:
Process Controls ...................................... $ 719.7 $ 606.4 $ 545.8 $ 548.7 $ 515.8
Electrical Controls ................................... 777.0 618.6 547.1 567.5 515.4
Industrial Technology ................................. 366.5 302.7 261.3 226.7 212.7
Dispositions .......................................... -- -- -- 134.9 180.2
- ------------------------------------------------------------------------------------------------------------------------------
$ 1,863.2 $ 1,527.7 $ 1,354.2 $ 1,477.8 $ 1,424.1
==============================================================================================================================
OPERATING EARNINGS:
Process Controls ...................................... $ 92.0 $ 66.8(3) $ 45.1(4) $ 60.5 $ 73.3
Electrical Controls ................................... 62.1(1) 30.7(3) 29.2(4) 43.1 43.9
Industrial Technology ................................. 51.1(2) 47.4(3) 44.8 33.1 25.0
Other charges and credits ............................. -- 46.2 48.0(5) (93.0) (6.7)
- ------------------------------------------------------------------------------------------------------------------------------
205.2 191.1 167.1 43.7 135.5
Equity income ......................................... 0.9 1.0 0.2 1.9 2.1
Interest expense, net ................................. (24.3) (11.8) (16.6) (24.8) (28.0)
Unallocated expenses .................................. (25.4) (20.0) (11.6) (11.3) (12.2)
- ------------------------------------------------------------------------------------------------------------------------------
Earnings from continuing operations before income taxes $ 156.4 $ 160.3 $ 139.1 $ 9.5 $ 97.4
==============================================================================================================================
IDENTIFIABLE ASSETS:
Process Controls ...................................... $ 420.9 $ 391.4 $ 474.3 $ 477.0 $ 473.9
Electrical Controls ................................... 692.0 399.4 326.5 330.8 295.7
Industrial Technology ................................. 209.0 181.3 167.2 181.7 305.4
- ------------------------------------------------------------------------------------------------------------------------------
1,321.9 972.1 968.0 989.5 1,075.0
General corporate assets .............................. 210.3 211.8 213.1 160.3 89.0
Assets held for sale at estimated realizable value .... 60.4 153.6 25.7 91.1 --
Investments in and advances to affiliates ............. 20.6 20.4 18.1 17.5 16.2
- ------------------------------------------------------------------------------------------------------------------------------
Total assets .......................................... $ 1,613.2 $ 1,357.9 $ 1,224.9 $ 1,258.4 $ 1,180.2
==============================================================================================================================
DEPRECIATION AND AMORTIZATION OF FIXED ASSETS(6):
Process Controls ...................................... $ 17.9 $ 16.6 $ 12.4 $ 12.9 $ 11.4
Electrical Controls ................................... 19.0 14.5 13.0 12.3 11.8
Industrial Technology ................................. 13.4 6.4 6.4 6.7 14.7
CAPITAL EXPENDITURES(6):
Process Controls ...................................... $ 15.0 $ 28.7 $ 23.1 $ 19.7 $ 16.4
Electrical Controls ................................... 21.1 21.8 22.3 19.5 15.1
Industrial Technology ................................. 12.9 11.4 7.7 5.0 10.9
- ------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Includes $7.4 of one-time charges related to the acquisition of Best Power.
(2) Includes $12.7 of one-time charges related to the merger with Data Switch.
(3) Includes 1994 charges in Process Controls ($11.9), Electrical Controls ($19.2) and Industrial Technology ($9.9) for the
consolidation of operations, asset valuations, environmental and other.
(4) Includes 1993 charges in Process Controls ($22.1) and Electrical Controls ($10.5) for asset valuations, restructuring, and
transaction and consolidation charges related to Revco.
(5) Represents credits for the divested semiconductor operations ($53.2) and charges for the transportation businesses ($5.2).
(6) Excludes discontinued operations.
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
GEOGRAPHIC AREAS 1995 1994 1993 1992 1991
========================================================================================================
<S> <C> <C> <C> <C> <C>
NET SALES:
United States ............................ $ 1,699.8 $ 1,390.0 $ 1,218.9 $ 1,290.4 $ 1,225.4
Foreign .................................. 239.9 180.7 173.7 238.5 257.7
Intergeographic .......................... (76.5) (43.0) (38.4) (51.1) (59.0)
- --------------------------------------------------------------------------------------------------------
$ 1,863.2 1,527.7 $ 1,354.2 $ 1,477.8 $ 1,424.1
========================================================================================================
OPERATING EARNINGS:
United States ............................ $ 212.0 $ 135.7 $ 113.4 $ 118.5 $ 118.1
Other charges and credits ................ (20.1) 46.2 48.0 (85.6) --
Foreign .................................. 13.3 9.2 5.7 10.8 17.4
- --------------------------------------------------------------------------------------------------------
$ 205.2 $ 191.1 $ 167.1 $ 43.7 $ 135.5
========================================================================================================
IDENTIFIABLE ASSETS:
United States ............................ $ 1,175.6 $ 875.8 $ 822.5 $ 769.2 $ 838.5
Foreign .................................. 146.3 96.3 145.5 220.3 236.5
- --------------------------------------------------------------------------------------------------------
$ 1,321.9 $ 972.1 $ 968.0 $ 989.5 $ 1,075.0
- --------------------------------------------------------------------------------------------------------
Export sales to unaffiliated customers(1) $ 199.1 $ 125.4 $ 110.9 $ 131.9 $ 130.5
========================================================================================================
<FN>
(1) Included in United States sales.
</TABLE>
<TABLE>
SUPPLEMENTARY INFORMATION
<CAPTION>
December 31, 1995 1994
========================================================================================
<S> <C> <C>
Intangibles:
Excess of cost over net assets acquired ......... $ 474.3 $ 210.9
Other intangibles ............................... 42.9 35.0
- ----------------------------------------------------------------------------------------
517.2 245.9
Accumulated amortization ........................ (111.2) (51.6)
- ----------------------------------------------------------------------------------------
$ 406.0 $ 194.3
- ----------------------------------------------------------------------------------------
Accrued expenses:
Dispositions and special items .................. $ 32.7 $ 37.1
Payroll and compensation ........................ 64.4 57.0
Environmental and legal ......................... 24.1 18.5
- ----------------------------------------------------------------------------------------
<CAPTION>
Year ended December 31, ............................. 1995 1994 1993
========================================================================================
<S> <C> <C> <C>
Liabilities assumed in conjunction with acquisitions:
Fair value of assets acquired ................... $ 332.1 $ 105.4 $ 24.4
Cash paid ....................................... (280.2) (83.3) (20.0)
- ----------------------------------------------------------------------------------------
$ 51.9 $ 22.1 $ 4.4
- ----------------------------------------------------------------------------------------
Research and development ............................ $ 46.9 $ 49.7 $ 53.1
- ----------------------------------------------------------------------------------------
Advertising expense ................................. $ 14.1 $ 10.1 $ 8.7
- ----------------------------------------------------------------------------------------
</TABLE>
36
<PAGE>
<TABLE>
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<CAPTION>
First Second Third Fourth
1995 1994 1995 1994 1995 1994 1995 1994
=================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales ................................ $434.1 $342.4 $446.3 $378.6 $481.1 $390.0 $501.7 $416.7
Gross profit ............................. 125.2 99.4 132.6 109.7 144.7 113.7 152.7 95.4
Earnings from continuing operations ...... 28.1 22.2 24.6 25.3 27.2 27.5 20.2 29.1
Discontinued operations .................. -- 2.4 -- (0.3) -- 0.3 -- --
Disposal of discontinued operations ...... -- -- (49.6) -- (14.4) -- -- (25.8)
- ---------------------------------------------------------------------------------------------------------------------------------
Net earnings (loss) ...................... $ 28.1 $ 24.6 $(25.0) $ 25.0 $ 12.8 $ 27.8 $ 20.2 $ 3.3
=================================================================================================================================
Earnings (loss) per share of common stock:
Continuing operations ................ $ 0.57(1) $ 0.47 $ 0.50(2) 0.53 $ 0.55 $ 0.58 $ 0.41(3) 0.62(4)
Discontinued operations .............. -- 0.05 -- -- -- 0.01 -- --
Disposal of discontinued operations .. -- -- (1.01) -- (0.29) -- -- (0.55)
- ---------------------------------------------------------------------------------------------------------------------------------
Net earnings (loss) ...................... $ 0.57 $ 0.52 $(0.51) $ 0.53 $ 0.26 $ 0.59 $ 0.41 $ 0.07
=================================================================================================================================
Common stock price range - high .......... 36 3/8 38 40 34 5/8 42 1/2 37 1/2 33 7/8 37 1/4
- low ........... 31 32 1/2 35 1/8 30 1/8 28 32 1/4 28 31
- ---------------------------------------------------------------------------------------------------------------------------------
<FN>
Note: The sum of the quarters' earnings per share may not equal the full year per-share amounts.
(1) Includes $0.08 of credits related to non-recurring items, primarily cash settlements of royalty and insured matters.
(2) Includes $0.10 of charges related to the acquisition of Best Power and $0.04 of credits related to accrual adjustments.
(3) Includes $0.17 of transaction and consolidation charges related to the merger with Data Switch.
(4) Includes $0.64 of charges for consolidation of operations, asset valuations, environmental and other, $0.64 of proceeds from
Reliance Electric, $0.07 of credits for reversal of excess restructuring and consolidation reserves upon completion of those
programs, and $0.03 of charges for acquisition integration activities.
</TABLE>
1995 amounts have been restated to reflect the merger with Data Switch. The
following table illustrates the effect of the merger:
First Second Third
Quarter Quarter Quarter
================================================================================
Net sales:
Previously reported ...................... $ 411.0 $ 421.4 $ 455.5
Impact of merger ......................... 23.1 24.9 25.6
- --------------------------------------------------------------------------------
Restated ............................... $ 434.1 $ 446.3 $ 481.1
================================================================================
Earnings from continuing operations:
Previously reported ...................... $ 27.3 $ 23.4 $ 25.6
Impact of merger ......................... 0.8 1.2 1.6
- --------------------------------------------------------------------------------
Restated ............................... $ 28.1 $ 24.6 $ 27.2
================================================================================
Earnings per share from continuing operations:
Previously reported ...................... $ 0.58 $ 0.50 $ 0.54
Impact of merger ......................... (0.01) -- 0.01
- --------------------------------------------------------------------------------
Restated ............................... $ 0.57 $ 0.50 $ 0.55
================================================================================
37
<PAGE>
<TABLE>
ELEVEN-YEAR FINANCIAL SUMMARY
<CAPTION>
General Signal Corporation and Consolidated Subsidiaries
Year ended December 31, (dollars in millions, except per share data)
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
NET SALES $1,863.2 $1,527.7 $1,354.2 $1,477.8 $1,424.1 $1,497.3 $1,522.4 $1,397.7 $1,249.2 $1,210.2 $1,407.0
- ------------------------------------------------------------------------------------------------------------------------------------
Cost of sales 1,308.0 1,109.5 959.0 1,070.2 1,015.7 1,061.8 1,075.7 983.6 885.0 846.1 996.7
Selling, general and
administrative expense 354.4 292.3 259.3 287.7 282.7 304.9 326.7 335.8 276.0 263.2 289.1
Other charges and
credits 20.1 (46.2) (19.8) 85.6 -- 83.3 (8.7) 24.1 -- -- 72.0
- ------------------------------------------------------------------------------------------------------------------------------------
Total operating cost
and expenses 1,682.5 1,355.6 1,198.5 1,443.5 1,298.4 1,450.0 1,393.7 1,343.5 1,161.0 1,109.3 1,357.8
- ------------------------------------------------------------------------------------------------------------------------------------
OPERATING EARNINGS 180.7 172.1 155.7 34.3 125.7 47.3 128.7 54.2 88.2 100.9 49.2
Interest (income)
expense, net 24.3 11.8 16.6 24.8 28.3 31.8 38.7 (1.9) (1.7) 2.3 1.4
- ------------------------------------------------------------------------------------------------------------------------------------
EARNINGS FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES 156.4 160.3 139.1 9.5 97.4 15.5 90.0 56.1 89.9 98.6 47.8
Income taxes 56.3 56.2 41.0 3.2 28.2 7.3 23.4 25.9 25.5 36.0 18.4
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings from continuing
operations 100.1 104.1 98.1 6.3 69.2 8.2 66.6 30.2 64.4 62.6 29.4
Earnings (loss) from
discontinued operations,
net of income taxes -- 2.4 (31.5) 6.1 (5.2) (26.9) 11.9 (5.0) 5.1 12.0 19.9
Loss on disposal of
discontinued operations,
net of income taxes (64.0) (25.8) -- -- (9.8) (14.2) -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
EARNINGS (LOSS) BEFORE
EXTRAORDINARY CHARGES
AND CUMULATIVE EFFECT
OF ACCOUNTING CHANGES 36.1 80.7 66.6 12.4 54.2 (32.9) 78.5 25.2 69.5 74.6 49.3
Extraordinary charges -- -- (6.6) (0.3) -- -- -- -- -- -- --
Cumulative effect of
accounting changes -- -- (25.3) (92.4) -- -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
NET EARNINGS (LOSS) $ 36.1 $ 80.7 $ 34.7 $ (80.3) $ 54.2 $ (32.9) $ 78.5 $ 25.2 $ 69.5 $ 74.6 $ 49.3
====================================================================================================================================
PER-SHARE DATA
EARNINGS (LOSS) PER
SHARE OF COMMON STOCK
Continuing operations $ 2.03 $ 2.20 $ 2.17 $ 0.15 $ 1.80 $ 0.21 $ 1.75 $ 0.55 $ 1.14 $ 1.09 $ 0.51
Discontinued
operations (1.30) (0.49) (0.70) 0.15 (0.40) (1.07) 0.31 (0.09) 0.09 0.21 0.35
Extraordinary charges -- -- (0.14) (0.01) -- -- -- -- -- -- --
Cumulative effect of
accounting changes -- -- (0.56) (2.21) -- -- -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
NET EARNINGS (LOSS) $ 0.73 $ 1.71 $ 0.77 $ (1.92) $ 1.40 $ (0.86) $ 2.06 $ 0.46 $ 1.23 $ 1.30 $ 0.86
====================================================================================================================================
Cash dividends per
share 0.96 0.90 0.90 0.90 0.90 0.90 0.90 0.90 0.90 0.90 0.90
Book value per share 11.71 11.64 11.09 8.90 12.32 11.69 13.25 12.09 16.51 16.16 15.73
- ------------------------------------------------------------------------------------------------------------------------------------
SUMMARY OF FINANCIAL
POSITION
Working capital 289.3 349.2 268.8 347.8 243.9 310.6 328.8 496.3 540.8 536.3 520.6
Property, plant and
equipment 312.7 280.5 263.4 246.9 263.7 283.0 325.1 312.5 310.6 345.6 361.5
Total assets 1,613.2 1,357.9 1,224.9 1,258.4 1,180.2 1,294.6 1,324.3 1,396.6 1,397.4 1,458.1 1,483.2
Total long-term
liabilities 603.0 442.0 373.9 537.7 345.7 440.8 373.1 539.9 163.3 179.8 172.9
Shareholders' equity 578.1 547.9 525.2 374.8 476.4 450.3 506.1 461.0 907.2 927.4 904.0
====================================================================================================================================
FINANCIAL RATIOS
Working capital to
sales 15.5% 22.9% 19.8% 23.5% 17.1% 20.7% 21.6% 35.5% 43.3% 44.3% 37.0%
Selling, general and
administrative
expenses to sales 19.0% 19.1% 19.1% 19.5% 19.9% 20.4% 21.5% 24.0% 22.1% 21.7% 20.6%
Operating margin 9.7% 11.3% 11.5% 2.3% 8.8% 3.2% 8.5% 3.9% 7.1% 8.3% 3.5%
After-tax return on
net sales 5.4% 6.8% 7.2% 0.4% 4.9% 0.5% 4.4% 2.2% 5.1% 5.2% 2.1%
Return on average
shareholders'
equity 6.3% 15.0% 7.7% (18.9%) 11.7% (6.9%) 16.2% 3.7% 7.6% 8.1% 5.5%
Current ratio 1.7 1.9 1.8 2.0 1.7 1.8 1.7 2.3 2.7 2.5 2.3
Long-term debt to
capitalization 42.6% 32.9% 26.7% 49.5% 37.8% 46.9% 39.6% 51.6% 10.9% 11.8% 12.1%
====================================================================================================================================
SUPPLEMENTAL INFORMATION
Capital expenditures 49.0 74.8 55.1 49.9 48.1 68.8 62.0 38.8 34.0 45.7 68.1
Depreciation and
amortization of fixed
assets 50.3 41.7 35.4 40.6 42.1 44.5 44.7 42.1 42.4 41.4 37.6
Research and development 46.9 49.7 53.1 56.2 87.3 93.4 92.8 93.7 84.1 74.4 79.4
Common stock price range:
High 42 1/2 38 37 7/8 32 5/8 26 7/8 29 5/8 28 7/8 28 1/8 30 5/8 27 1/8 26 7/8
Low 28 30 1/8 30 25 7/8 17 5/8 15 5/8 22 7/8 20 16 5/8 19 5/8 18 1/2
Price-earnings ratio
range - continuing
operations 20.9-13.8 17.3-13.7 17.5-13.8 21.1-16.8 14.9-9.8 21.7-11.5 16.5-13.1 36.1-25.7 26.9-14.6 24.9-18.0 20.9-14.4
(1) (1) (1) (1)
Average common shares
outstanding 49.2 47.3 45.2 41.8 38.6 38.4 38.1 55.4 56.5 57.5 57.4
Employees (in thousands) 12.9 12.2 11.2 12.1 12.6 11.6 16.9 16.6 16.6 17.5 19.3
====================================================================================================================================
<FN>
(1) Excludes the impact of after-tax charges related to dispositions of businesses.
38 39
</TABLE>
<PAGE>
SHAREHOLDER INFORMATION
ANNUAL MEETING
The 1996 annual meeting of shareholders will be held at 10:00 a.m. on Thursday,
April 18, 1996 at General Signal Headquarters, One High Ridge Park, Stamford,
Connecticut.
FORM 10-K
The company's 1995 Annual Report on Form 10-K, filed with the Securities and
Exchange Commission, will be available after April 1, 1996. A copy of this
report may be obtained by writing to the Secretary of the Corporation.
TRANSFER AGENT
First Chicago Trust Company of New York
P.O. Box 2500
Jersey City, NJ 07303-2500
800-756-8200
INDEPENDENT AUDITORS
Ernst & Young LLP
1111 Summer Street
Stamford, Connecticut 06905
LISTINGS
General Signal Corporation common stock is listed and traded on the New York and
Pacific Stock Exchanges under the symbol GSX.
DIVIDEND REINVESTMENT PLAN
A fee-paid Automatic Dividend Reinvestment and Cash Payment Plan is available to
shareholders of record. Through voluntary participation, shareholders may
purchase additional shares of the company's stock by reinvesting their dividends
or by making cash payments directly to First Chicago. Under the latter option,
shareholders may purchase shares with cash payments from $25 to $10,000 per
quarter whenever a shareholder desires. General Signal pays all brokerage
commissions and fees. Additional information about this plan is available from:
First Chicago Trust Company of New York
General Signal Dividend Reinvestment Plan
P.O. Box 2500
Jersey City, NJ 07303-2500
800-756-8200
An Equal Opportunity Employer
Printed in the U.S.A.
40
GENERAL SIGNAL CORPORATION
__________
BY-LAWS
__________
As Amended Through February 1, 1996
ARTICLE I
SHAREHOLDERS' MEETING
SECTION 1. Annual Meeting: The Annual Meeting of the shareholders of this
Corporation for the election of directors and the transaction of such other
business as may properly come before such meeting shall be held each year on
such date and at such time and place, whether within or without the State of
New York, as shall be determined by the Board of Directors.
SECTION 2. Special Meeting: A Special Meeting of the shareholders may
be held at any time upon the call of the Board of Directors or the Chairman
of the Board and shall be called by the Secretary at the written request of
shareholders owning at least two-thirds of the outstanding shares of stock
entitled to vote, which request shall specify the matters to be presented
to such meeting.
SECTION 3. Notice of Annual or Special Meeting: Written notice of the
holding of each Annual or Special Meeting of the shareholders shall be given
by the Secretary. Such notice shall state the place, date and hour of the
meeting, and the purpose or purposes for which the meeting is called, and
shall be signed by the Secretary, and shall indicate that it is being
issued by or at the direction of the person or persons calling the
meeting. A copy of such notice shall be mailed, postage prepaid,
not less than ten nor more than fifty days before the date of the
meeting, to each shareholder of record as of such record date, not less
than ten nor more than fifty days before the date of the meeting, as may
be fixed by the Board of Directors for determining the shareholders
entitled to notice of, or to vote at, the meeting. Such notice shall
be directed to the shareholder at his address as it appears on the record
of shareholders, or, if he shall have filed with the Secretary a written
request that notices to him be mailed to some other address, then directed
to him at such other address.
If, at any meeting, action is proposed to be taken which would, if taken,
entitle certain shareholders to receive payment for their shares, the notice
of such meeting shall include a statement of that purpose and to that effect.
At any meeting of shareholders or any such adjourned meeting, only such
business shall be conducted as shall have been properly brought before such
meeting or any such adjourned meeting. To be properly brought before any
meeting of shareholders or any such adjourned meeting, business must be (a)
specified in the notice of meeting (or any supplement thereto) given by or
at the direction of the Board of Directors, (b) otherwise properly brought
before such meeting or any such adjourned meeting by or at the direction of
the Board of Directors, or (c) otherwise properly brought before such meeting
or any such adjourned meeting by a shareholder. For business to be properly
brought before any meeting of shareholders or any such adjourned meeting by
a shareholder, the shareholder must have given timely notice thereof in
writing to the Secretary. To be timely, a shareholder's notice must be
delivered to or mailed and received at the principal executive offices of
the Corporation not less than forty-five days nor more than sixty days
prior to such meeting; provided, however, that in the event less than
fifty-five days prior public disclosure of the date of such meeting is
made to the shareholders or in the event the only public disclosure of
the date of the meeting is written notice in accordance with
this Article 1, Section 3, notice by such shareholder to be timely
must be so received not later than the close of business on the tenth
day following the day on which such notice of the date of such meeting
was mailed or such public disclosure was made. A shareholder's notice
to the Secretary shall set forth as to each matter the shareholder proposes
to bring before such meeting (a) a brief description of the business desired
to be brought before such meeting and the reasons for conducting such
business at such meeting, (b) the name and address, as they appear on
the Corporation's books, of the shareholder proposing such business,
(c) the class and number of shares of the securities of the Corporation
which are beneficially owned by such shareholder, and (d) any material
interest of such shareholder in such business.
No business shall be conducted at any meeting of shareholders or any such
adjourned meeting except in accordance with the procedures set forth in this
Article 1, Section 3. In the event that a shareholder seeks to bring one or
more matters before a meeting of shareholders or any such adjourned meeting,
the Board of Directors shall establish a committee consisting of
non-management directors for the purpose of reviewing compliance with this
Article 1, Section 3; provided, however, that if the business to be brought
before such meeting or any such adjourned meeting by a shareholder relates
to the removal, replacement or election of one or more directors, the Secretary
shall appoint two or more inspectors, neither of whom shall be an affiliate of
the Corporation, to act in lieu of such committee to review compliance with
this Article 1, Section 3. If the committee or the inspectors (as the case may
be) shall determine that a shareholder has not complied with this Article 1,
Section 3, the committee or the inspectors (as the case may be) shall
direct the chairman of such meeting to declare to such meeting or any
such adjourned meeting that such business was not properly brought
before such meeting or any such adjourned meeting in accordance with the
provisions of this Article 1, Section 3; and the chairman shall so declare
to such meeting or any such adjourned meeting and any such business not
properly brought before such meeting or any such adjourned meeting shall
not be transacted.
Only individuals who are nominated in accordance with the procedures set
forth in this Article 1, Section 3, shall be eligible for election as
directors. Nominations of individuals for election to the Board of Directors
may be made at a meeting of shareholders or any such adjourned meeting by or at
the direction of the board of Directors or by any shareholder of the
Corporation entitled to vote for the election of
directors at such meeting or any such adjourned meeting who complies with the
notice procedures set forth in this Article 1, Section 3.
Such nominations, other than those made by or at the direction of the
Board of Directors, shall be made pursuant to timely notice in writing to
the Secretary. To be timely, a shareholder's notice shall be delivered to
or mailed and received at the principal executive offices of the Corporation
not less than forty-five days nor more than sixty days
prior to such meeting; provided, however, that in the event less than
fifty-five days prior public disclosure of the date of such meeting is
made to the shareholders or in the event
the only public disclosure of the date of the meeting is written notice in
accordance with this Article 1, Section 3, notice by such shareholder to be
timely must be so received not later than the close of business on the tenth
day following the day on which such notice
of the date of such meeting was mailed or such public disclosure was made.
Such shareholder's notice shall set forth (a) as to each individual whom
such shareholder proposes to nominate for election or re-election as
director, (i) the name, age, business address and residence address of
such individual, (ii) the principal occupation or employment of such
individual, (iii) the class and number of shares, or the amount of any
securities of the Corporation which are beneficially owned by such individual
and (iv) any other information relating to such individual that is required
to be disclosed in solicitations of proxies for election of directors, or is
otherwise required, in each case, pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended
(including without limitation such individual's written consent to being
named in the proxy statement as a nominee and to serving as a director if
elected); and (b) as to the shareholder giving the notice, (i) the name and
address, as they appear on the Corporation's books, of such shareholder and
(ii) the class and number of shares of the securities of the Corporation
which are beneficially owned by such shareholder. At the request of the
Board of Directors, any individual nominated by the Board of Directors for
election as a director shall furnish to the Secretary that information required
to be set forth in a shareholder's notice of nomination which pertains to the
nominee. No individual shall be eligible for election as a director of the
Corporation unless nominated in accordance with the
procedures set forth in this Article 1, Section 3. In the event that a
shareholder seeks to
nominate one or more directors, the Secretary shall appoint two inspectors,
neither of whom shall be an affiliate of the Corporation, to determine whether
such shareholder has complied with this Article 1, Section 3. If the
inspectors shall determine that such shareholder has not complied with
this Article 1, Section 3, the inspector shall direct the chairman of
such meeting or any such adjourned meeting to declare to such meeting or
any such adjourned meeting that a nomination was not made in accordance with
the prescribed procedures, and the chairman shall so declare to such meeting
or any such adjourned meeting and the defective nomination shall be
disregarded.
SECTION 4. Presiding Officer: At all meetings of shareholders the
Chairman of the Board shall preside, or in his absence, the Chairman of the
Executive Committee, the President or any Vice President may preside.
SECTION 5. Inspectors: Prior to each meeting of the shareholders, the
Board of Directors may appoint two Inspectors of Election and two or more
Alternate Inspectors, to serve at such meeting and any adjournment thereof.
If any Inspector refuses to serve, or shall not be present at the meeting of
the shareholders, the Alternate Inspectors shall
act in the order of their appointment.
SECTION 6. Voting and Method of: Except as otherwise provided in the
Certificate of Incorporation, at all meetings of the shareholders, each
shareholder entitled to vote shall be entitled to one vote for every share
standing in his name on the record of shareholders, and all questions to be
decided by the shareholders, except the question
of election of directors and such other questions the manner of deciding which
is specifically regulated by statute, shall be decided by a majority of the
votes cast at the meeting in person or by proxy by the holders of shares
entitled to vote thereon. All voting
shall be viva-voce, except that any qualified voter may require a vote by
ballot on any question to be decided. In case of a vote by ballot, each
ballot shall state the name of the shareholder voting and the number,
class and series (if any) of shares owned by him,
and in addition, if such ballot be cast by a proxy, the name of the proxy shall
be stated.
SECTION 7. Quorum: Except as may be otherwise provided by law or by the
Certificate of Incorporation, at all meetings of the shareholders, the
holders of a majority of the shares entitled to vote thereat shall
constitute a quorum for the transaction of any business.
SECTION 8. Fiscal Year: The fiscal year of the Corporation shall
close on the 31st day of December in each year. The officers of the
Corporation shall prepare and cause to be submitted to the shareholders
at the Annual Meeting a detailed statement showing the financial condition
of the Corporation.
ARTICLE II
DIRECTORS
SECTION 1. Election of Directors: The directors shall be classified with
respect to their terms of office by dividing them into three classes. All
classes shall be as nearly equal in number as possible, and no class shall
include less than three directors. Subject to such limitations, the size of
each class may be fixed by action of the shareholders or
of the Board of Directors.
At each Annual Meeting of shareholders, directors to replace those whose
terms expire at such Annual Meeting shall be elected to hold office until the
expiration of the term of whatever class they are assigned to provided that no
director may be assigned to a class the term of which will expire later than the
Annual Meeting next succeeding the
Director's attaining age 72. Notwithstanding the foregoing, Ralph E. Bailey,
John P. Horgan and Roland W. Schmitt shall be permitted to be nominated for a
one-year term at the 1996 Annual Meeting of Shareholders.
Each director shall hold office until the expiration of the term for
which he is elected, and until his successor has been elected and qualified,
provided, however, that a director may be removed from office as a director,
but only for cause, by action of the shareholders or of the Board of Directors.
SECTION 2. Number of Directors: The number of the directors of the
Corporation shall be not less than 9 nor more than 15 as shall be determined
from time to time by the Board of Directors.
SECTION 3. Newly Created Directorships and Vacancies: Newly created
directorships resulting from an increase in the number of directors and
vacancies occurring in the Board for any reason may be filled by the vote of
a majority of the directors then in office, although less than a quorum may
exist. A director elected to fill a newly created directorship or a vacancy
shall be elected to hold office until the next Annual Meeting of the
shareholders, and (if he is to have a successor) until his successor
has been elected and qualified.
SECTION 4. Regular Meetings: Regular Meetings of the Board of Directors
shall be held at such times and places as may be fixed by the Board of
Directors provided that the Organization Meeting of the newly elected Board of
Directors shall be held on the same day as the Annual Meeting of the
shareholders, at which time the Executive
Committee and other Committees of the Board and Officers shall be elected or
appointed. Unless otherwise required by appropriate resolution of the Board
of Directors, or by law,
notice of any such meetings need not be given.
SECTION 5. Special Meetings: Special Meetings of the Board of
Directors shall be called by the Secretary upon the order of the Chairman
of the Board, the President, or the Chairman of the Executive Committee,
or upon the written request of five (5) directors.
SECTION 6. Presiding Officer: At all meetings of the Board of
Directors, the Chairman of the Board of Directors shall preside, or in his
absence, the Chairman of the
Executive Committee, the President or any Vice President who is a member
thereof may preside.
SECTION 7. Quorum: A majority of the directors then in office or
half of such number when the number of directors then in office is even,
but not less than one-third of the entire Board, shall constitute a quorum for
the transaction of business at all meetings of the Board.
SECTION 8. Notice: The Secretary shall mail to each director notice
of any Special Meeting, or of any Regular Meeting, if required, at least two
days before the meeting, or shall telegraph or telephone such notice not later
than the day before such meeting. Each director shall file with the Secretary
a designation of the address to which such notice to him shall be sent, and
any such notice to him thereafter shall be
addressed in accordance with his latest designation.
SECTION 9. Designation of Executive and Other Committees: The Board
of Directors shall by resolution adopted by a majority of the entire Board,
designate an Executive Committee of not less than three of its members of whom
the Chairman of the Board, the Chairman of the Executive Committee, and the
President shall be ex officio members, and said Executive Committee shall have
authority to exercise and shall exercise in the interim between the Regular and
Special meetings of the Board of Directors all of the rights, powers and duties
of the Board of Directors, except such as cannot be lawfully delegated.
The Board of Directors may by resolution adopted by a majority of the
entire Board, designate one or more directors as alternate members of the
Executive Committee, who may replace any absent member or members of the
Executive Committee, at any meeting thereof, when required to constitute a
quorum.
Meetings of the Executive Committee may be called by the Secretary upon
order by the Chairman of the Executive Committee or in his absence by the
Chairman of the Board, the President, or upon written request of two (2)
members of the Executive Committee.
At all meetings of the Executive Committee, the Chairman of the
Executive Committee shall preside, or in his absence the Chairman of the
Board or the President may preside.
At all meetings of the Executive Committee, a majority of the full
membership of the Executive Committee, including vacancies not filled or
eliminated, shall constitute a quorum for the transaction of business.
The Board of Directors may by resolution adopted by a majority of the
entire Board, designate other Committees, each consisting of three or more
directors, and delegate to them such powers and duties of the Board as may be
lawfully delegated and determined to be appropriate by the Board.
The Executive Committee and each other Committee designated pursuant to
this Section, and each member or alternate member thereof, shall serve until
the next Annual Meeting of the shareholders and at the pleasure of the Board of
Directors. Vacancies in the Executive Committee or any other Committee,
occurring for any reason, may by
resolution adopted by a majority of the entire Board at any meeting of the
Board of Directors, be filled or may be eliminated by reducing the number
constituting the membership of such Committee, provided, however, that the
membership of any Committee shall not be reduced to less than three.
Notice of the time and place of any meeting of the Executive Committee
shall be given in the manner provided in Section 8 of this Article for
the giving of notice of meetings of the Board of Directors. Meetings of
any other Committee designated
pursuant to this Section 9 shall be held in such manner, and at such times and
places, and upon such notice, if any, as shall be provided in the resolution
of the Board creating such Committee.
SECTION 10. Compensation: Each director who is not a full-time
employee of the Corporation or of any consolidated subsidiary shall be paid
such compensation for serving as a director as the Board of Directors may,
from time to time, determine.
Section 11. Action by Unanimous Written Consent: Any action required
to be or permitted to be taken by the Board of Directors or any Committee
thereof may be taken without a meeting if all members of the Board of
Directors or the Committee consent in
writing to the adoption of a resolution authorizing the action. The
resolution and written consents thereto by the members of the Board of
Directors or Committee shall be filed
with the minutes of the proceedings of the Board of Directors or Committee.
Section 12. Participation in Meetings by Means of Conference
Telephone: Any one or more members of the Board of Directors or any
Committee thereof may participate
in a meeting of the Board of Directors or Committee by means of a
conference telephone or similar communication equipment allowing all persons
participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence
in person at such meeting.
ARTICLE III
OFFICERS
SECTION 1. Executive Officers: The Officers of the Corporation shall
consist of a Chairman of the Board of Directors, a President, a Vice
President-Finance, one or more other Vice Presidents, one or more of whom may
also be designated Executive Vice President or Senior Vice President, a
Secretary, a Treasurer and a Controller, all of whom shall be elected
annually by the Board at a meeting following the Annual Meeting of the
shareholders. The Board may also elect one or more Assistant Treasurers and
one or more Assistant Secretaries and such subordinate officers and agents
of the Corporation as it may from time to time determine. The same person
may hold two or more offices,
except that the Chairman of the Board and President shall not hold the
office of Secretary.
SECTION 2. Duties of Chairman of the Board: The Chairman of the Board
shall be a director and shall be chief executive officer of the Corporation
and, subject to the direction of the Board, shall exercise general
supervision over the business and affairs
of the Corporation and shall perform such other duties as may be
assigned to him from
time to time by the Board. If the office of the President is not
independently established, he shall perform all duties of that office. He
shall preside at all meetings of the Board of
Directors and shall also preside at all meetings of the shareholders of the
Corporation.
SECTION 3. Duties of President: The President shall be a director and
shall be the chief operating officer of the Corporation and, subject to the
direction of the Board of
Directors and the Chairman of the Board, shall direct and supervise the
business operations of the Corporation and shall perform such other duties as
from time to time
the Board of Directors may prescribe or the Chairman of the Board may assign to
him.
The office of the President will normally be vested in the Chairman of the
Board,
provided, however, that in the discretion of the Board of Directors, the
position of
President may be established independent of, but reporting to, the Chairman of
the
Board.
SECTION 4. Duties of Vice President-Finance, and other Vice Presidents:
The
Vice President-Finance shall serve as principal financial officer of the
Corporation and
shall perform such other duties as shall from time to time be prescribed by the
Board of
Directors or assigned to him by the Chairman of the Board or by the President.
Each
other Vice President shall perform such duties as from time to time may be
by the Board of Directors or assigned to him by the Chairman of the Board or
the Officer
to whom he reports.
SECTION 5. Duties of Treasurer and Controller: The Treasurer shall have
the
care and custody of all the funds and securities of the Corporation and, in
general, shall
perform all the duties incident to the office of Treasurer including the
appointment of
depository and disbursement banks. The Controller shall have charge of the
books of
account of the Corporation and, in general, perform all the duties incident to
the office of
Controller. The Treasurer and the Controller shall also discharge such other
duties as
from time to time the Board of Directors may prescribe or the Chairman of the
Board, the
President, or the Vice President-Finance may assign.
SECTION 6. Duties of Secretary: The Secretary shall keep the minutes of
the
meetings of the Board of Directors, of the Executive Committee and other
Committees
of the Board and of the shareholders, and shall attend to the giving and service
of all
notices for meetings of the Board of Directors, of the Executive Committee and
other
Committees of the Board and of the shareholders and otherwise whenever required,
except to the extent, that such duties shall have been specifically delegated
to another
officer by the Board of Directors or by the Chairman of the Board. He shall
have the
custody of such books and papers as the Board of Directors, the Chairman of the
Board,
or the President may provide. He shall also discharge such other duties as
from time to
time the Board of Directors may prescribe or the Chairman of the Board, or the
President
may assign to him.
SECTION 7. Assistant Officers: The Board of Directors may elect one or
more
Assistant Secretaries or one or more Assistant Treasurers. Each Assistant
Secretary, if
any, and each Assistant Treasurer, if any, shall have such authority and
perform such
duties as from time to time the Board of Directors may prescribe or the
Chairman of the
Board or the President may assign.
SECTION 8. Subordinate Officers: The Board of Directors may elect such
subordinate officers as it may deem desirable. Each such officer shall have
such
authority and perform such duties as the Board of Directors may prescribe. The
Board
of Directors may, from time to time, authorize any officer to appoint and remove
subordinate officers and prescribe the powers and duties thereof.
SECTION 9. Surety Bonds of Officers: The Board of Directors may require
from
any officer of the Corporation a bond in such amount as it may determine for
the
faithful
discharge of the duties of any such officer; such bond to be approved by the
Board and
to be obtained at the expense of the Corporation.
SECTION 10. Compensation of Officers: The Chairman of the Board, with
the
advice of the President of the Corporation, shall have power to fix the
compensation of
all officers of the Corporation, except the Chairman of the Board, the
President and the
officers reporting directly to either of them. The Board of Directors shall
have power to
fix the compensation of the Chairman of the Board, the President and of the
officers
reporting directly to either of them. The Board of Directors may authorize any
officer,
upon whom the power of appointing subordinate officers may have been conferred,
to fix the compensation of such subordinate officers. Notwithstanding the
foregoing, the Board
of Directors may delegate to a Committee of the Board the responsibility of
determining
the incentive compensation and stock awards of the Chairman of the Board, the
President
and the officers reporting directly to either of them.
SECTION 11. Vacancy: Any vacancy of an office occurring may be filled
at any
Regular or Special Meeting of the Board of Directors.
SECTION 12. Removal of Officers: Any officer of the Corporation may be
removed, with or without cause, by the vote of the Board of Directors at any
meeting
thereof.
SECTION 13. Checks and Obligations: All notes and all checks, drafts,
or other
orders for the payment of money, and all endorsements thereof, executed on
behalf of
the Corporation shall be signed by any person or persons designated for the
purpose
either by the Board or by an officer or officers of the Corporation pursuant to
authority
delegated by the Board of Directors.
SECTION 14. Execution of Contracts, Assignments, Deeds and other
Documents:
All contracts, agreements, assignments, transfers, guaranties, deeds, stock
powers or
other instruments of the Corporation may be executed and delivered by the
Chairman of
the Board, the President, or any Vice President or by such other officer or
officers, or
agent or agents, of the Corporation as shall be thereunto authorized from time
to time
either by the Board or by power of attorney executed by the Chairman of the
Board, the
President, any Senior Vice President, or by any person pursuant to authority
granted by
the Board; and the Secretary or any Assistant Secretary, the Treasurer or any
Assistant
Treasurer may affix the seal of the Corporation thereto and attest same.
SECTION 15. Execution of Proxies: The Chairman of the Board, the
President,
or any Vice President or any other person designated by the Board of Directors,
may
authorize from time to time the execution and issuance of proxies to vote upon
shares
of stock of other corporations owned by the corporation, or authorize the
execution of a
consent to action taken or to be taken by such other corporation. All such
proxies or
consents may be signed in the name of the Corporation by any of the persons
above-
mentioned in this Section 15 or by any other person or persons designated for
the
purpose either by the Board of Directors or by power of attorney executed by
any person
pursuant to authority granted by the Board.
SECTION 16. Facsimile Signatures: Any signature which is authorized
by
Section 13, 14 or 15 of this Article may be facsimile, if so determined by the
Board of
Directors, or by an officer or officers of the Corporation pursuant to authority
delegated
by the Board of Directors.
ARTICLE IV
CREATION OF DIVISIONS
SECTION 1. Creation of Divisions: The Board of Directors may from time
to time
create divisions and may set apart to such divisions such aspects or portions
of the
business, affairs and properties of the Corporation as the Board may from time
to time
determine. Each division of the Corporation shall be organized and regulated
as
hereinafter provided in this Article IV. As used in the succeeding Sections of
this Article,
the term "Company" shall refer to any division of the Corporation.
SECTION 2. Executive Officers of Company: The Chairman of the Board of
the
Corporation may appoint, with the advice of the President of the Corporation,
as
Executive Officers of the Company, a President, one or more Vice Presidents,
appropriate
Financial Officers and a Secretary and in his discretion, one or more Assistant
Secretaries and Assistant Financial Officers and such subordinate officers as
may from
time to time be deemed desirable. Such officers shall be appointed as soon as
practicable following the creation of the Company and thereafter shall hold
office at the
discretion of the Chairman of the Board of the Corporation. The same person
may hold
two or more offices of the Company, except the offices of President and
Secretary of the
Company, and any person holding an office of the Company may also be elected
by the
Board as an officer of the Corporation. Vacancies occurring in any office
may be filled
at any time by the Chairman of the Board of the Corporation, with the advice
of the
President of the Corporation. The Executive Officers and all other persons
who shall
serve the Company in the capacities set forth in this Article are hereby
appointed agents
of the Corporation with the powers and duties herein set forth. However,
the authority
of said agents shall be limited to matters related to the properties, business
and affairs
of the Company, and shall not extend to any other portion of the properties,
business and
affairs of the Corporation nor are such Executive Officers or other persons
to be
considered officers of the Corporation.
SECTION 3. Authority of the Executive Officers of the Company: The
President of the Company shall be the Chief Executive Officer of the
Company. He shall exercise
general supervision over the business, affairs and properties of the
Company and shall
be directly responsible to, and shall perform such other duties as may be
assigned to him
from time to time by, the Chairman of the Board or the assigned Officer
or other
employee of the Corporation to whom the President of the Company reports.
All Executive Officers other than the President of the Company, and any
subordinate officers,
shall be directly responsible to the President of the Company and any
Officer or other
employee of the Corporation as the Chairman of the Board or the assigned
Officer or
other employee of the Corporation to whom the President of the Company reports
shall
direct.
SECTION 4. Use of Divisional Names: In executing any document on behalf
of
any division of the Corporation, the name of such division shall be followed by
the words
"a division of General Signal Corporation." In any instance in which a division
of the
Corporation shall use the name of the division followed by the words, "a unit of
General
Signal," such words shall have the same meaning as "a division of General
Signal
Corporation."
ARTICLE V
INDEMNIFICATION
SECTION 1. Indemnification: Except to the extent expressly prohibited by
the New York Business Corporation Law, the Corporation shall indemnify each
person made
or threatened to be made a party to any action or proceeding, whether civil
or criminal,
and whether by or in the right of the Corporation or otherwise, by reason of
the fact that
such person or such person's testator or intestate is or was a director or
officer of the
Corporation, or serves or served at the request of the Corporation any other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise in any capacity while he or she was such a director or officer
(hereinafter referred to as "Indemnified
Person"), against judgments, fines, penalties, amounts paid in settlement
and reasonable
expenses, including attorneys' fees, incurred in connection with such
action or
proceeding, or any appeal therein, provided that no such indemnification
shall be made
if a judgment or other final adjudication adverse to such Indemnified Person
establishes
that either (a) his or her acts were committed in bad faith, or were the
result of active and
deliberate dishonesty, and were material to the cause of action so adjudicated,
or (b) that
he or she personally gained in fact a financial profit or other advantage to
which he or
she was not legally entitled.
The Corporation shall advance or promptly reimburse upon request any
Indemnified Person for all expenses, including attorneys' fees, reasonably
incurred in
defending any action or proceeding in advance of the final disposition
thereof upon
receipt of an undertaking by or on behalf of such Indemnified Person to repay
such
amount if such Indemnified Person is ultimately found not be entitled to
indemnification
or, where indemnification is granted, to the extent the expenses so advanced
or
eimbursed exceed the amount to which such Indemnified Person is entitled.
Nothing herein shall limit or affect any right of any Indemnified Person
otherwise
than hereunder to indemnification or expenses, including attorneys' fees, under
any
statute, rule, regulation, certificate of incorporation, by-law, insurance
policy, contract or
otherwise.
Anything in these by-laws to the contrary notwithstanding, no elimination
of this by-
law, and no amendment of this by-law adversely affecting the right of any
Indemnified
Person to indemnification or advancement of expenses hereunder shall be
effective until
the 60th day following notice to such Indemnified Person of such action, and
no elimination of or amendment to this by-law shall thereafter deprive any
Indemnified
Person of his or her rights hereunder arising out of alleged or actual
occurrences, acts
or failures to act prior to such 60th day.
The Corporation shall not, except by elimination or amendment of this
by-law in
a manner consistent with the preceding paragraph, take any corporate action or
enter into
any agreement which prohibits, or otherwise limits the rights of any
Indemnified Person
to, indemnification in accordance with the provisions of this by-law. The
indemnification
of any Indemnified Person provided by this by-law shall be deemed to be a
contract
between the Corporation and each Indemnified Person and shall continue after
such
Indemnified Person has ceased to be a director or officer of the Corporation
and
shall
inure to the benefit of such Indemnified Person's heirs, executors,
administrators and
legal representatives. If the Corporation fails timely to make any payment
pursuant to the
indemnification and advancement or reimbursement of expenses provisions of this
Article V and an Indemnified Person commences an action or proceeding to
recover such
payment, the Corporation in addition shall advance or reimburse such
Indemnified Person for the legal fees and other expenses of such action or
proceeding.
The Corporation is authorized to enter into agreements with any of its
directors or
officers extending rights to indemnification and advancement of expenses to
such
Indemnified Person to the fullest extent permitted by applicable law, but the
failure to
enter into any such agreement shall not affect or limit the rights of such
Indemnified
Person pursuant to this by-law, it being expressly recognized hereby that all
directors or
officers of the Corporation, by serving as such after the adoption hereof, are
acting in
reliance hereon and that the Corporation is estopped to contend otherwise.
Persons who
are not directors or officers of the Corporation shall be similarly indemnified
and entitled
to advancement or reimbursement of expenses to the extent authorized at any
time
by
the Board of Directors.
In case any provision in this by-law shall be determined at any time to be
unenforceable in any respect, the other provisions shall not in any way be
affected or
impaired thereby, and the affected provision shall be given the fullest possible
enforcement in the circumstances, it being the intention of the Corporation to
afford
indemnification and advancement of expenses to its directors or officers,
acting in such
capacities or in the other capacities mentioned herein, to the fullest extent
permitted by
law whether arising from alleged or actual occurrences, acts or failures to act
occurring
before or after the adoption of this Article V.
For purposes of this by-law, the Corporation shall be deemed to have
requested
an Indemnified Person to serve an employee benefit plan where the performance
by such
Indemnified Person of his or her duties to the Corporation also imposes
duties on, or
otherwise involves services by, such Indemnified Person to the plan or
participants or
beneficiaries of the plan, and excise taxes assessed on an Indemnified Person
with
respect to an employee benefit plan pursuant to applicable law shall be
considered
indemnifiable fines. For purposes of this by-law, the term "Corporation"
shall include any
legal successor to the Corporation, including any corporation which acquires
all or
substantially all of the assets of the Corporation in one or more
transactions.
ARTICLE VI
CAPITAL STOCK
SECTION 1. Certificates of Capital Stock: All certificates of stock of
the Corporation, both preferred and common, shall be separately numbered and
the facsimile
signature of the Chairman of the Board, or the President, or a Vice President
and the
facsimile counter-signature of the Treasurer, or an Assistant Treasurer, or
the Secretary
or an Assistant Secretary and the facsimile seal of the Corporation shall
appear thereon,
all in manner as authorized under the laws of the State of New York and
approved by the
New York Stock Exchange.
SECTION 2. Transfer Agent and Registrar: All certificates of stock of
the
Corporation shall be issued only through a Transfer Agent of the Corporation's
stock,
consisting of a Bank or Trust Company, duly appointed by the Board of Directors
to act
as Transfer Agent and bear the counter-signature of the Registrar of the
Corporation's
stock duly appointed by the Board of Directors to act as Registrar.
Endorsement to the
foregoing effect shall be made upon all certificates issued.
SECTION 3. Transfer of Shares: Shares of stock shall be transferable
only on
the books of the Corporation by the holder thereof in person or pursuant to a
power of
attorney duly executed and filed with the Transfer Agent, upon the surrender of
the
certificate representing the shares to be transferred, properly endorsed. All
certificates
surrendered for transfer shall be cancelled by the Transfer Agent.
SECTION 4. Lost, Destroyed or Stolen Certificates: No certificate for
shares of
stock of the Corporation shall be issued in place of any certificate alleged to
have been
lost, destroyed or stolen except on production of such evidence of such loss,
destruction
or theft and on delivery to the Corporation, if the Board of Directors shall
so
require, of
a bond of indemnity upon such terms and secured by such surety as the Board
of
Directors may in its discretion determine to be satisfactory.
SECTION 5. Seal of Corporation: The seal of the Corporation shall be
circular
in form and bear the words "GENERAL SIGNAL CORPORATION" next inside the line of
its circumference and the words "Incorporated June 13th, 1904" in the center
within the
line of an inner circle.
ARTICLE VII
AMENDMENTS
SECTION 1. Amendments: Except as otherwise provided by the Certificate of
Incorporation, any provision or provisions of these By-Laws, including any
amendment thereof,
regardless of the manner in which any such provision or amendment may have been
adopted, may be deleted or amended in any respect at any Annual Meeting of the
shareholders, or at any Special Meeting called for that purpose, by a
majority of the votes
cast at such meeting in person or by proxy by the holders of shares entitled
to vote
thereon, or with the exception of this Section 1 of Article VII, by a majority
of the Board
of Directors then in office at any meeting thereof.
ARTICLE VIII
WAIVER OF NOTICE
SECTION 1. Waiver of Notice: Any notice required by these By-Laws may
be
waived in writing, either before or after the action requiring such notice is
taken.
December 8, 1995
PERSONAL & CONFIDENTIAL
Mr. Joel S. Friedman
320 Wildwood Road
Stamford, Connecticut 06903
Dear Joel:
The severance provisions offered to you on behalf of General Signal are listed
below. These have assumed that you are retiring based on your comments.
1. Termination of Active Employment
You will remain on the payroll as an active employee through December 31,
1995. During that time, you will be able to answer questions and
contribute
to an orderly transition of your duties and responsibilities. It should
not be
necessary for you to come into the office on a regular basis to accomplish
this transition.
2. Incentive Compensation
You will be eligible for the 1995 Incentive Compensation payment as
determined and paid in 1996.
3. Transition Payment
Since you do not wish to take advantage of outplacement services, you will
be paid a one-time lump sum of $84,000. In addition, title for the company
car which you are now using will be transferred to you as soon as
practicable in January, 1996.
4. Pension Benefits
Effective December 31, 1995, you will elect early retirement under the
qualified Corporate Retirement Plan of the Company (supplemented by the
Company's Benefit Equalization Plan to the extent necessary). Your pension
benefits will commence on January 1, 1996 in the form you elect. It is
understood that, provided you meet the life expectancy requirement, you
will
be able to receive your pension benefits in a lump sum distribution. Under
the Corporate Retirement Plan, your pension calculation will be based on
your age and service as of January 1, 1996 and the highest earnings years
would be 1991-1995.
In addition, the Company will supplement the pension benefits payable to
you under the Corporate Retirement Plan and under the Company s Benefit
Equalization Plan (the Pension Plans ), by providing to you the additional
pension benefits that you would have been entitled to receive under the
Pension Plans if you remained in employment with the Company until
November 1, 1999 by giving recognition to such additional age and service
credit. Such supplemental benefits will be treated as additional benefits
under the Benefit Equalization Plan and will commence on November 1,
1999 in the form you elect.
5. Severance Payment
A severance payment of $525,000 will be paid to you through the bi-weekly
payroll for 18 months. If you would prefer that this payment be extended
for up to four years, please contact Liz Conklyn to make these
arrangements.
Because you will not be an employee during this period, you will not be
able
to participate in the Company s qualified savings plan nor accrue
additional
credit for the qualified pension plan.
6. Deferred Compensation Plan
You will be paid all Company matching contributions that will be forfeited
under the Company s Deferred Compensation Plan made in respect to
deferrals prior to December 31, 1995 in January 1996. You will not be
permitted to make any contributions to the Deferred Compensation Plan or
to have any Company matching contributions credited on your behalf with
respect to any periods after December 31, 1995.
7. Stock Options
Upon retirement, you will have five years (or the expiration of the term if
that comes first) to exercise your vested options. Options that have been
held
by you for one year but not completely vested will continue to vest
according to their original vesting schedule and be exercisable as
indicated
above. I will request that the Personnel and Compensation Committee
consider extending this treatment to options that have been held by you for
less than one year at the December 14, 1995 meeting (such options normally
terminate at retirement) by authorizing the Company to amend such option
agreements.
8. Confidential Information
You will keep confidential all confidential and trade secret information
concerning the Company, its businesses, and its prospects which has become
known to you.
9. Waiver and Release
In consideration of the terms of the severance agreement and the payments
referred to in it, you waive and release any and all rights or claims
that you
have, as of the date of the execution of the agreement, against the
Company,
its affiliated companies or any of their respective officers, directors,
agents,
employees, successors or assigns. The rights and claims so waived and
released shall include, but not be limited to, those arising under
local, state
and federal statute or common law (including claims of breach of promise
and wrongful discharge), and any law relating to sex, age, race,
religious,
handicap or national origin discrimination (including any claims under
Title
VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the
Age
Discrimination in Employment Act and the Older Worker s Benefit
Protection Act).
Please feel free to call either me or Liz Conklyn if you have any questions.
After
your review, if you agree to the terms outlined in this letter, please sign
and return
to me the enclosed copy of this letter.
Sincerely,
/s/ Michael Lockhart
-------------------
Michael D. Lockhart
MDL:cm
/s/ Joel S. Friedman
Agreed to: _____________________________
Joel S. Friedman
December 21, 1995
Date: _____________________________
SEPARATION AGREEMENT AND GENERAL RELEASE
THIS SEPARATION AGREEMENT AND GENERAL RELEASE is made and
entered into as of this 19th day of October, 1995 by and between
EDMUND M. CARPENTER (the "Executive") and GENERAL SIGNAL
CORPORATION, a New York corporation (the "Company").
W I T N E S S E T H :
WHEREAS, the Executive has been employed by the Company
as its Chairman and Chief Executive Officer and in other
capacities; and
WHEREAS, on October 19, 1995 the Executive ceased to be
the Chairman and Chief Executive Officer of the Company, ceased all
other officer and employee positions with the Company and its
subsidiaries, and resigned his membership on the Boards of
Directors and all Committees of the Company and its subsidiaries;
and
WHEREAS, the Executive and the Company desire to settle
fully and finally all matters between them to date, including, but
in no way limited to, any issues that might arise out of the
Executive's employment or the termination of his employment;
NOW, THEREFORE, in consideration of the mutual covenants
and promises contained herein, the parties hereto, intending to be
legally bound hereby, agree as follows:
1. The Company shall pay to the Executive, in
accordance with the Company's standard payroll practices, his base
salary (at the rate in effect on October 19, 1995) until the
earlier of (i) December 31, 1996 or (ii) the date on which the
Executive commences substantially full-time employment as an
employee with any employer. The Executive shall notify the Company
immediately upon his acceptance of any employment prior to
December 31, 1996. The Executive has no duty or obligation to seek
any new employment.
2. The Executive shall receive a cash bonus for 1995 in
an amount equal to the product of (i) $612,692.37, multiplied by
(ii) the average percentage of target bonuses treated as earned by
other corporate officers participating in the General Signal
Corporation Incentive Compensation Plan (the "Bonus Plan") for 1995
(but excluding any guaranteed minimum bonus received by any
corporate officer pursuant to a contractual obligation of the
Company if such guaranteed minimum bonus represents a greater
percentage of the applicable target bonus than the percentage
determined pursuant to this subclause (ii) without regard to any
such minimum bonus or bonuses), multiplied by (iii) .8. Said bonus
shall be paid to the Executive at the same time that other 1995
bonuses are paid under the Bonus Plan.
3. The Company shall supplement the benefits payable in
respect of the Executive under the Corporate Retirement Plan of
General Signal Corporation and under the General Signal Corporation
Benefit Equalization Plan, as augmented pursuant to the Executive's
letter agreement with the Company dated April 15, 1988
(collectively, the "Pension Plans"), by providing to the Executive
(or to the Executive's beneficiary if applicable under the
applicable form of payment) the additional benefits that he would
have been entitled to receive under the Pension Plans if he
remained in employment with the Company until December 31, 1996
earning base salary at the rate in effect on October 19, 1995,
received the cash bonus payment described in Section 2 above, and
retired on December 31, 1996; provided, however, that the benefits
payable under the Pension Plans as modified by this Section 3 shall
be reduced by the actuarially equivalent value (as determined in
good faith by the Company and the enrolled actuary for the General
Signal Corporation Benefit Equalization Plan using the actuarial
assumptions and tables that apply to the respective Pension Plans)
of the benefits payable in respect of the Executive under the ITT
pension plans. Such supplemental benefits shall be treated as
additional benefits under the General Signal Corporation Benefit
Equalization Plan and shall be payable in the same form and
commencing at the same time as benefits payable under said Benefit
Equalization Plan.
4. In respect of all stock options granted to the
Executive under the General Signal Corporation 1985 Stock Option
Plan, under the General Signal Corporation 1989 Stock Option and
Incentive Plan and under the General Signal Corporation 1992 Stock
Incentive Plan and still outstanding on October 19, 1995 (the
"Options"), the Executive (or, in the event of his death, the
person entitled to exercise the applicable Option following his
death) shall have the right to exercise such Options until the
earlier of (i) October 19, 2000 or (ii) the expiration of the
stated option term of the applicable Option (without regard to and
without giving effect to any earlier expiration that could result
from the Executive's ceasing to be the Chief Executive Officer of
the Company, but giving effect to any earlier expiration by reason
of the Executive's death), provided, however, that in no event may
the Executive exercise any such Option unless it either was
exercisable on October 19, 1995 or became exercisable pursuant to
its terms prior to January 1, 1997 (as if he remained in employment
with the Company through December 31, 1996) and on or before the
date of exercise. The Executive shall have no right to exercise
any Option that would not have become exercisable prior to January
1, 1997 if he had remained in employment through and continuing
beyond December 31, 1996. By executing this Agreement, the Company
and the Executive agree that all of the Executive's Options and the
related option agreements are amended in accordance with the
foregoing provisions of this Section 4, and that all provisions of
such Options and option agreements shall remain in full force and
effect except as so amended.
5. The Executive shall continue to vest in all Company
matching contributions under the General Signal Corporation
Deferred Compensation Plan made in respect of deferrals prior to
October 20, 1995 as if he remained in employment with the Company
until October 19, 1996. The Executive shall not be permitted to
make any contributions to said Deferred Compensation Plan or to
have any Company matching contributions credited on his behalf with
respect to any periods after October 19, 1995.
6. The Executive has elected or will elect to convert
his coverage under the Company's group-term life insurance program
to an individual universal life insurance policy with a death
benefit equal to $1,580,000. The Company shall pay the Executive's
premiums for such policy, but not beyond the earlier of
(i) December 31, 1996 or (ii) the date on which the Executive
commences substantially full-time employment as an employee with
any employer. If the Executive dies prior to the earlier of the
dates set forth in the preceding sentence, any remaining payments
under Section 1 or Section 2 of this Agreement shall be paid to his
estate or his personal representative at the time or times such
payments would have been made if the Executive had not died. In
addition, if the Executive elects continuation coverage under any
of the Company's group health plans pursuant to Part 6 of Subtitle
B of Title I of the Executive Retirement Income Security Act of
1974, as amended ("ERISA"), the Company shall pay the difference
between the full amount of the Executive's premiums for such
continuation coverage and the amount that the Executive would have
been required to pay for coverage if he had remained an employee of
the Company, but not beyond the earlier of (i) December 31, 1996 or
(ii) the date on which the Executive commences substantially full-
time employment as an employee with any employer. The Executive
shall pay the balance of such premiums, and such coverage shall
continue for the period provided under ERISA even though the
Company may cease to pay premiums under this Section 6 (provided
the Executive pays all the required premiums and otherwise
satisfies the requirements for continuation coverage).
7. Within 60 days after the execution of this
Agreement, the Company shall convey to the Executive ownership of
the automobile that the Company was providing for the use of the
Executive on October 19, 1995.
8. The Company shall reimburse the Executive for the
reasonable expenses (not including income taxes) incurred by the
Executive in renting an office in the Stamford/Greenwich,
Connecticut area and in obtaining shared secretarial, reception and
similar support services, but not beyond the earlier of
(i) December 31, 1996 or (ii) the date on which the Executive
commences substantially full-time employment as an employee with
any employer; provided, however, that any expenses pursuant to this
Section 8 shall be reimbursed by the Company only to the extent the
Company has approved in writing the amount of such expenses prior
to their being incurred. The Company's response to a request for
approval of such expenses shall not be unreasonably delayed.
9. The Executive understands and agrees that the
consideration described in the preceding Sections of this Agreement
is more than the Executive would otherwise be entitled to under the
Company's existing plans and policies. Except as otherwise
expressly provided in this Agreement, the Executive after
October 19, 1995 shall be entitled to none of the benefits or other
perquisites of employment extended to employees by the Company, and
the Executive shall have no right to any benefits under any plan,
program, policy or arrangement of the Company which are conditioned
on retirement or that would be available only if termination of
employment occurred after October 19, 1995. The payments and
benefits provided and to be provided to the Executive under
Sections 3, 4 and 5 of this Agreement shall be unaffected by any
new employment of the Executive after the effective date of this
Agreement.
10. The Executive, to the best of his knowledge, has
returned or will as soon as practicable (but in any event no later
than 30 days after execution of this Agreement) return to the
Company all Company Information and related reports, files,
memoranda, and records; credit cards, cardkey passes; door and
file keys; computer access codes; software; and other physical or
personal property which the Executive received or prepared or
helped prepare in connection with his employment and which are in
his actual possession or control on the date of this Agreement.
The Executive has not, to the best of his knowledge, retained and
will not intentionally retain any copies, duplicates,
reproductions, or excerpts thereof. The term "Company Information"
as used in this Agreement means all information relating to the
Company or any of its subsidiaries which is not already in the
public domain and which is regarded by the Company as confidential,
proprietary or private in nature, including, without limitation,
information received from third parties under confidential
conditions, technical, business, or financial information, and
other information concerning the business, contemplated future
business prospects, and other affairs of the Company. The Company
shall not treat information as confidential, proprietary or private
for purposes of this Agreement if it has treated the same
information as not being confidential, proprietary or private with
respect to any other former employee.
11. The Executive agrees that in the course of his
employment with the Company, he has acquired Company Information as
defined in Section 10. The Executive understands and agrees that
such Company Information has been disclosed to the Executive in
confidence and for Company use only. Unless otherwise required by
a court of competent jurisdiction or pursuant to any recognized
subpoena power, or as is reasonably necessary in connection with
any adversarial process between the Executive and the Company, the
Executive understands and agrees that he (i) will keep Company
Information confidential at all times after his employment with the
Company, (ii) will not disclose or communicate Company Information
to any third party, and (iii) will not make use of Company
Information on the Executive's own behalf, or on behalf of any
third party. In view of the nature of the Executive's employment
and the nature of Company Information which the Executive has
received during the course of his employment, the Executive agrees
that any unauthorized disclosure to third parties of Company
Information or other violation, or threatened violation, of this
Agreement would cause irreparable damage to the trade secret status
of Company Information and to the Company, and that, therefore, the
Company shall be entitled to an injunction prohibiting the
Executive from any such disclosure, attempted disclosure,
violation, or threatened violation. When Company Information
becomes generally available to the public other than by the
Executive's acts or omissions, it is no longer subject to these
restrictions. However, Company Information shall not be deemed to
come under this exception merely because it is embraced by more
general information which is or becomes generally available to the
public. The undertakings set forth in this Section 11 shall
survive the termination of this Agreement or other arrangements
contained in this Agreement.
12. Unless otherwise required by a court of competent
jurisdiction or pursuant to any recognized subpoena power or as is
reasonably necessary in connection with any adversarial process
between the Executive and the Company, the Executive agrees and
promises that he will not make any oral or written statements or
reveal any information to any person, company, or agency which may
be construed to be negative, disparaging or damaging to the
reputation or business of the Company, its subsidiaries, directors,
officers or affiliates, or which would interfere in any way with
the business relations between the Company or any of its
subsidiaries or affiliates and any of their customers or potential
customers.
13. Unless otherwise required by a court of competent
jurisdiction or pursuant to any recognized subpoena power or as is
reasonably necessary in connection with any adversarial process
between the Executive and the Company, the Company agrees and
promises that neither it nor its directors or officers will make
any oral or written statements or reveal any information to any
person, company, or agency which may be construed to be negative,
disparaging or damaging to the reputation or business of the
Executive or any member of his family or which would interfere in
any way with the future business relationships of the Executive.
14. The Executive represents and agrees that, unless
compelled by legal process or as is reasonably necessary in
connection with any adversarial process between the Company and the
Executive, he will keep the terms of this Agreement completely
confidential, and that he will not hereafter disclose any
information concerning this Agreement to anyone except his
financial, legal or tax advisor(s), his accountants, and his
immediate family; provided that these individuals agree to keep
said information confidential and not disclose it to others.
15. The Company represents and agrees that, unless
compelled by legal process or applicable legal requirements, or as
is reasonably necessary in connection with any adversarial process
between the Company and the Executive, it will keep the terms of
this Agreement completely confidential, and that it will not
hereafter disclose any information concerning this Agreement to
anyone except its financial, legal or tax advisor(s), its
accountants, its directors, and those employees of the Company who
have a need to know about its terms; provided that these
individuals agree to keep said information confidential and not
disclose it to others; and provided further that the Executive
shall have the opportunity to review and comment upon any proposed
public disclosure pursuant to applicable legal requirements with
respect to any of the terms of this Agreement.
16. In consideration of the payments and benefits to the
Executive under this Agreement (including, without limitation, the
right to exercise Options as set forth in Section 4 hereof), and
for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the Executive, the
Executive shall not, during the Noncompetition Period (as
hereinafter defined), directly or indirectly, act as a director,
officer, employee, manager, trustee, agent, partner, advisor, joint
venturer, or consultant of, with or to, or otherwise engage in, any
business or businesses that actually compete to a substantial
extent with those businesses the Company and its subsidiaries
engaged in on October 19, 1995 which competition is reasonably
likely to have a material adverse effect on the Company and its
subsidiaries taken as a whole. For purposes of this Section 16,
the "Noncompetition Period" shall mean the period beginning on
October 19, 1995 and ending on December 31, 1997.
17. For a period of five years from the date of this
Agreement (the "Restricted Period"), except as specifically
requested in writing by the Company, the Executive, singly or with
any other person or directly or indirectly, shall not propose,
enter into, or agree to enter into, or encourage any other person
to propose, enter into, or agree to enter into (i) any form of
business combination, acquisition or other transaction relating to
the Company, (ii) any form of restructuring, recapitalization or
similar transaction with respect to the Company, or (iii) any
demand, request or proposal to amend, waive or terminate any
provision of this Section 17 of this Agreement. Furthermore,
during the Restricted Period, except as specifically requested in
writing by the Company, the Executive shall not, singly or with any
other person or directly or indirectly, (1) acquire, or offer,
propose or agree to acquire, by tender offer, purchase or
otherwise, any voting securities of the Company except through the
exercise of Options, (2) make, or in any way participate in, any
solicitation of proxies or written consents with respect to voting
securities of the Company (it being understood that the mere
execution of a proxy or written consent shall not be treated as
constituting participation in such a solicitation), (3) become a
participant in any election contest with respect to the Company,
(4) seek to influence any person with respect to the voting or
disposition of any voting securities of the Company, (5) demand a
copy of the Company's list of stockholders or its other books and
records, (6) participate in or encourage the formation of any
partnership, syndicate or other group that owns or seeks or offers
to acquire beneficial ownership of any voting securities of the
Company or that seeks to affect control of the Company or for the
purpose of circumventing any provision of this Agreement or (7)
otherwise act to seek or to offer to control or influence, in any
manner, the management, Board of Directors or policies of the
Company.
During the period beginning on October 19, 1995 and
ending on December 31, 1997, the Executive shall not directly or
indirectly solicit for employment any of the current directors,
officers or managers of the Company.
18. In consideration of the payments and benefits to the
Executive under this Agreement (including, without limitation, the
right to exercise Options as set forth in Section 4 hereof), and
for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the Executive, the
Executive knowingly, voluntarily and unconditionally hereby forever
waives, releases and discharges, and covenants never to sue on, any
and all claims, liabilities, causes of actions, judgments, orders,
assessments, penalties, fines, expenses and costs (including
without limitation attorneys' fees) and/or suits of any kind
arising out of any actions, events or circumstances before the date
of execution of this Agreement ("Claims") which the Executive has,
ever had or may have, including, without limitation, any Claims
arising in whole or in part from the Executive's employment or the
termination of the Executive's employment with the Company or the
manner of said termination; provided, however, that this Section 18
shall not apply to any of the obligations of the Company
specifically provided for in this Agreement. This Agreement is
intended as a full and final settlement and compromise of each,
every and all Claims of every kind and nature, whether known or
unknown, which have been or could be asserted against the Company
and/or any of its subsidiaries, shareholders, officers, directors,
agents, and employees, past or present, and their respective heirs,
successors and assigns (collectively, the "Releasees"), including,
without limitation --
(1) any Claims arising out of any employment agreement
or other contract, side-letter, resolution, promise
or understanding of any kind, whether written or
oral or express or implied;
(2) any Claims arising under the Age Discrimination in
Employment Act ("ADEA"), as amended, 29 U.S.C.
621 et seq.; and
(3) any Claims arising under any federal, state, or
local civil rights, human rights, anti-
discrimination, labor, employment, contract or tort
law, rule, regulation, order or decision,
including, without limitation, the Americans with
Disabilities Act of 1990, 42 U.S.C. 12101 et
seq., and Title VII of the Civil Rights Act of
1964, 42 U.S.C. 2000e et seq., and as each of
these laws have been or will be amended,
except to the extent that any governmental authority or other third
party, i.e., other than one of the Releasees, files a charge or
institutes an investigation, lawsuit or any proceeding against the
Executive based on any event, occurrence or omission during the
period of the Executive's employment with the Company, in which
case the Executive will be permitted to implead or bring a court
action against the Company and/or any of the Releasees for
indemnification of any liability or other appropriate remedy,
provided such impleader or court action would be available but for
this Agreement.
Notwithstanding anything to the contrary in this
Section 18, the Executive does not release (i) any claim he may
have under any employee benefit plan in which he was a participant
during his employment with the Company for the payment of a benefit
thereunder to which he would be entitled upon his termination of
employment on October 19, 1995 in accordance with the terms of such
plan or (ii) any claim that he may have under this Agreement.
19. The Executive understands that this Agreement
affects significant rights and represents and agrees that he has
carefully read and fully understands all of the provisions of this
Agreement, that he is voluntarily entering into this Agreement,
and that he has been advised to consult with and has in fact
consulted with legal counsel before entering into this Agreement.
In particular, the Executive acknowledges that he has been given
twenty-one (21) days during which time he has carefully considered
and voluntarily approved the terms of this Agreement. The
Executive understands that, pursuant to the provisions of the ADEA,
he shall have a period of seven (7) days from the date of execution
of this Agreement during which he may revoke this Agreement via
hand delivery of a notice of revocation to the Company's offices to
the attention of Edgar J. Smith, Jr., General Counsel. This
Agreement shall not become effective or enforceable until the
revocation period has expired.
20. In the event of any breach by the Executive of this
Agreement, the Executive shall forfeit (to the extent permitted by
law) all payments and benefits hereunder (including, without
limitation, payments and benefits already received, any profits
realized with respect to shares of Company stock acquired upon
exercise after January 19, 1996 of an Option that was exercisable
on October 19, 1995, and any profits realized with respect to
shares of Company stock acquired upon exercise after October 19,
1995 of an Option that was not exercisable on October 19, 1995) to
the extent in excess of the payments and benefits he would have
received following termination of his employment on October 19,
1995 in the absence of this Agreement. To the extent that any
payments or benefits already received or any profits with respect
to Company stock are forfeited, the Executive shall promptly pay
all such forfeited payments and benefits and all such forfeited
profits to the Company. In addition, either party to this
Agreement may seek other legal and equitable relief in the event of
any breach of this Agreement by the other party.
21. The Company's obligations to make payments, to
transfer property, and to provide benefits hereunder shall be
subject to the Executive's satisfaction of any applicable
withholding requirements.
22. Nothing in this Agreement shall be construed as
limiting or in any other way affecting the Executive's rights to
indemnification under the Company's charter or bylaws or under the
Indemnification Agreement dated May 1, 1988 between the Company and
the Executive. Notwithstanding any other provision of this
Agreement, to the extent that the Executive is by reason of his
status as an officer, director or employee of the Company or any of
its subsidiaries prior to October 19, 1995, a witness or
interviewed or deposed as a potential witness in any action, suit,
arbitration, alternate dispute resolution mechanism, investigation,
administrative hearing or any other proceeding whether civil,
criminal, administrative, or investigative, other than one
initiated by the Executive, the Executive will be indemnified by
the Company against all expenses actually and reasonably incurred
by the Executive in connection therewith or as a result thereof.
In addition, for 1995 and for at least six years thereafter, the
Company agrees to include the Executive within the coverage of any
directors' and officers' liability insurance policy covering
officers and directors of the Company generally with respect to his
services to the Company as an officer and director through October
19, 1995.
23. The Company shall from time to time designate a
specific officer of the Company who shall be the principal contact
at the Company for the Executive in matters dealing with the
operation of this Agreement and shall notify the Executive of such
designation. Until further notice to the Executive, such
designatee shall be Elizabeth D. Conklyn.
24. This Agreement constitutes the entire understanding
and agreement between the Company and the Executive with regard to
all matters herein and supersedes all prior oral and written
agreements and understandings of the parties with respect to such
matters, whether express or implied. There are no other
agreements, conditions, or representations, oral or written,
express or implied, with regard thereto. This Agreement may be
amended only in a writing of even or subsequent date, signed by all
parties hereto.
25. If any term or provision of this Agreement, or the
application thereof to any person or circumstances, will to any
extent be invalid or unenforceable, the remainder of this
Agreement, or the application of such terms to persons or
circumstances other than those as to which it is invalid or
unenforceable, will not be affected thereby, and each term of this
Agreement will be valid and enforceable to the fullest extent
permitted by law.
26. This Agreement shall be construed and enforced in
accordance with the laws of the State of Connecticut without
reference to its choice of law provisions and shall be binding upon
the parties and their respective heirs, executors, successors and
assigns.
27. This Agreement does not constitute any admission of
wrongdoing, or evidence thereof, on the part of any parties hereto
or the Releasees. Except as required by court order, or to enforce
the terms of this Agreement, this Agreement may not be used in any
court or administrative proceeding.
28. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, but
all of which together shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the Company and the Executive have
caused this Agreement to be executed as of the date first above
written.
GENERAL SIGNAL CORPORATION
/s/ Michael Lockhart
By:____________________________
Its
WITNESS:
/s/ Mark Hill /s/ Edmund M. Carpenter
_____________________ _______________________________
Edmund M. Carpenter
AGREEMENT
AGREEMENT dated the 7th day of November, 1995, between GENERAL
SIGNAL CORPORATION (hereinafter the "Corporation") and GEORGE
FALCONER, (hereinafter "Falconer").
1. Falconer will retire effective February 1, 1996.
2. Consultation Compensation.
(a) During the period February 1, 1996 through January
31, 1997, Falconer will be compensated by the Corporation at the
rate of $100,000.00 per annum for consulting services, payable
monthly commencing February 1, 1996.
(b) For the year January 1, 1995 through December 31,
1995, Falconer will be fully included in the Company's Incentive
Compensation Program as though he had worked full time throughout
the year. His bonus will be on the same basis as those employee
officers on his level.
(c) The parties acknowledge that as a consultant,
Falconer will be an independent contractor and shall receive a 1099
statement at year end.
3. Automobile. The Corporation shall transfer title to the
Company car Falconer presently uses free and clear of all liens and
encumbrances to Falconer on February 1, 1996. Falconer will be
responsible for income tax liability arising out of this transfer,
if any. Falconer will pay all other taxes including but not
limited to all sales and use taxes arising by virtue of this
transfer, if any.
4. Consulting Services and Expenses Incurred by Falconer in
Connection Therewith.
Falconer's consulting services will be reasonably related
to his previous work experience with the Corporation, and will be
reasonable in time and duration and performed only as authorized
and requested by the Chief Executive Officer of the Corporation.
Falconer will be reimbursed for reasonable business expenses
associated with his consulting services by the Corporation. It is
understood that Falconer will pre-clear the particular expenses
with the Chief Executive Officer of the Corporation before
undertaking those consulting services, and the Corporation agrees
not to unreasonably withhold consent to same.
5. Death or Disability of Falconer. In the event that
Falconer dies, or becomes permanently or partially disabled, during
the period February 1, 1996 through January 31, 1997, all rights to
consulting payments shall cease.
6. In consideration of the Corporation's compliance with its
obligations under this Agreement, Falconer agrees as follows:
(a) His last day of active day-to-day employment with
the Corporation will be January 31, 1996.
(b) Not to disclose, except with the Corporation's prior
written consent, any trade secret including marketing strategy,
sales strategy, or confidential and proprietary information that
relates in any way to any Corporation actual or anticipated
business, research, development, product, sales, financial or
human resource activity that he learned of as a result of being an
employee of the Company or otherwise.
(c) Not to make slanderous remarks about the
Corporation, its products or employees; provided that, if
subpoenaed to give testimony, he shall not be prevented from giving
truthful testimony.
(d) Waives and releases any and all rights or claims
that he has, as of the date of the execution of this Agreement,
against the Corporation, its affiliated companies or any of their
respective officers, directors, agents, employees, successors or
assigns. The rights and claims so waived and released shall
include, but not be limited to, those arising under local, state
and federal statute or common law (including claims of breach of
promise and wrongful discharge), and any law relating to sex, age,
race, religious, handicap or national origin discrimination
(including any claims under Title VII of the Civile Rights Act of
1964, the Civil Rights Act of 1991, the Age Discrimination
Employment Act and the Older Worker's Benefit Protection Act).
7. The Corporation and Falconer agree that this Agreement
supersedes any and all prior agreements between them with respect
to his early retirement, and this Agreement shall not be modified
or altered except in writing by Falconer and a duly authorized
representative of the Corporation.
8. The Corporation and Falconer agree that the purpose of
this Agreement is to amicably conclude the employment relationship
of the parties as well as to define the rights and obligations of
the parties during the life of this Agreement. General Signal
further agrees that Falconer shall be entitled to any and all
medical, dental, and life insurance benefits which are available to
other retirees of General Signal in Falconer's same or similar job
level, subject to General Signal's retained right to change,
suspend, or terminate such benefits for any or all classes of
retirees.
9. The individual executing this Agreement on behalf of the
Corporation represents that he is authorized to enter into this
Agreement.
10. In the event of a breach of this Agreement by any party,
the successful party in any litigation shall be entitled to
reasonable attorneys fees from the breaching party.
11. Falconer is advised to consult with an attorney prior to
executing this Agreement. By signing this Agreement, Falconer
acknowledges that he was afforded a period of at least 21 days
within which to consider this Agreement, that he has had sufficient
opportunity to consult with the advisors of his choice, and that he
has freely, knowingly and voluntarily entered into this Agreement.
12. To enter into this Agreement, Falconer must execute it by
signing and dating it below. Falconer may revoke this Agreement
during the seven days after his execution of it. Unless revoked,
this Agreement shall become effective and enforceable on the eighth
day after it is executed by Falconer.
13. This Agreement shall be governed by the laws of the State
of New York.
14. If any provision of this Agreement is contrary to,
prohibited by, or deemed invalid under any applicable laws or
regulations, then such provision shall be deemed severed and deemed
omitted but shall not invalidate the remaining provisions hereof.
Dated: Stamford, Connecticut
November 7, 1995 GENERAL SIGNAL CORPORATION
By: ______________________
/s/ George Falconer
__________________________
GEORGE FALCONER
