<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
F O R M 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
-----------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission File Number 1-313
-------
T H E L A M S O N & S E S S I O N S C O.
- - - - --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Ohio 34-0349210
- - - - -------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
25701 Science Park Drive
Cleveland, Ohio 44122-7313
- - - - -------------------------------- ------------------------------------
(Address of principal executive (Zip Code)
offices)
216/464-3400
--------------------------------------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on which
Title of each class registered
---------------------------------- ----------------------------------
Common Shares, without par value New York Stock Exchange
---------------------------------- ----------------------------------
Pacific Stock Exchange
---------------------------------- ----------------------------------
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (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.
The aggregate market value of the voting stock held as of February 1, 1995 by
non-affiliates of the registrant: $72,894,251.
As of February 1, 1995 the Registrant had outstanding 13,278,784 common shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the 1995 Annual Meeting of Shareholders are
incorporated by reference into Part III.
L1773 (02/23/95)
<PAGE> 2
PART I
Item 1. - BUSINESS
The Lamson & Sessions Co. ("Company"), founded in 1866, is a diversified
manufacturer and supplier of a broad line of thermoplastic electrical and fluid
drainage products for major domestic markets and a producer of fasteners for
the aerospace industry. The markets for thermoplastic electrical conduit,
related fittings and accessories, wiring devices and sewer pipe include the
construction, utility and telecommunications industries; municipalities and
other government agencies; and contractors and do-it-yourself home remodelers.
Fasteners manufactured serve airframe and jet engine manufacturers in the
aerospace industry.
In May 1994, the Company completed the sale of its Midland Steel Division which
was engaged in the manufacture and sale of frame assemblies and components.
Proceeds from sale were utilized to reduce debt (see Note C, page 21 of this
report).
PRINCIPAL PRODUCTS AND MARKETS
The Company is a leading domestic producer of a broad line of thermoplastic
electrical conduit, wiring devices, and related fittings and accessories for
the construction, consumer (DIY), utility and telecommunications industries,
and manufactures and sells thermoplastic sewer pipe. The broad and
comprehensive lines of complimentary and compatible thermoplastic products are
carried by electrical and building supply wholesalers and retailers.
All of the Company's thermoplastic electrical products compete with and serve
as substitutes for similar metallic products, and its engineered sewer pipe
products compete with and serve as substitutes for clay, concrete, ductile
iron, cement asbestos and polyethylene products. The Company's thermoplastic
products offer several advantages over these other products. Specifically,
nonmetallic electrical conduit and related fittings and accessories are
generally less expensive, lighter and easier to install than metallic products.
Furthermore, thermoplastic conduit does not rust, corrode or conduct
electricity. Thermoplastic sewer pipe weighs less than substitute products, is
easier and more economical to install, does not degenerate due to sewer gases
as do some competing products, and eliminates avoidable problems which can be
caused by infiltration and exfiltration.
Four core markets are served, each of which has unique product and marketing
requirements. These markets are: (i) Industrial, Residential, Commercial and
Utility Construction (served by Carlon Electrical Products ("Electrical")) --
contractors engaged in the installation of electrical systems in industrial,
residential, commercial construction and electric power utility projects;
original equipment manufacturers who use components as subassemblies for their
own products and industrial companies who maintain or repair their own
facilities; (ii) Consumer (served by Lamson Home Products ("Home")) -- retail
consumers of electrical products who perform "do-it-yourself" home repairs and
small electrical contractors; (iii) Telecommunications (served by Carlon
Telecom Systems ("Telecom")) -- cable TV, telephone and telecommunications
companies and (iv) Engineered Sewer Products (served by Lamson Vylon Pipe
("Vylon")) -- various government and private builders of sewer and drainage
system. Additionally, the aircraft market serves airframe and jet engine
manufacturers.
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L1773 (02/23/95)
<PAGE> 3
<TABLE>
A breakdown of revenues as a percent of net sales related to significant classes of product by
major market segment for 1994, 1993 and 1992, respectively is as follows:
<CAPTION>
1994 1993 1992
--------------------- ----------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
(In thousands)
Industrial,
Residential,
Commercial & Utility
Construction $ 149,863 52% $ 141,210 55% $ 139,033 55%
Consumer 49,463 17% 40,754 16% 39,498 15%
Telecommunications 44,603 16% 39,123 15% 37,569 15%
Engineered Sewer
Products 24,878 9% 21,744 8% 16,090 6%
Aircraft Parts 18,838 6% 16,741 6% 23,232 9%
---------- ---- ---------- ---- ---------- ----
$ 287,645 100% $ 259,572 100% $ 255,422 100%
========== ==== ========== ==== ========== ====
</TABLE>
The following summarizes the principal products used in each of the four core
markets:
INDUSTRIAL, RESIDENTIAL, COMMERCIAL AND UTILITY CONSTRUCTION. The principal
products sold to this market include rigid conduit, flexible (electrical
nonmetallic tubing), fittings and accessories, outlet boxes, and other
products. Other products in this market also include thermoplastic spirally
extruded liquidtight conduit, which is used by industrial companies and
original equipment manufacturers requiring a watertight housing for electrical
cable, and a broad line of industrial nonmetallic enclosures comprised of
molded, non-corrosive boxes designed to enclose and protect devices such as
electrical controls, switches and industrial control panels.
CONSUMER. The products included in this market are products such as light
dimmers, fan speed controls, touch controls, door chimes and home security
systems. In addition, the Company supplies this market with products such as
outlet boxes, electrical conduit, liquidtight conduit and electrical fittings.
TELECOMMUNICATIONS. In this market products include (i) traditional smooth
wall communication duct and spacers used by telecommunication and CATV
industries to house electrical cable, (ii) duct systems designed to protect
underground fiber optic cables and improve the efficiency and space utilization
of existing duct systems.
ENGINEERED SEWER PRODUCTS. Principal products utilized by this market include
closed profile engineered sewer pipe used for direct burial and sliplining as
well as traditional solid wall sewer and drain pipe used in residential
construction of sanitary drainage systems, sewer main and highway underdrain
available in diameters ranging from 4 to 48 inches.
AIRCRAFT PARTS. The principal market served is the aircraft market, for which
special design high performance fasteners and spherical pivot bearings are
manufactured and sold primarily to domestic and foreign markets for use by
original equipment manufacturers.
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L1773 (02/23/95)
<PAGE> 4
COMPETITION
Each of the four core markets in which the Company is presently operating are
highly competitive based on service, price and quality. Most of the
competitors are either national or smaller regional manufacturers who compete
with limited product offerings. Unlike a majority of its competitors, the
Company manufactures a broad line of thermoplastic products, complementary
fittings and accessories, thus enabling it to offer its customers complete and
integrated systems.
Markets for the Company's aircraft parts are highly fragmented and include
several major competitors. The Company believes that it competes effectively
on the basis of price, product quality and delivery.
Certain of the Company's competitors have greater financial resources than the
Company.
DISTRIBUTION
The Company distributes its core products through a nationwide network of more
than 170 manufacturers' representatives. Currently, 3 of these manufacturers'
representatives inventory the Company's products. The Company has reduced the
number of inventory locations and has developed its own distribution centers.
In the aerospace unit, a combination of direct sales, manufacturer's
representatives and distributors are used.
RAW MATERIALS
The Company is a large purchaser of pipe grade polyvinyl chloride resin and has
historically been able to obtain adequate quantities. Raw materials for the
aerospace market consist mainly of carbon, alloy and stainless steels,
aluminum, zinc and other special metals that are purchased principally from
major domestic companies and are adequately available.
PATENTS AND TRADEMARKS
The Company owns various patents, patent applications, licenses, trademarks and
trademark applications relating to its products and processes. While the
Company considers that, in the aggregate, its patents, licenses and trademarks
are of importance in the operation of its business, it does not consider that
any individual patent, license or trademark, or any technically related group,
is of such importance that termination would materially affect its business.
SEASONAL FACTORS
The Company's four core business units experience seasonality caused
principally by a decrease in construction activity during the winter months.
They are subjected to the economic cycles affecting the construction industry.
The aerospace fastener unit is dependent on the economic cycles of the aircraft
market, although such impact should be reduced in the future, as the Company
expands into a broader range of market niches.
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L1773 (02/23/95)
<PAGE> 5
MAJOR CUSTOMERS
Sales to Affiliated Distributors, a buying group not otherwise affiliated with
the Company, totalled approximately 12% of the Company's sales. No customer
exceeded 10% of net sales in 1993 or 1992.
<TABLE>
BACKLOG
The Company's backlog of orders, believed firm, at the fiscal years ended was
as follows:
<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
(In thousands)
$ 17,493 $ 26,598 $ 32,052
</TABLE>
The Company does not believe that information concerning backlog is reflective
of the status of its business at any one point in time. Due to the nature of
the business within the Electrical, Telecom, Home and Vylon markets, the
Company typically ships its products within a short period after receipt of the
order. In the aerospace market, major customers generally issue blanket
purchase orders and then issue short-term releases against these purchase
orders. Therefore, at any point in time, backlog only includes the releases
that have been received for shipment of products against the blanket orders and
not the entire quantity represented by the blanket order. Approximately 6% of
the backlog at December 31, 1994, primarily in the aerospace unit, is not
expected to be delivered during 1995. The reduction in backlog from each
preceding year is attributable to the lower backlogs in the aerospace unit
reflecting the general weakness in that market.
RESEARCH AND DEVELOPMENT
The Company is engaged in an aggressive new product development program in an
effort to introduce new and innovative applications for thermoplastic products
for its existing core business units. The Company maintains a separate
research and development center in Cleveland, Ohio to facilitate the
introduction of new value-added products and improved manufacturing processes.
This activity during each of the last three years of Company sponsored research
and development activities totalled $3.4 million, $3.2 million and $3.3 million
in 1994, 1993 and 1992, respectively.
ENVIRONMENTAL REGULATIONS
The Company believes that its current operations and its use of property, plant
and equipment conform in all material respects to applicable environmental laws
and regulations presently in effect (See Notes C and G -- Notes to Consolidated
Financial Statements on pages 21 and 25 of this report). The Company has
facilities at numerous geographic locations, which are subject to a range of
federal, state and local environmental laws and regulations. Compliance with
these laws has, and will, require expenditures on a continuing basis.
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L1773 (02/23/95)
<PAGE> 6
EMPLOYEES
At fiscal years ended, the Company had the following employees:
1994 1993 1992
------- ------- -------
1,325 1,425 1,510
FOREIGN OPERATIONS
The net sales, operating earnings, and assets employed outside the United
States are not significant. Export sales are approximately 1% of consolidated
net sales in each of the past three fiscal years and are made principally to
countries in North America.
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L1773 (02/23/95)
<PAGE> 7
Item 2. - PROPERTIES
The Company owns manufacturing and distribution facilities which are suitable
and adequate for the production and marketing of its products. The Company
owns executive and administrative offices which are located in Cleveland, Ohio
and occupy 68,000 square feet in a suburban office complex. In addition, the
Company also has research and development offices, located in Cleveland, Ohio
which occupy leased space of 27,000 square feet. Principal facilities are
located in the following cities:
<TABLE>
<CAPTION>
Type of Operation Principal Approximate
and Location Products Square Feet
- - - - ------------ -------- -----------
<S> <C> <C>
Injection molding:
Clinton, Iowa Outlet boxes, enclosures and fittings 155,800
Clinton, Iowa Distribution Center 55,900
Bowling Green, Ohio Outlet boxes, enclosures,
fittings and large diameter 61,300
sewer pipe
Extrusion:
Woodland, California Rigid conduit, fluid 72,900
systems pipe, duct
and fittings
Woodland, California Distribution Center 40,800
High Springs, Florida Rigid conduit, duct, 112,500
sewer pipe and fittings
Aurora, Ohio Rigid conduit, flexible 143,400
conduit, duct, enclosure
assembly/modification and fittings
Oklahoma City, Oklahoma Rigid conduit, duct, fluid 165,600
systems pipe, large diameter
sewer pipe and fittings
Nazareth, Pennsylvania Rigid conduit, duct and sewer pipe 52,800
Pasadena, Texas Flexible conduit 46,200
Montreal, Canada Distribution Center 20,000
</TABLE>
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L1773 (02/23/95)
<PAGE> 8
<TABLE>
<CAPTION>
Principal Approximate
Location Products Square Feet
- - - - -------- -------- ------------
<S> <C> <C>
Sylmar, California Special design high performance 104,000
fasteners, spherical pivot bearings
</TABLE>
All of the Company's facilities listed in the above table are owned, except for
the Clinton, IA and Woodland, CA Distribution Centers and Montreal, Canada.
The Company presently utilizes substantially all of its facilities and operated
in 1994 at approximately 80% of productive capacity.
Item 3. - LEGAL PROCEEDINGS
On January 14, 1992 an action was filed against the Company by Ameritrust Co.
N.A. ("Plaintiff") in the U.S. District Court, Northern District of Ohio,
seeking to recover $7.3 million under the Comprehensive Environmental Response,
Compensation & Liability Act of 1980, as amended ("CERCLA") as well as under
state law theories of public nuisance, negligence and strict liability. The
plaintiff claims damages consisting of response costs incurred by the plaintiff
in remediating environmental contamination allegedly caused by the Company at a
manufacturing plant site which the Company sold in 1978 and which was acquired
by the plaintiff in 1985. The plaintiff also seeks prejudgment interest and
attorneys' fees. On May 21, 1992, the Court dismissed with prejudice the state
law claims for public nuisance, negligence and strict liability and ruled that
the plaintiff does not have the right to a contribution claim under CERCLA. On
June 9, 1992, the Company filed a Second Motion to Dismiss or in the Alternative
for Partial Summary Judgment alleging among other things, failure to comply
with certain mandatory federal notice requirements and that the remediation was
inconsistent with the national contingency plan as required by CERCLA. On
October 15, 1993, the Court denied the Company's Second Motion to Dismiss and
at the same time denied all pending motions filed by the Plaintiff. On April
29, 1994, the Company filed a Third-Party Complaint against Baker Material
Handling Company seeking contribution. On May 27, 1994, the Company filed its
Answer to the Second Amended Complaint, and the Court has set a discovery
cut-off of February 28, 1995. On November 24, 1994, the Company filed a
declaratory judgment action in the Cuyahoga County Common Pleas Court against
its liability insurer seeking defense and indemnity costs associated with the
action brought by Ameritrust. The outcome of this litigation is not expected
to have a material effect on the Company's financial position.
Item 4. - SUBMISSION OF MATTERS TO SECURITY HOLDERS.
None.
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L1773 (02/23/95)
<PAGE> 9
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS OF THE
REGISTRANT
<S> <C>
JOHN B. SCHULZE MELVIN W. JOHNSON
Chairman, President and Chief Executive Officer. Vice President
Chairman, President and Chief Executive Officer since Vice President since February 1991. Previously was Vice
January 1990. Age 57. President -- Engineering January 1985 - January 1991.
Age 58.
JAMES J. ABEL
Executive Vice President, Secretary, Treasurer and Chief MARK R. BUCK
Financial Officer.
Vice President - Carlon Electrical Products
Executive Vice President, Secretary, Treasurer and Chief
Financial Officer since September 1994. Previously was Vice President - Carlon Electrical Products since October
Executive Vice President, Treasurer and Chief Financial 1983. Age 41.
Officer February 1993 - September 1994. Previously was
Senior Vice President, Treasurer and Chief Financial
Officer December 1990 - February 1993. Previously was A. CORYDON MEYER
Senior Vice President & Chief Financial Officer of The
Gibson-Homans Company. Age 49. Vice President - Lamson Home Products
CHARLES E. ALLEN Vice President - Lamson Home Products since March 1990.
Age 40.
Senior Vice President
Senior Vice President since September 1989. Age 54.
</TABLE>
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L1773 (02/23/95)
<PAGE> 10
PART II
Item 5. - MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
HOLDER MATTERS
The Company's Common Stock is traded on the New York Stock Exchange and Pacific
Stock Exchange. High and low sales prices for the common stock are included in
Note L -- Notes to Consolidated Financial Statements on page 29 of this report.
No dividends were paid in 1994, 1993 or 1992. The approximate number of
shareholders of record of the Company's Common Stock at February 1, 1995 was
2,360. Information concerning restrictions on the Company's ability to pay
dividends is contained in Note B -- Notes to Consolidated Financial Statements
on pages 20 and 21 of this report.
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L1773 (02/23/95)
<PAGE> 11
<TABLE>
Item 6. - SELECTED FINANCIAL DATA
FIVE-YEAR FINANCIAL SUMMARY
<CAPTION>
FISCAL YEARS ENDED
---------------------------------------------------------------------------
(In thousands except per share data, shareholders 1994 1993 1992 1991 1990
and employees)
- - - - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net Sales $ 287,645 $ 259,572 $ 255,422 $ 284,241 $ 289,142
Cost of Products Sold 235,876 221,405 220,901 251,010 244,214
GROSS MARGIN 51,769 38,167 34,521 33,231 44,928
Selling, General and Administrative Expenses 40,840 35,500 33,404 36,224 36,098
Non-Recurring Charges 4,602 6,696
OPERATING EARNINGS (LOSS) 10,929 2,667 (3,485) (9,689) 8,830
Net Interest Expense 6,673 5,784 5,815 4,864 4,825
Gain on Sale of Business 4,362
EARNINGS (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES
AND EFFECT OF ACCOUNTING CHANGE 4,256 (3,117) (9,300) (10,191) 4,005
Income Tax (Benefit) (800) (1,742) 457
EARNINGS (LOSS) FROM CONTINUING
OPERATIONS BEFORE EFFECT OF
ACCOUNTING CHANGE 4,256 (3,117) (8,500) (8,449) 3,548
Earnings (Loss) on Discontinued Operations (9,930) (2,674) (10,956) (5,448) (2,223)
Cumulative Effect of Accounting Change (26,860)
NET EARNINGS (LOSS) (5,674) (5,791) (46,316) (13,897) 1,325
- - - - ------------------------------------------------------------------------------------------------------------------------------------
Year-End Financial Position:
Current Assets $ 87,526 $ 83,842 $ 86,737 $ 86,290 $ 93,434
Other Assets 1,899 9,148 13,131 11,090 14,924
Assets Held for Sale 3,742 17,555 16,349 17,783 18,540
Property, Plant and Equipment 53,979 57,841 61,028 64,360 73,211
Total Assets 147,146 168,386 177,245 179,523 200,109
Current Liabilities 52,032 48,268 50,336 42,829 43,014
Long-Term Debt 46,958 62,730 58,579 53,031 57,201
Other Long-Term Liabilities 35,276 41,562 41,886 9,245 9,001
Shareholders' Equity 12,880 15,826 26,444 74,418 90,893
Working Capital 35,494 35,574 36,401 43,461 50,420
- - - - ------------------------------------------------------------------------------------------------------------------------------------
Statistical Information:
Average Number of Common Shares and
Common Share Equivalents 13,239 13,210 13,197 13,184 13,158
Number of Shareholders of Record 2,370 2,553 2,531 2,662 2,731
Number of Employees 1,325 1,425 1,510 1,448 1,517
Book Value 0.97 1.20 2.00 5.64 6.91
Market Price 6 4-3/4 5-5/8 4-1/8 3-7/8
- - - - ------------------------------------------------------------------------------------------------------------------------------------
Earnings (Loss) Per Common Share:
Continuing Operations $ 0.32 $ (0.24) $ (0.64) $ (0.64) $ 0.27
Discontinued Operations (0.75) (0.20) (0.83) (0.41) (0.17)
Accounting Change (2.04)
Net Earnings (Loss) $ (0.43) $ (0.44) $ (3.51) $ (1.05) $ 0.10
</TABLE>
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L1773 (02/23/95)
<PAGE> 12
Item 7. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
1994 Compared with 1993
Sales were higher in all of the Company's core business units for the second
consecutive year increasing overall sales 11% over 1993 levels. Product mix
improvements, which gave rise to higher average selling prices, were coupled
with strong demand through the fourth quarter contributing to the sales gains.
Carlon Electrical Products ("Electrical") and Carlon Telecom Systems
("Telecom") emphasis on priority products improved their product mix and
achieved higher sales on lower volume in 1994. Lamson Home Products ("Home
Products") aggressive expansion of its product line and market share
contributed to sales growth of 21% compared with the prior period. Lamson
Vylon Pipe ("Vylon") experienced strong demand for its products, and better
product mix resulted in a 15% increase in revenue compared with 1993.
Gross margins improved by 22% in 1994 to 18%. Increased manufacturing
efficiencies and reduced rigid pipe sales improved margins despite escalating
prices throughout the year on the Company's primary raw material.
Selling, general and administrative expenses increased nominally as a
percentage of sales over the 1993 period. Increased commission rates on the
higher margin product, promotional expenses, salary expenses and employee
health care costs contributed to this change. The effect of rising interest
rates on the Company's secured credit facility were softened by the lower
average borrowings resulting from the proceeds from the sale of Midland Steel
Products.
Since there is no income against which net operating losses can be carried
back, the Company did not record any current tax benefit for 1994. The Company
does have net operating loss carryforwards which should reduce future income
tax expense.
1993 Compared with 1992
Sales increased in 1993 for the first time since 1988 due to a significant
improvement in the fourth quarter versus the prior year. Product mix improved
by virtue of strong growth in sales of engineered specialty products. This
shift in product mix resulted in higher average selling prices which helped
offset competitive pricing conditions and adverse weather conditions
particularly in the third quarter of 1993. Increased sales in all four core
business units with Electrical and Telecom shifting their emphasis from
commodity product, particularly rigid pipe, resulted in higher average selling
prices and mitigated lower overall unit shipments. Home Products and Vylon
experienced stronger demand for their expanded product lines which contributed
to higher sales in both units.
Gross margins improved in 1993 by 9% to 14.7%. Cost reduction programs in our
manufacturing facilities, coupled with a reduction in total commodity rigid
pipe sales, improved the margin by 10.6% offsetting margin erosion due to the
erratic pricing of the Company's primary raw material.
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L1773 (02/23/95)
<PAGE> 13
Selling, general and administrative expenses decreased nominally in relation to
sales from the prior year. The overall increase is due to salary expenses,
employee health care costs, commissions and promotional expenses. While the
Company had higher average borrowings during 1993, interest income on
refundable income taxes reduced overall interest expense in 1993.
Since there is no income against which net operating losses can be carried
back, the Company did not record any current tax benefit for 1993. The Company
does have net operating loss carryforwards which should reduce future income
tax expense. The Company adopted Financial Accounting Standard Board Statement
No. 109, "Accounting for Income Taxes," in the first quarter of 1993 and this
adoption had no impact on the Company's financial position.
CASH FLOW, LIQUIDITY AND CAPITAL RESOURCES
Cash flow from continuing operations increased nearly 50% over 1993 and the
Midland Steel Products' sale proceeds reduced overall borrowing levels. These
sources provided adequate funding of capital expenditures and working capital
requirements and strengthened the Company's liquidity. The Company has
announced its intent to refinance its credit facility in recognition of its
improved financial condition. While the outcome of this effort is not known,
the Company expects a favorable resolution to this effort. In 1993, the
Company did not increase its total borrowing and generated cash flow from
operations for the first time since 1990. Cash flow from operations provided
the funding for capital expenditures while borrowings under the secured credit
agreement were virtually offset by principal reductions. Internally generated
cash flows and existing capacity under the secured credit agreement will be
adequate to fund the cash needs for capital expenditures and general operating
requirements.
OUTLOOK
The Company's progress to transform itself into a strategically focused
electrical-products manufacturer and marketer has improved the operating
results in recent years. Consistent with this strategy, the Company has
previously announced its intent to pursue the possible sale of its aerospace
fastener unit, Valley-Todeco. The Company will continue to emphasize product
development for industrial original equipment manufacturers and maintenance
repair operations markets in addition to an expanded line of convenience items
for the consumer which should provide protection against cyclical trends in
residential construction markets. Despite concerns about rising interest rates
and weak growth in the general economy, the Company foresees opportunities for
significant improvement in 1995.
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L1773 (02/23/95)
<PAGE> 14
<TABLE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED STATEMENT OF OPERATIONS
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
(Dollars in thousands, except per share amounts)
<CAPTION>
FISCAL YEARS
-------------------------------------------------
1994 1993 1992
-------------------------------------------------
<S> <C> <C> <C>
Net sales $ 287,645 $ 259,572 $ 255,422
Cost of products sold 235,876 221,405 220,901
---------- ---------- ----------
GROSS MARGIN 51,769 38,167 34,521
Selling, general and
administrative expenses 40,840 35,500 33,404
Non-recurring charges 4,602
---------- ---------- ----------
OPERATING EARNINGS (LOSS) 10,929 2,667 (3,485)
Interest (6,673) (5,784) (5,815)
---------- ---------- ----------
EARNINGS (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES
AND EFFECT OF ACCOUNTING CHANGE 4,256 (3,117) (9,300)
Income tax benefit 800
---------- ---------- ----------
EARNINGS (LOSS) FROM CONTINUING
OPERATIONS BEFORE EFFECT OF
ACCOUNTING CHANGE 4,256 (3,117) (8,500)
Loss from Discontinued Operations (9,930) (2,674) (10,956)
---------- ---------- ----------
EARNINGS (LOSS) BEFORE EFFECT OF
ACCOUNTING CHANGE (5,674) (5,791) (19,456)
Cumulative Effect of Accounting Change (26,860)
---------- ---------- ----------
NET EARNINGS (LOSS) $ (5,674) $ (5,791) $ (46,316)
========== ========== ==========
EARNINGS (LOSS) PER COMMON SHARE
--------------------------------
Continuing operations $ .32 $ (.24) $ (.64)
Discontinued operations (.75) (.20) (.83)
Accounting change (2.04)
---------- ---------- ----------
Net earnings (loss) $ (.43) $ (.44) $ (3.51)
========== ========== ==========
AVERAGE COMMON SHARES 13,239 13,210 13,197
========== ========== ==========
<FN>
See notes to consolidated financial statements.
</TABLE>
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<PAGE> 15
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
(Dollars in thousands)
<CAPTION>
FISCAL YEARS
---------------------------------------------
1994 1993 1992
---------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Earnings (loss) from continuing operations $ 4,256 $ (3,117) $ (8,500)
Adjustments to reconcile earnings (loss) from continuing
operations to cash provided (used) by continuing operations:
Depreciation and amortization 8,544 8,126 8,087
Non-recurring charges 4,602
Net change in working capital accounts:
Accounts receivable (719) (4,298) 2,180
Inventories (2,857) 6,644 (4,159)
Prepaid expenses and other 589 580 682
Accounts payable, accrued expenses and other
current liabilities 1,200 1,968 2,661
Net change in other long-term items 79 (2,290) (6,199)
--------- --------- ----------
CASH PROVIDED (USED) BY CONTINUING OPERATIONS 11,092 7,613 (646)
Earnings (loss) from discontinued operations (9,930) (2,674) (10,956)
Adjustments to reconcile earnings (loss) from discontinued
operations to cash used by discontinued operations:
Net change in assets held for sale (1,792) (1,206) 1,434
Net change in other long-term items 4,403
Non-recurring charges 5,040
--------- --------- ----------
CASH USED BY DISCONTINUED OPERATIONS (7,319) (3,880) (4,482)
--------- --------- ----------
CASH PROVIDED (USED) BY OPERATING ACTIVITIES 3,773 3,733 (5,128)
INVESTING ACTIVITIES
Net proceeds from sale of division 16,430
Purchases of property, plant and equipment (6,074) (6,437) (6,198)
Proceeds from sale of property, plant and equipment 2,550
--------- --------- ----------
CASH PROVIDED (USED) BY INVESTING ACTIVITIES 10,356 (3,887) (6,198)
FINANCING ACTIVITIES
Long-term borrowings 10,980 8,831 38,574
Payments on long-term borrowings (24,685) (8,716) (28,180)
Exercise of stock options 273 70 82
--------- --------- ----------
CASH (USED) PROVIDED BY FINANCING ACTIVITIES (13,432) 185 10,476
--------- --------- ----------
INCREASE (DECREASE) IN CASH 697 31 (850)
Cash at beginning of year 1,188 1,157 2,007
--------- --------- ----------
CASH AT END OF YEAR $ 1,885 $ 1,188 $ 1,157
========= ========= ==========
<FN>
See notes to consolidated financial statements.
</TABLE>
- 15 -
L1773 (02/23/95)
<PAGE> 16
<TABLE>
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
December 31, 1994 and January 1, 1994
(Dollars in thousands)
<CAPTION>
1994 1993
-----------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 1,885 $ 1,188
Accounts receivable, less allowances:
1994--$1,653 and 1993--$1,559 35,448 34,729
Inventories:
Finished goods and work-in-process 41,157 39,317
Raw materials and supplies 5,048 4,031
----------- -----------
46,205 43,348
Prepaid expenses and other 3,988 4,577
----------- -----------
TOTAL CURRENT ASSETS 87,526 83,842
ASSETS HELD FOR SALE 3,742 17,555
OTHER ASSETS 1,899 9,148
PROPERTY, PLANT AND EQUIPMENT
Land 4,019 4,019
Buildings 24,350 22,807
Machinery and equipment 87,545 86,300
----------- -----------
115,914 113,126
Less allowances for depreciation
and amortization 61,935 55,285
----------- -----------
53,979 57,841
----------- -----------
$ 147,146 $ 168,386
=========== ===========
</TABLE>
- 16 -
L1773 (02/23/95)
<PAGE> 17
<TABLE>
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
December 31, 1994 and January 1, 1994
(Dollars in thousands)
<CAPTION>
1994 1993
------------------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 17,354 $ 19,408
Accrued expenses and other liabilities 27,167 23,361
Taxes 3,009 3,064
Current maturities of long-term debt 4,502 2,435
---------- ----------
TOTAL CURRENT LIABILITIES 52,032 48,268
LONG-TERM DEBT 46,958 62,730
POSTRETIREMENT BENEFITS AND OTHER
LONG-TERM LIABILITIES 35,276 41,562
SHAREHOLDERS' EQUITY
Common shares, without par value, with stated
value of $.10 per share, authorized 20,000,000
shares; outstanding--13,278,784 shares in 1994
and 13,220,034 shares in 1993 1,328 1,322
Other capital 72,679 72,412
Retained earnings (deficit) (52,728) (47,054)
Pension adjustment (8,399) (10,854)
---------- ----------
12,880 15,826
---------- ----------
$ 147,146 $ 168,386
========== ==========
<FN>
See notes to consolidated financial statements.
</TABLE>
- 17 -
L1773 (02/23/95)
<PAGE> 18
<TABLE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
(Dollars in thousands)
<CAPTION>
RETAINED TOTAL
COMMON OTHER EARNINGS PENSION SHAREHOLDERS'
SHARES CAPITAL (DEFICIT) ADJUSTMENT EQUITY
---------- -------- ---------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1991 $ 1,319 $ 72,263 $ 5,053 $ (4,217) $ 74,418
Net loss (46,316) (46,316)
Issuance of 18,250 common shares
under stock option plans 1 81 82
Pension adjustment (1,740) (1,740)
---------- -------- ---------- ------------ ----------------
Balance at January 2, 1993 1,320 72,344 (41,263) (5,957) 26,444
Net loss (5,791) (5,791)
Issuance of 15,300 common shares
under stock option plans 2 68 70
Pension adjustment (4,897) (4,897)
---------- -------- ---------- ------------ ----------------
Balance at January 1, 1994 1,322 72,412 (47,054) (10,854) 15,826
Net loss (5,674) (5,674)
Issuance of 58,750 common shares
under stock option plans 6 267 273
Pension adjustment 2,455 2,455
---------- -------- ---------- ------------ ----------------
Balance at December 31, 1994 $ 1,328 $ 72,679 $ (52,728) $ (8,399) $ 12,880
========== ======== ========== ============ ================
<FN>
See notes to consolidated financial statements.
</TABLE>
- 18 -
L1773 (02/23/95)
<PAGE> 19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
Three fiscal years ended December 31, 1994
NOTE A--ACCOUNTING POLICIES
FISCAL YEAR - The Company's fiscal year end is the Saturday closest to December
31.
PRINCIPLES OF CONSOLIDATION AND PRESENTATION: The consolidated financial
statements include the accounts of the Company and all domestic and foreign
subsidiaries after elimination of significant intercompany items and
transactions. Certain 1993 and 1992 items have been reclassified to conform
with 1994 reporting classifications.
INVENTORIES: Inventories are valued at the lower of first-in, first-out (FIFO)
cost or market.
PROPERTY AND DEPRECIATION: Property, plant and equipment are recorded at cost.
For financial reporting purposes, depreciation and amortization are computed
principally by the straight-line method over the estimated useful lives of the
assets. Accelerated methods of depreciation are used for federal income tax
purposes.
INCOME TAXES: Beginning in fiscal year 1993, the Company adopted the
provisions of Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes." There was no cumulative effect nor any impact
on the Company's financial position as a result of this adoption. Investment
tax credits are recorded using the flow-through method. In previous years, the
Company followed the provisions of SFAS No. 96.
EARNINGS (LOSS) PER COMMON SHARE: Earnings (loss) per common share are based
on the weighted average number of common shares and common share equivalents
outstanding during the year.
- 19 -
L1773 (02/23/95)
<PAGE> 20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
NOTE B--LONG-TERM DEBT
<TABLE>
Long-term debt consists of the following:
(In thousands)
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Secured Credit Agreement:
Term Note $ 9,000 $ 15,771
Revolver 18,955 24,405
---------- ----------
27,955 40,176
14% Senior Subordinated Notes 11,120 11,120
Industrial Revenue Bonds 9,600 10,885
Building mortgage 2,785 2,984
---------- ----------
51,460 65,165
Less amounts classified as current 4,502 2,435
---------- ----------
$ 46,958 $ 62,730
========== ==========
</TABLE>
The Company has a long-term $65,000,000 secured credit agreement supported by
the Company's accounts receivable, inventory and property, plant and equipment.
The term portion of this facility carries interest at 11.55% and requires
quarterly principal payments of $750,000 with interest. The remaining
revolving credit portion permits borrowings up to $45,000,000 at any time
through December 31, 1999, with interest at 2.5% over the prime rate (8.5% at
December 31, 1994). The agreement provides for the payment of a commitment fee
of .375% per annum on the average daily unused commitment. In addition to
amounts borrowed, letters of credit related to Industrial Revenue Bond
financings total approximately $10,000,000 under the agreement.
The 14% Senior Subordinated Notes are due in 1997 with interest payable
semi-annually on each June 1 and December 1. The Notes are redeemable at the
option of the Company, in whole or in part, at the principal amount plus a
specified declining premium together with accrued interest.
The Company's Industrial Revenue Bond financings include several issues due in
annual installments from 1994 through 2023 with interest at rates varying from
4% to 8%. In addition, the Company has available letter of credit arrangements
with an additional lender to provide approximately $3,000,000 for trade and
general corporate purposes. Substantially all of these letters of credit are
secured by certain assets. The Company's headquarter facility is subject to a
mortgage payable in equal monthly installments through 2003 with interest at
8.625%.
The Company's credit agreements contain various restrictive covenants
pertaining to maintenance of working capital, debt service, tangible net worth,
certain financial ratios and prohibit the payment of dividends and early
redemption of subordinated notes.
- 20 -
L1773 (02/23/95)
<PAGE> 21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
NOTE B--LONG-TERM DEBT--Continued
The aggregate minimum combined maturities of long-term debt for the years 1996
through 1999 are approximately $4,531,000, $15,678,000, $1,581,000 and
$20,561,000, respectively, with $4,607,000 due thereafter.
Interest expense includes $850,000, $767,000 and $713,000 for amortization of
deferred financing cost in 1994, 1993 and 1992, respectively. Interest paid
was $6,847,000, $8,229,000 and $7,320,000 in 1994, 1993 and 1992, respectively.
Rental expense related to operating leases was $3,015,000, $2,647,000 and
$2,531,000 in 1994, 1993 and 1992, respectively. Aggregate future minimum
payments related to operating leases with initial or remaining terms of one
year or more for the years 1995 through 1998 and thereafter are $1,880,000,
$1,265,000, $851,000, $694,000 and $854,000, respectively.
NOTE C--DISCONTINUED OPERATIONS
<TABLE>
The results of discontinued operations are reflected on a restated comparative
basis as follows:
<CAPTION>
(In thousands)
1994 1993 1992
------------ ------------ --------------
<S> <C> <C> <C>
Net Sales $ 23,337 $ 41,884 $ 28,338
============ ============ ==============
Loss from Operations $ 1,030 $ 2,674 $ 10,956
Loss on Disposal 8,900
------------ ------------ --------------
$ 9,930 $ 2,674 $ 10,956
============ ============ ==============
</TABLE>
During the first quarter of 1994, the Company entered into a definitive
agreement to sell substantially all of the assets and certain liabilities
(including prospective pension and postretirement benefit obligations) of its
Midland Steel Products Division for $16,430,000 resulting in a loss of
$8,900,000 ($.67 per share) after related costs and expenses. Included in the
loss on disposal is a curtailment loss of $1,140,000 related to net pension
costs and a settlement gain of $650,000 related to postretirement benefits
other than pensions. The Company believes adequate provision has been made for
all contractual obligations, environmental costs, and other obligations
retained in the sale of the division. Included in each years' loss from
operations is interest of $1,836,000 allocated on the basis of the Company's
incremental borrowing rate applied on the net proceeds from the sale. The
assets held for sale at the end of 1994 are comprised of land and building
pending final resolution of certain contractual conditions.
- 21 -
L1773 (02/23/95)
<PAGE> 22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
NOTE D--PENSION PLANS
The Company sponsors pension plans covering substantially all employees. Plans
covering salaried employees provide benefits that are based on an employee's
years of service and compensation during the five-year period prior to
retirement. Plans covering hourly employees provide benefits of stated amounts
for each year of service. The Company annually contributes amounts to the
plans which are actuarially determined to provide sufficient assets to meet
future benefit payment requirements.
<TABLE>
Pension expense from continuing operations is comprised of the following:
<CAPTION>
(In thousands) 1994 1993 1992
---------- ---------- ---------
<S> <C> <C> <C>
Benefits earned $ 1,694 $ 1,599 $ 1,235
Interest on projected
benefit obligations 5,781 6,090 5,853
Actual return on assets (1,917) (6,813) (5,956)
Net amortization and deferral (3,310) 1,678 400
Defined contribution and other plans 813 620 474
---------- ---------- ---------
$ 3,061 $ 3,174 $ 2,006
========== ========== =========
</TABLE>
<TABLE>
The following table summarizes the funded status of the Company's defined benefit pension
plans and the related amounts recognized in the Company's consolidated statement of financial
position:
<CAPTION>
1994 1993
STATUS OF PLANS STATUS OF PLANS
----------------------------- -----------------------------
(In thousands) ASSETS BENEFITS ASSETS BENEFITS
EXCEED EXCEED EXCEED EXCEED
BENEFITS ASSETS BENEFITS ASSETS
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Actuarial present
value of benefit
obligations:
Vested benefit
obligations $ 8,849 $ 61,633 $ 14,126 $ 60,959
=========== =========== ========== ===========
Accumulated benefit
obligations $ 9,313 $ 61,790 $ 15,243 $ 62,792
=========== =========== ========== ===========
Plan assets at fair
value $ 13,235 $ 49,329 $ 20,000 $ 43,313
Projected benefit
obligations (12,569) (62,156) (19,998) (62,999)
----------- ----------- ---------- -----------
Plan assets in excess
of (less than)
projected benefit
obligations 666 (12,827) 2 (19,686)
Unrecognized prior service cost (30) 346 233 1,048
Unrecognized net
liabilities due to
changes in assumptions 1,508 10,962 4,273 12,585
Unrecognized initial
net (asset) obligations (266) (1,561) (1,267) 473
Minimum liability (9,381) (13,899)
----------- ----------- ---------- -----------
Pension assets
(liabilities) $ 1,878 $ (12,461) $ 3,241 $ (19,479)
=========== =========== ========== ===========
</TABLE>
- 22 -
L1773 (02/23/95)
<PAGE> 23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
NOTE D--PENSION PLANS--Continued
Accrued expenses and other liabilities include the current portion of pension
liabilities of $4,487,000 and $4,665,000 in 1994 and 1993, respectively. The
discount rates used in determining pension expense were 7.25%, 8.5% and 9% in
1994, 1993 and 1992, respectively. The discount rates used for funded status
information were 8.0% in 1994 and 7.25% in 1993. The change in the discount
rate had the effect of decreasing the accumulated benefit obligation
approximately $4,800,000. This change will not have a material effect on
future pension expense. The long-term rates of return on assets used in
determining the funded status information were 9.5% in 1994 and 1993. Plan
assets consist primarily of fixed income and equity securities including
Company securities totalling $3,212,000. The salary progression assumptions
used in determining the funded status information were 5% in each year.
NOTE E--POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
In addition to providing pension benefits, the Company provides health care and
life insurance benefits for certain of its retired employees.
In 1992, the Company adopted SFAS No. 106, "Employers Accounting for
Postretirement Benefits Other Than Pensions." Under SFAS No. 106, the Company
is required to accrue the estimated cost of retiree benefit payments, other
than pensions, during employees' active service period. The Company previously
expensed the cost of these benefits, which are primarily health care, as claims
were paid.
The Company elected to recognize this change in accounting on the immediate
recognition basis. The cumulative effect of adopting SFAS No. 106 was an
increase in accrued postretirement benefits other than pensions and decrease in
1992 net earnings of $26,860,000.
The Company continues to fund these benefit costs on a pay-as-you-go basis,
with the retiree, in most instances, paying a portion of the costs.
- 23 -
L1773 (02/23/95)
<PAGE> 24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
NOTE E--POSTRETIREMENT BENEFITS OTHER THAN PENSIONS--Continued
<TABLE>
Summary information for the Company's plans is as follows:
<CAPTION>
(In thousands)
1994 1993
--------------- --------------
<S> <C> <C>
Accumulated Postretirement Benefit Obligation (APBO):
Retirees $ 17,036 $ 19,164
Active participants eligible to receive benefits 2,134 3,763
Other active plan participants 5,561 7,323
--------------- --------------
24,731 30,250
Unamortized (loss) (960) (1,962)
--------------- --------------
23,771 28,288
Current portion 2,100 2,100
--------------- --------------
$ 21,671 $ 26,188
=============== ==============
</TABLE>
The decrease in APBO is principally due to the sale of the Midland Steel
Products Division (see Note C). In addition, the Company remains contingently
liable for postretirement benefits of certain businesses previously sold.
<TABLE>
The components of periodic postretirement benefit cost reflected in continuing operations are as
follows:
<CAPTION>
(In thousands)
1994 1993 1992
------------- ------------ --------------
<S> <C> <C> <C>
Benefits earned $ 698 $ 670 $ 598
Interest on postretirement benefit obligation 1,806 2,073 2,022
------------- ------------ --------------
$ 2,504 $ 2,743 $ 2,620
============= ============ ==============
</TABLE>
The discount rate used in determining the APBO was 7.5% in 1994 and 1993. The
assumed health care cost trend rate used in measuring the APBO was an average
of 14% in 1994 and 1993, declining to an ultimate rate of 5.5% in 2007 and
thereafter.
If the health care cost trend rate assumptions were increased by 1%, the APBO
as of December 31, 1994 would increase by 9.2%. The effect of this change on
periodic postretirement benefit cost for 1994 would be an increase of 11.2%, or
approximately $280,000.
- 24 -
L1773 (02/23/95)
<PAGE> 25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
NOTE F--NON-RECURRING CHARGES
In 1992, the Company recorded non-recurring charges of $4,602,000 ($.35 per
share after tax effect). The majority of these costs are included in other
long-term liabilities and represent provisions for the relocation of production
lines, consolidation of plant capacity, and various other costs resulting from
the Company's efforts to improve cost effectiveness and future profitability.
NOTE G--LITIGATION
In 1992, the present owner of property sold by the Company in 1978 filed a
complaint against the Company seeking reimbursement for certain costs related
to environmental remediation of the site. All but one of the claims have been
dismissed. Management believes that the final resolution of this matter will
not have a material adverse effect on the Company's consolidated financial
position.
The Company is a party to various claims and matters of litigation incidental
to the normal course of its business. Management believes that the final
resolution of these matters will not have a material adverse effect on the
Company's financial position.
NOTE H--PREFERRED AND PREFERENCE STOCK
The Company has authorized 1,200,000 and 3,000,000 shares of Serial Preferred
and Preference Stock, respectively, none of which is issued or outstanding at
December 31, 1994.
The Company has reserved for issuance 200,000 shares of Cumulative Redeemable
Serial Preference Stock, Series II, without par value, which is part of
purchase rights related to each outstanding common share. None of these shares
were issued in 1994 or 1993. The right associated with each common share
entitles its holder to purchase from the Company or acquiring company, one
one-hundredth of a share of preference stock at a price of $47 which is subject
to adjustment. The rights become exercisable only if a person or group
acquires beneficial ownership of 15% or more of the Company's common shares or
takes certain other actions. In any such event, a 15% or more owner is
prohibited from exercising the rights. When exercisable, the rights entitle
each holder to purchase, according to the agreement, either the Company's
common shares or stock in the acquiring entity worth twice the value of the
then applicable purchase price. Under certain circumstances, the Company has
the authority to exchange each right for one common share without payment
required. Unless otherwise extended, the Company may redeem the rights in
their entirety, at a price of one cent per right, at any time until the tenth
calendar day following any public announcement that beneficial ownership of 15%
or more has occurred in the Company's common shares, or upon certain other
events, including Board of Directors approval of a merger. The rights expire
on September 7, 1998.
- 25 -
L1773 (02/23/95)
<PAGE> 26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
NOTE I--STOCK OPTIONS
Under the 1994 Nonemployee Directors Stock Option Plan, the Company is
authorized to issue 60,000 non-qualified stock options. The options become
exercisable one year after date of grant and expire at the end of ten years.
Under the 1988 Incentive Equity Performance Plan, the Company is authorized to
issue 1,150,000 incentive stock options (ISO's), non-qualified stock options,
stock appreciation rights (SAR's), and restricted or deferred stock. Options
generally become exercisable in part one year after date of grant and expire at
the end of ten years. Options outstanding under the 1978 Non-Qualified
Incentive Stock Option Plan have been granted for the purchase of common shares
at prices ranging from $4.750 to $5.75 per share. No options are available for
future grant under the 1978 Plan.
<TABLE>
A summary of the option transactions follows:
<CAPTION>
NUMBER OF SHARES
----------------------------
1994 1993
-------- --------
<S> <C> <C>
Outstanding, beginning of year 659,400 500,900
Granted at $5.563 to $6.75 per share 200,500 192,500
Exercised at $2.125 to $7.19 per share (58,750) (15,300)
Expired/cancelled at $4.375 to $15.438 per share (74,850) (18,700)
-------- --------
Outstanding, end of year at $3.88 to $12.938 726,300 659,400
======== ========
Exercisable, end of year 490,300 428,650
======== ========
<FN>
At fiscal year end 1994, there were 431,900 options available for future grant.
</TABLE>
- 26 -
L1773 (02/23/95)
<PAGE> 27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
NOTE J -- INCOME TAXES
There was no income tax expense or benefit recorded in 1994 or 1993. The
Company provided an income tax benefit of $800,000 in 1992.
The Company has available net operating loss carryforwards totalling
approximately $39 million which expire in the years 1999 to 2009. The Company
also has available general business tax credit carryforwards of $2 million
which expire through 2009, and alternative minimum tax credit carryforwards of
approximately $1 million which may be carried forward indefinitely.
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and liabilities are presented below:
<TABLE>
<CAPTION>
(In thousands) 1994 1993
------------- ------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 13,600 $ 14,600
Other accruals, credits and reserves 11,300 9,500
General business and alternative minimum tax credits 2,900 2,900
Postretirement benefits other than pensions 8,300 9,900
------------- ------------
36,100 36,900
Less: valuation allowance (30,000) (28,000)
------------- ------------
Total net deferred tax assets 6,100 8,900
Deferred tax liabilities:
Tax in excess of book depreciation 5,900 8,200
Pensions 200 700
------------- ------------
Total deferred tax liabilities 6,100 8,900
------------- ------------
$ -0- $ -0-
============= ============
</TABLE>
- 27 -
L1773 (02/23/95)
<PAGE> 28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
NOTE J -- INCOME TAXES -- Continued
The provision for income taxes is different than the amount computed using the
applicable statutory federal income tax rate with the differences summarized
below:
<TABLE>
<CAPTION>
(In thousands)
1994 1993 1992
-------------- ------------ ------------
<S> <C> <C> <C>
Tax expense (benefit) at statutory rates $ (1,995) $ (2,027) $ (6,887)
Adjustment due to:
Effect of temporary differences 3,738
Alternative minimum tax 1,970
Change in valuation allowance 1,964 1,818
Other 31 209 379
-------------- ------------ ------------
$ -0- $ -0- $ (800)
============== ============ ============
</TABLE>
In 1994, 1993 and 1992, the Company received income tax refunds of $201,000,
$1,626,000 and $1,618,000, respectively.
NOTE K--INDUSTRY SEGMENTS
With the completion of the sale of the Midland Steel Products Division (see
Note C), the Company presently operates in one dominant industry segment. The
Company is principally engaged in the manufacture and sale of thermoplastic
conduit, enclosures, wiring devices and accessories for the construction,
consumer, power, communications and waste water markets as well as fasteners
for the aerospace engine and airframe markets.
In 1994, sales to a single customer totalled approximately 12%. No customer
exceeded 10% of net sales in 1993 or 1992.
- 28 -
L1773 (02/23/95)
<PAGE> 29
<TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
(Dollars in thousands, except per share amounts)
NOTE L--SUMMARY OF QUARTERLY RESULTS OF OPERATIONS--(UNAUDITED)
<CAPTION>
EARNINGS
(LOSS) FROM LOSS FROM NET
NET GROSS CONTINUING DISCONTINUED EARNINGS
SALES PROFIT OPERATIONS OPERATIONS (LOSS)
--------- --------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C>
Fiscal 1994:
First quarter $ 63,889 $ 10,267 $ (960) $ (9,930) $(10,890)
Second quarter 74,655 14,016 2,019 2,019
Third quarter 79,048 14,161 2,110 2,110
Fourth quarter 70,053 13,325 1,087 1,087
--------- --------- ----------- ----------- --------
TOTALS $287,645 $ 51,769 $ 4,256 $ (9,930) $ (5,674)
========= ========= =========== =========== ========
Fiscal 1993:
First quarter $ 57,692 $ 8,942 $ (1,470) $ (1,075) $ (2,545)
Second quarter 65,971 10,236 (547) (127) (674)
Third quarter 70,537 10,990 1,409 (2,073) (664)
Fourth quarter 65,372 7,999 (2,509) 601 (1,908)
--------- --------- ----------- ----------- --------
TOTALS $259,572 $ 38,167 $ (3,117) $ (2,674) $ (5,791)
========= ========= =========== =========== ========
<CAPTION>
EARNINGS EARNINGS
(LOSS) PER (LOSS) PER
COMMON COMMON MARKET PRICE
SHARE FROM SHARE FROM NET EARNINGS PER COMMON
CONTINUING DISCONTINUED (LOSS) PER SHARE
OPERATIONS OPERATIONS COMMON SHARE HIGH LOW
------------ ----------- -------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Fiscal 1994:
First quarter $ (.07) $ (.75) $ (.82) $ 7-1/2 $ 4-7/8
Second quarter .15 .15 8-1/2 6-1/8
Third quarter .16 .16 8-1/2 6-3/4
Fourth quarter .08 .08 7-1/4 5-1/4
------------ ----------- --------------
TOTALS $ .32 $ (.75) $ (.43)
============ =========== ==============
Fiscal 1993:
First quarter $ (.11) $ (.08) $ (.19) $ 6-1/2 $ 5-1/2
Second quarter (.04) (.01) (.05) 5-7/8 4-3/4
Third quarter .11 (.16) (.05) 5-1/2 4-5/8
Fourth quarter (.20) .05 (.15) 5-1/4 4-5/8
------------ ----------- --------------
TOTALS $ (.24) $ (.20) $ (.44)
============ =========== ==============
</TABLE>
- 29 -
L1773 (02/23/95)
<PAGE> 30
<TABLE>
PART IV
The Lamson & Sessions Co. and Subsidiaries
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<CAPTION>
(In thousands)
- - - - ------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT CHARGED TO BALANCE AT
BEGINNING OF COSTS AND DEDUCTIONS - END OF
DESCRIPTION PERIOD EXPENSES DESCRIBE PERIOD
- - - - ------------------------------------------------------------------------------------------------------------------------------------
- - - - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1994
Allowances deducted from assets:
Trade receivable allowances $ 1,559 $ 805 $ 711 (B) $ 1,653
Inventory obsolescence reserve 1,703 464 1,137 (C) 1,030
Other Assets 3,452 (3,414) (D) 6,866
Accounts and loss reserves included in
current and long-term liabilities 3,027 8,950 (A) 4,068 (A) 7,909
- - - - ------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED JANUARY 1, 1994
Allowances deducted from assets:
Trade receivable allowances $ 1,861 $ 872 $ 1,174 (B) $ 1,559
Inventory obsolescence reserve 2,480 210 987 (C) 1,703
Other Assets 3,606 154 3,452
Accounts and loss reserves included in
current and long-term liabilities 3,337 310 3,027
- - - - ------------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED JANUARY 2, 1993
Allowances deducted from assets:
Trade receivable allowances $ 1,405 $ 1,003 $ 547 (B) $ 1,861
Inventory obsolescence reserve 1,534 2,031 1,085 (C) 2,480
Other Assets 2,991 600 (15) 3,606
Accounts and loss reserves included in
current and long-term liabilities 2,337 1,000 (A) 3,337
- - - - ------------------------------------------------------------------------------------------------------------------------------------
<FN>
Note A - Provision for discontinued operations, costs relating to sales of businesses and non-recurring charges.
Note B - Principally write-off of uncollectible accounts and disputed items, net of recoveries.
Note C - Principally the disposal of obsolete inventory.
Note D - Adjustment to provisions for previously sold business.
</TABLE>
- 30 -
L1773 (02/23/95)
<PAGE> 31
REPORT OF INDEPENDENT AUDITORS
- - - - ------------------------------
Board of Directors and Shareholders
The Lamson & Sessions Co.
We have audited the accompanying consolidated statements of financial position
of The Lamson & Sessions Co. and Subsidiaries as of December 31, 1994 and
January 1, 1994, and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the three fiscal years in the
period ended December 31, 1994. Our audits also included the financial
statement schedule listed in the Index at Item 14 (a). These financial
statements and schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of The
Lamson & Sessions Co. and Subsidiaries at December 31, 1994 and January 1,
1994, and the consolidated results of their operations and their cash flows for
each of the three fiscal years in the period ended December 31, 1994, in
conformity with generally accepted accounting principles. Also, in our
opinion, the related financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
As discussed in Note E to the consolidated financial statements, effective
January 1, 1992, the Company changed its method of accounting for
postretirement benefits other than pensions.
Ernst & Young LLP
Cleveland, Ohio
January 20, 1995
- 31 -
L1773 (02/23/95)
<PAGE> 32
STATEMENT OF MANAGEMENT'S RESPONSIBILITY
----------------------------------------
We have prepared the financial statements and other financial information
contained in this Annual Report.
The management of Lamson & Sessions is primarily responsible for the integrity
of this financial information. The financial statements were prepared in
accordance with generally accepted accounting principles and necessarily
include certain amounts based on management's reasonable best estimates and
judgments, giving due consideration to materiality. Financial information
contained elsewhere in this annual report is consistent with that contained in
the financial statements.
Management is responsible for establishing and maintaining a system of internal
control designed to provide reasonable assurance as to the integrity and
reliability of financial reporting. The concept of reasonable assurance is
based on the recognition that there are inherent limitations in all systems of
internal control, and that the cost of such systems should not exceed the
benefits to be derived therefrom.
To meet management's responsibility for financial reporting, we have
established internal control systems which we believe are adequate to provide
reasonable assurance that our assets are protected from loss. These systems
produce data used for the preparation of published financial information and
provide for appropriate reporting relationships and division of responsibility.
All significant systems and controls are reviewed periodically by our internal
auditors in order to ensure compliance, and by our independent auditors to
support their audit work. It is management's policy to implement a high
proportion of recommendations resulting from these reviews.
The Audit Committee of the Board of Directors, composed solely of outside
directors, meets regularly with management, internal auditors, and our
independent auditors to review accounting, auditing and financial matters.
Both the independent auditors and the internal auditors have free access to the
Audit Committee, with or without management, to discuss the scope and results
of their audits and the adequacy of the system of internal controls.
/s/ John B. Schulze
- - - - --------------------------------
John B. Schulze
Chairman of the Board, President and
Chief Executive Officer
/s/ James J. Abel
- - - - --------------------------------
James J. Abel
Executive Vice President, Secretary,
Treasurer and Chief Financial Officer
- 32 -
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<PAGE> 33
PART II
Item 9. - DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
Item 10. - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) Directors
The information set forth under the caption "Election of Directors" in
the Company's definitive proxy statement for its annual meeting of
shareholders to be held April 28, 1995 is hereby incorporated by
reference.
(b) Executive Officers - See Part I
(c) Compliance with Section 16 (a) of the Exchange Act.
The information set forth in the last paragraph under caption
"Election of Directors" in the Company's definitive proxy statement
for its annual meeting of shareholders to be held April 28, 1995 is
hereby incorporated by reference.
Item 11. - EXECUTIVE COMPENSATION
The information set forth under the caption "Executive Compensation" in the
Company's definitive proxy statement for its annual meeting of shareholders to
be held April 28, 1995 is hereby incorporated by reference.
Item 12. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under the captions "Ownership of the Company's Common
Shares," "Election of Directors" and "Security Ownership of Management" in the
Company's definitive proxy statement for its annual meeting of shareholders to
be held April 28, 1995 is hereby incorporated by reference.
Item 13. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTION
None.
PART IV
Item 14. - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
- 33 -
L1773 (02/23/95)
<PAGE> 34
(a) The following documents are filed as part of this report:
Consolidated financial statements of The Lamson & Sessions Co. and
Subsidiaries are included in Item 8 of this report:
1. Financial Statements
Consolidated Statement of Operations for Fiscal Years Ended 1994, 1993
and 1992.
Consolidated Statement of Cash Flows for Fiscal Years Ended 1994, 1993
and 1992.
Consolidated Statement of Financial Position at December 31, 1994 and
January 1, 1994.
Consolidated Statement of Shareholders' Equity for Fiscal Years Ended
1994, 1993 and 1992.
Notes to Consolidated Financial Statements.
2. Financial Statement Schedule
Schedule II - Valuation and Qualifying Accounts and Reserves.
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable and, therefore, have been omitted.
3. Exhibits - Management Contracts and Compensatory Plans are identified
with an asterisk (*).
3(a) Amended Articles of Incorporation of the Company (incorporated by
reference to Exhibit 1 to the Company's Registration Statement on
Form 8-A filed with the Securities and Exchange Commission on June 1,
1989).
3(b) Amended Code of Regulations of the Company filed herewith.
4(a) Specimen Certificate of Common Shares, without par value with Rights
legend (incorporated by reference to Exhibit 3 to the Company's
Registration Statement on Form 8-A filed with the Securities and
Exchange Commission on June 1, 1989).
4(b) Form of Indenture by and between the Company and AmeriTrust Company
of New York, Trustee, pertaining to the 14% Senior Subordinated Notes
due 1997 (incorporated by reference to Exhibit 4(j) to the Company's
Registration Statement on Form S-2 (Registration No. 33-13574) filed
with the Securities and Exchange Commission on June 12, 1987).
- 34 -
L1773 (02/23/95)
<PAGE> 35
4(c) Supplemental Indenture by and between the Company and AmeriTrust
Company of New York, Trustee, pertaining to 14% Senior Subordinated
Notes due 1997 dated as of February 5, 1992 (incorporated by
reference to Exhibit 4(c) of the Company's Annual Report on Form 10-K
for the year ended December 31, 1991).
4(d) Form of 14% Senior Subordinated Note due 1997 (incorporated by
reference to Exhibit 4(k) of the Company's Registration Statement on
Form S-2 (Registration No. 33-13574) filed with the Securities and
Exchange Commission on June 12, 1987).
4(e) Form of Right Certificate (incorporated by reference to Exhibit 4(oo)
to the Company's Registration Statement on Form 8-A filed with the
Securities and Exchange Commission on August 25, 1988).
4(f) Amendment No. 1 to Rights Agreement dated as of February 14, 1990, by
and between the Company and National City Bank (incorporated by
reference to Exhibit 2.4 of the Company's Form 8 filed with the
Securities and Exchange Commission on February 20, 1990).
4(g) Rights Agreement, amended and restated as of February 14, 1990, by
and between the Company and National City Bank (incorporated by
reference to Exhibit 2.5 of the Company's Form 8 filed with the
Securities and Exchange Commission on February 20, 1990).
4(h) Loan Agreement dated as of February 13, 1992 among the Company, the
Lenders party thereto from time to time, and General Electric Capital
Corporation (incorporated by reference to Exhibit 4(i) of the
Company's Annual Report on Form 10-K for the year ended December 31,
1991, the "GECC Loan Agreement").
4(i) Letter of Credit Agreement dated as of February 13, 1992 by and
between the Company and National City Bank (incorporated by reference
to Exhibit 4(j) of the Company's Annual Report on Form 10-K for the
year ended December 31, 1991).
4(j) Amendment No. 1 and Waiver dated February 11, 1993 to the GECC Loan
Agreement (incorporated by reference to Exhibit 4(j) of the Company's
Annual Report on Form 10-K for the year ended January 2, 1993).
* 10(a) 1988 Incentive Equity Performance Plan (as amended on September 22,
1988, February 23, 1989, and December 20, 1990 and April 24, 1992)
(incorporated by reference to Exhibit 28 of the Company's Registration
Statement, on Form S-8 and Form S-3 (Registration No. 33-54732) filed
with the Securities and Exchange Commission on November 20, 1992).
* 10(b) Form of Three-Year Employment Agreement between the Company and
certain executive officers filed herewith.
* 10(c) Form of Two-Year Employment Agreement between the Company and certain
executive officers filed herewith.
- 35 -
L1773 (02/23/95)
<PAGE> 36
* 10(d) Corporate Officers Incentive Compensation Plan filed herewith.
* 10(e) Form of Amended and Restated Supplemental Executive Retirement
Agreement dated as of March 20, 1990 between the Company and certain
of its executive officers (incorporated by reference to Exhibit 10(g)
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1990).
* 10(f) The Company's Deferred Compensation Plan for Nonemployee Directors
(incorporated by reference to Exhibit 10(i) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1990).
* 10(g) Form of Indemnification Agreement between the Company and the
Directors and certain officers filed herewith.
* 10(h) The Company's Long Term Incentive Plan (incorporated by reference to
Exhibit 10(k) to the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 1991).
* 10(i) Separation Agreement between the Company and Thomas M. Kostelnik,
dated June 7, 1993 (incorporated herein by reference to Exhibit 10 to
the Company's Quarterly Report on Form 10-Q for the period ended July
3, 1993).
10(j) Mortgage and Security Agreement, dated October 29, 1993, between The
Lamson & Sessions Co. and PFL Life Insurance Company (incorporated
herein by reference to Exhibit 10(j) to the Company's Annual Report
on Form 10-K for the year ended January 1, 1994).
10(k) Asset Purchase Agreement between Iochpe-Maxion Ohio, Inc. and The
Lamson & Sessions Co. dated as of May 4, 1994 (incorporated by
reference to Exhibit 10 to the Company's Current Report on Form 8-K
dated as of May 27, 1994).
* 10(l) Separation Agreement between The Lamson & Sessions Co. and Allan J.
Zambie, dated July 31, 1994 (incorporated by reference to Exhibit 10
to the Company's Quarterly Report on Form 10-Q for the period ended
October 1, 1994).
10(m) Amendment No. 2 and Consent, dated as of March 1, 1994, to the GECC
Loan Agreement filed herewith.
10(n) Amendment No. 3, dated as of March 31, 1994 to the GECC Loan
Agreement filed herewith.
10(o) Amendment No. 4 and Consent, dated as of May 15, 1994, to the GECC
Loan Agreement filed herewith.
10(p) Amendment No. 5, dated as of June 10, 1994, to the GECC Loan
Agreement filed herewith.
- 36 -
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<PAGE> 37
10(q) Amendment No. 6, dated as of September 30, 1994, to the GECC Loan
Agreement filed herewith.
10(r) Amendment No. 7, dated as of January 31, 1995, to the GECC Loan
Agreement filed herewith.
11 Computation of Earnings Per Common Share
21 Subsidiaries of the Registrant
23 Consent of Independent Accountants
24 Powers of Attorney
27 Financial Data Schedule (submitted for the SEC's information).
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the three months ended
December 31, 1994.
(c) Exhibits - The response to this portion of Item 14 is submitted as a
separate section of this report.
(d) Financial Statement Schedules - The response to this portion of Item
14 is included in Item 8.
- 37 -
L1773 (02/23/95)
<PAGE> 38
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf of the undersigned, thereunto duly authorized, on this 24th day of
February 1995.
THE LAMSON & SESSIONS CO.
By /s/ James J. Abel
------------------------
James J. Abel
Executive Vice President, Secretary,
Treasurer and Chief Financial Officer
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 indicated as of February 24, 1995.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ John B. Schulze Chairman of the Board, President
- - - - ------------------------------------ and Chief Executive Officer
John B. Schulze (Principal Executive Officer)
/s/ James J. Abel Executive Vice President, Secretary,
- - - - ----------------------------------- Treasurer and Chief Financial Officer
James J. Abel (Principal Financial Officer and
Principal Accounting Officer)
/s/ Francis H. Beam, Jr.* Director
- - - - -------------------------
Francis H. Beam, Jr.
/s/ Leigh Carter* Director
- - - - -------------------------
Leigh Carter
</TABLE>
- 38 -
L1773 (02/23/95)
<PAGE> 39
<TABLE>
<S> <C>
/s/ Martin J. Cleary* Director
- - - - -------------------------
Martin J. Cleary
/s/ John C. Dannemiller* Director
- - - - -------------------------
John C. Dannemiller
/s/ Russel B. Every* Director
- - - - -------------------------
Russel B. Every
/s/ George R. Hill* Director
- - - - -------------------------
George R. Hill
/s/ A. Malachi Mixon III* Director
- - - - -------------------------
A. Malachi Mixon III
/s/ Kevin O'Donnell* Director
- - - - -------------------------
Kevin O'Donnell
/s/ D. Van Skilling* Director
- - - - -------------------------
D. Van Skilling
<FN>
* The undersigned, by signing his name hereto, does sign and execute this
Annual Report on Form 10-K pursuant to a Power of Attorney executed on
behalf of the above named directors of The Lamson & Sessions Co. and filed
herewith as Exhibit 24 on behalf of The Lamson & Sessions Co. and each
such person.
</TABLE>
February 24, 1995
By /s/ James J. Abel
-----------------------------------
James J. Abel, Attorney-in-fact
- 39 -
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<PAGE> 40
<TABLE>
<CAPTION>
EXHIBIT INDEX
EXHIBIT NO. PAGE
- - - - ----------- ----
<S> <C> <C>
3(a) Amended Articles of Incorporation of the Company (incorporated by
reference to Exhibit 1 to the Company's Registration Statement on
Form 8-A filed with the Securities and Exchange Commission on June 1,
1989).
3(b) Amended Code of Regulations of the Company filed herewith.
4(a) Specimen Certificate of Common Shares, without par value with Rights
legend (incorporated by reference to Exhibit 3 to the Company's
Registration Statement on Form 8-A filed with the Securities and
Exchange Commission on June 1, 1989).
4(b) Form of Indenture by and between the Company and AmeriTrust Company of
New York, Trustee, pertaining to the 14% Senior Subordinated Notes due
1997 (incorporated by reference to Exhibit 4(j) to the Company's
Registration Statement on Form S-2 (Registration No. 33-13574) filed
with the Securities and Exchange Commission on June 12, 1987).
4(c) Supplemental Indenture by and between the Company and AmeriTrust Company
of New York, Trustee, pertaining to 14% Senior Subordinated Notes due
1997 dated as of February 5, 1992 (incorporated by reference to Exhibit
4(c) of the Company's Annual Report on Form 10-K for the year ended December
31, 1991).
4(d) Form of 14% Senior Subordinated Note due 1997 (incorporated by reference
to Exhibit 4(k) of the Company's Registration Statement on Form S-2
(Registration No. 33-13574) filed with the Securities and Exchange Commission
on June 12, 1987).
4(e) Form of Right Certificate (incorporated by reference to Exhibit 4(oo) to the
Company's Registration Statement on Form 8-A filed with the Securities and
Exchange Commission on August 25, 1988).
4(f) Amendment No. 1 to Rights Agreement dated as of February 14, 1990, by and
between the Company and National City Bank (incorporated by reference to
Exhibit 2.4 of the Company's Form 8 filed with the Securities and Exchange
Commission on February 20, 1990).
4(g) Rights Agreement, amended and restated as of February 14, 1990, by and
between the Company and National City Bank (incorporated by reference to
Exhibit 2.5 of the Company's Form 8 filed with the Securities and Exchange
Commission on February 20, 1990).
</TABLE>
- 40 -
L1773 (02/23/95)
<PAGE> 41
<TABLE>
<CAPTION>
EXHIBIT INDEX
EXHIBIT NO. PAGE
- - - - ----------- ----
<S> <C> <C>
4(h) Loan Agreement dated as of February 13, 1992 among the Company,
the Lenders party thereto from time to time, and General Electric
Capital Corporation (incorporated by reference to Exhibit 4(i) of
the Company's Annual Report on Form 10-K for the year ended December
31, 1991, the "GECC Loan Agreement").
4(i) Letter of Credit Agreement dated as of February 13, 1992 by and
between the Company and National City Bank (incorporated by reference
to Exhibit 4(j) of the Company's Annual Report on Form 10-K for the
year ended December 31, 1991).
4(j) Amendment No. 1 and Waiver dated February 11, 1993 to the GECC Loan
Agreement (incorporated by reference to Exhibit 4(j) of the Company's
Annual Report on Form 10-K for the year ended January 2, 1993).
* 10(a) 1988 Incentive Equity Performance Plan (as amended on September 22, 1988,
February 23, 1989, December 20, 1990 and April 24, 1992) (incorporated by
reference to Exhibit 28 of the Company's Registration Statement, on Form
S-8 and Form S-3 (Registration No. 33-54732) filed with the Securities and
Exchange Commission on November 20, 1992).
* 10(b) Form of Three-Year Employment Agreement between the Company and certain
executive officers filed herewith.
* 10(c) Form of Two-Year Employment Agreement between the Company and certain
executive officers filed herewith.
* 10(d) Corporate Officers Incentive Compensation Plan filed herewith.
* 10(e) Form of Amended and Restated Supplemental Executive Retirement Agreement
dated as of March 20, 1990 between the Company and certain of its
executive officers (incorporated by reference to Exhibit 10(g) to the
Company's Annual Report on Form 10-K for the year ended December 31, 1990).
* 10(f) The Company's Deferred Compensation Plan for Nonemployee Directors
(incorporated by reference to Exhibit 10(i) to the Company's Annual
Report on Form 10-K for the year ended December 31, 1990).
* 10(g) Form of Indemnification Agreement between the Company and the Directors
and certain officers filed herewith.
</TABLE>
- 41 -
L1773 (02/23/95)
<PAGE> 42
<TABLE>
<CAPTION>
EXHIBIT INDEX
EXHIBIT NO. PAGE
- - - - ----------- ----
<S> <C> <C>
* 10(h) The Company's Long Term Incentive Plan (incorporated by reference to
Exhibit 10(k) to the Company's Quarterly Report on Form 10-Q for the
period ended September 30, 1991).
* 10(i) Separation Agreement between the Company and Thomas M. Kostelnik,
dated June 7, 1993 (incorporated herein by reference to Exhibit 10
to the Company's Quarterly Report on Form 10-Q for the period ended
July 3, 1993).
10(j) Mortgage and Security Agreement, dated October 29, 1993, between
The Lamson & Sessions Co. and PFL Life Insurance Company
(incorporated herein by reference to Exhibit 10(j) to the Company's
Annual Report on Form 10-K for the year ended January 1, 1994).
10(k) Asset Purchase Agreement between Iochpe-Maxion Ohio, Inc. and The
Lamson & Sessions Co. dated as of May 4, 1994 (incorporated by
reference to Exhibit 10 to the Company's Current Report on Form 8-K
dated as of May 27, 1994).
* 10(l) Separation Agreement between The Lamson & Sessions Co. and Allan J.
Zambie, dated July 31, 1994 (incorporated by reference to Exhibit
10 to the Company's Quarterly Report on Form 10-Q for the period
ended October 1, 1994).
10(m) Amendment No. 2 and Consent, dated as of March 1, 1994, to the GECC
Loan Agreement filed herewith.
10(n) Amendment No. 3, dated as of March 31, 1994 to the GECC Loan
Agreement filed herewith.
10(o) Amendment No. 4 and Consent, dated as of May 15, 1994, to the GECC
Loan Agreement filed herewith.
10(p) Amendment No. 5, dated as of June 10, 1994, to the GECC Loan
Agreement filed herewith.
10(q) Amendment No. 6, dated as of September 30, 1994, to the GECC Loan
Agreement filed herewith.
10(r) Amendment No. 7, dated as of January 31, 1995, to the GECC Loan
Agreement filed herewith.
11 Computation of Earnings Per Common Share
</TABLE>
- 42 -
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<PAGE> 43
<TABLE>
<CAPTION>
EXHIBIT INDEX
EXHIBIT NO. PAGE
- - - - ----------- ----
<S> <C> <C>
21 Subsidiaries of the Registrant
23 Consent of Independent Accountants
24 Powers of Attorney
27 Financial Data Schedule (Submitted for the SEC's information)
</TABLE>
- 43 -
L1773 (02/23/95)
<PAGE> 1
Exhibit 3(b)
THE LAMSON & SESSIONS CO.
CORPORATE CHARTER NO. 2235
ORGANIZED IN THE STATE OF OHIO, NOVEMBER 7, 1883
AMENDED CODE OF REGULATIONS
ARTICLE I
SHAREHOLDERS
Section 1. Annual Meeting
The Annual Meeting of Shareholders of the Company for the election of
Directors, the consideration of financial statements and other reports to be
laid before such meeting, and the transaction of such other business as may be
brought before such meeting shall be held at 2:00 o'clock P.M. or at such
other time as may be designated by the Board of Directors, the Chairman of the
Board or the President and specified in the notice of the meeting, on the
fourth Friday in April of each year if not a legal holiday and if a legal
holiday on the next succeeding business day. Upon due notice there may also be
considered and acted upon at an Annual Meeting any matter which could properly
be considered and acted upon at a Special Meeting.
Section 2. Special Meetings
Special Meetings of Shareholders of the Company may be held on any
business day when called by the Chairman of the Board, the President, the Board
of Directors acting at a meeting, a majority of the Directors acting without a
meeting, or persons who hold fifty per cent (50%) of all shares outstanding and
entitled to vote thereat. Upon request in writing delivered either in person
or by registered mail to the President or the Secretary by any persons entitled
to call a Meeting of Shareholders, such Officer shall forthwith cause to be
given to the Shareholders entitled thereto the requisite notice of a meeting to
be held on the specified date, as provided in Section 4 of this Article I. If
such notice is not given within forty-five (45) days after the delivery or
mailing of such request, the persons calling the meeting may fix the time of
the meeting and give notice thereof in the manner provided by law or as
provided in these Regulations, or cause such notice to be given by any
designated representative. Calls for Special Meetings shall specify the
purpose or purposes thereof, and no business shall be considered at any such
meeting other than that specified in the call therefor.
1
<PAGE> 2
Section 3. Place of Meetings
Meetings of Shareholders shall be held at the principal office of the
Company in Ohio unless the Board of Directors acting at a meeting, or a
majority of the Directors acting without a meeting, designates some other place
either within or without the State of Ohio and causes the notice thereof to so
specify.
Section 4. Notice of Meetings - Waiver
Not less than seven (7) nor more than sixty (60) days before the date
fixed for a Meeting of Shareholders, written notice stating the time, place and
purposes of such meeting shall be given by or at the direction of the Chairman
of the Board, the President, the Secretary, an Assistant Secretary, or any
other person required or permitted by these Regulations to give such notice.
The notice shall be given by personal delivery or by mail to each Shareholder
entitled to notice of the meeting who is of record as of the date next
preceding the day on which notice is given, or, if another date thereof is duly
fixed, of record as of said date. If mailed, such notice shall be addressed to
the Shareholder at his address as it appears on the records of the Company, and
such notice shall be deemed to have been given on the day when deposited in the
mail. If said record date shall fall on a holiday, the record date should be
taken as of the close of business on the next preceding day which is not a
holiday.
Notice of the time, place and purposes of any Meeting of Shareholders may
be waived by any Shareholder in writing, either before or after the holding of
such meeting, which writing shall be filed with and entered upon the records of
the meeting, or by his attendance at any such meeting without protesting the
lack of proper notice prior to or at the commencement of such meeting.
Section 5. Quorum - Adjournment
At any meeting of Shareholders, except a meeting one purpose of which is
the election of Directors, the holders of shares entitling them to exercise
two-thirds of the voting power of the Company, present in person or by proxy,
shall constitute a quorum for such meeting. At a meeting one purpose of which
is the election of Directors, the holders of shares entitling them to exercise
seventy-five per cent of the voting power of the Company, present in person or
by proxy, shall constitue a quorum; provided, however, if holders of shares
entitling them to exercise less than seventy-five per cent of
2
<PAGE> 3
the voting power of the Company are present in person or by proxy and
matters other than the election of Directors are to be presented to the
meeting, then, if holders of shares entitling them to exercise at least
two-thirds of the voting power of the Company are present, such other
matters may be presented for consideration and action, but no election of
Directors shall occur. Notwithstanding the foregoing, no action required
by law, the Amended Articles of Incorporation or these Regulations to be
authorized or taken by the holders of a designated proportion of shares of
the Company may be authorized or taken by a lesser proportion. The
holders of a majority of the voting shares represented at the meeting,
whether or not a quorum is present, may adjourn such meeting from time to
time without notice other than by announcement at the meeting. If any
meeting is adjourned, notice of adjournment need not be given if the time
and place to which it is adjourned are fixed and announced at such
meeting, except as otherwise provided in Article III.
Section 6. Proxies
A person who is entitled to attend a Shareholders' Meeting, to vote
thereat or to execute consents, waivers or releases may be represented at
such meeting or vote thereat, and execute consents, waivers and releases,
and exercise any of his rights by proxy or proxies appointed by a writing
signed by such person as provided by the laws of the State of Ohio.
Section 7. Financial Reports
At the Annual Meeting, there shall be laid before the Shareholders a
financial statement, which may be consolidated, consisting of:
1. A Balance Sheet containing a summary of the assets,
liabilities, stated capital and surplus (showing separately any
capital surplus arising from unrealized appreciation of assets,
other capital surplus, and earned surplus) of the Company as of
a date not more than four (4) months before the date of such
meeting; and
2. A Statement of Profit and Loss and Surplus, including a summary
of profits, dividends paid, and other changes in the surplus
accounts of the Company, for the year ending with the date of
such Balance Sheet.
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An Opinion signed by the President, or a Vice President, or Treasurer,
or Assistant Treasurer, or by a public accountant or firm of public
accountants, shall be appended to such financial statement to the effect that
the financial statement presents fairly the position of the Company and the
results of its operations in conformity with generally accepted accounting
principles applied on a basis consistent with that of the preceding period, or
such other Opinion as is in accordance with sound accounting practice.
Section 8. Organization of Meetings
(a) The Board of Directors shall determine from time to time the
Officer who shall preside at all Meetings of Shareholders.
(b) The Secretary or Assistant Secretary shall act as secretary and
keep the minutes of all meetings and in the absence of the Secretary
and Assistant Secretary, the presiding Officer at the meeting shall
appoint any other Officer to act in his place.
(c) At each meeting an alphabetically arranged list or classified
list of Shareholders of record who are entitled to vote as of the
applicable record date, showing their respective addresses and the
number and class of shares held by each, shall be produced by the
Secretary, Assistant Secretary or the particular agent having charge of
the transfer of the shares. This list, when certified by such Officer
or agent, shall be prima facie evidence of the ownership or the facts
shown therein.
Section 9. Inspectors of Election
The Directors, in advance of any Meeting of Shareholders, may appoint
any person(s) as an Inspector of Election to act at such meeting or any
adjournments thereof. If Inspector(s) are not so appointed, the Officer or
person acting as Chairman of any such meeting may and on the request of any
Shareholder or his proxy shall make such appointment.
In case any person appointed as Inspector fails to appear or act, the
vacancy may be filled by appointment made by the Directors in advance of the
meeting, or at the meeting by the Officer or person acting as Chairman.
If there are three (3) or more Inspectors, the decision, act or
certification of a majority of them shall be effective in all respects as
the decision, act or certification of all.
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The Inspector(s) shall determine the number of shares outstanding,
the voting rights with respect to each of the shares represented at the
meeting, the existence of a quorum, and the authenticity, validity and
factual effect of the proxies; receive votes, ballots, consents, waivers or
releases; hear and determine all matters of challenges, ownership and
questions arising in connection with the voting; count and tabulate all
votes, consents, waivers and releases; determine and announce the result;
and do such other acts as are proper to conduct the election or vote with
fairness to all Shareholders.
On request, the Inspector(s) shall make a report in writing on any
question or matter determined by them and execute a certification of any
fact found by them. The certification of the Inspector(s) shall be prima
facie evidence of the facts stated therein and of the results of the voting
as certified by them.
Section 10. Voting
In all cases except where otherwise provided by statute, every
Shareholder entitled to vote shall be entitled to cast one vote, in person
or by proxy, on each proposal submitted to the meeting for each share
held of record by him on the record date for the determination of the
Shareholders entitled to vote at such meeting.
ARTICLE II
BOARD OF DIRECTORS
Section 1. General Powers
Except where the law, the Amended Articles of Incorporation or these
Regulations require action to be authorized or taken by Shareholders, all of
the authority of the Company shall be exercised by the Board of Directors.
Section 2. Number of Directors
The Board of Directors of the Company, none of whom need be
Shareholders, shall consist of not less than nine (9) nor more than fifteen
(15) members. Without amendment of these Regulations, the number of
Directors may be fixed or changed to a number not less than nine (9) nor
greater than fifteen (15) at any Annual or Special Meeting of Shareholders
called for that purpose at which a quorum is present, by the affirmative
vote of the holders of two-thirds of the voting power of the Company, but
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no reduction in the number of Directors shall of itself have the effect of
shortening the term of any incumbent Director. Notwithstanding the foregoing
provisions of this Section 2 of Article II, the number of Directors may also
be changed by the Board of Directors, and the Board of Directors may fill any
Director's office that is created by an increase in the number of Directors,
by resolution adopted by the vote of a majority of the Directors present at a
meeting at which a quorum is present.
Section 3. Classification of Directors
The Directors shall be divided into three classes. Each class shall
consist of an equal number of Directors to the extent possible, and in no
event shall any class consist of less than three (3) Directors. In the event
the total number of Directors is not divisible by three (3), an extra Director
shall be elected to Class I if there is one (1) extra Director to be assigned
among the classes, and an extra Director shall be elected in both Classes I
and II if there are two (2) extra Directors to be assigned among the classes.
Section 4. Election of Directors
Directors shall be elected at the Annual Meeting of Shareholders, but
when the Annual Meeting is not held or Directors are not elected thereat, they
may be elected at a Special Meeting of Shareholders called and held for that
purpose, or by the Board of Directors pursuant to the authority of Section 2
of this Article II.
At a meeting of Shareholders or the Board of Directors at which
Directors are to be elected, only persons nominated as candidates shall be
eligible for election as Directors, and the candidates receiving the greatest
number of votes shall be elected. Voting in the election of Directors by
shareholders may be cumulative as provided by statute. A separate election
shall be held for each class of Directors.
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Section 5. Term of Office and Vacancies
The term of office of each class of Directors shall be three (3)
years, and Directors shall hold office until the Annual Meeting of
Shareholders next succeeding their election at which the term of office of
their class expires and until their successors are elected and qualified,
or until their earlier resignation, removal from office, or death. Any
Director may resign at any time by oral statement to that effect made at a
meeting of the Board or in a writing to that effect delivered to the
Secretary or Assistant Secretary, such resignation to take effect
immediately or at such other time as the Director may specify. Neither an
individual Director, nor a class of Directors, nor all the Directors shall
be removed from office by the Shareholders except upon the affirmative
vote for removal of the holders of eighty per cent (80%) of the voting
power of the Company; provided, however, that unless all the Directors or
all the Directors of a particular class are removed, no individual Director
shall be removed if the votes of a sufficient number of shares are cast
against his removal which, if cumulatively voted at an election of all the
Directors of a particular class, would be sufficient to elect at least one
Director.
In the event of the occurrence of any vacancy or vacancies in the
Board of Directors irrespective of the reason therefor, the remaining
Directors, though less than a majority of the whole authorized number of
Directors, may upon vote of a majority of their number fill such vacancy
for the unexpired term. A vacancy or vacancies shall also be deemed to
exist within the meaning of this section in case the Board of Directors
shall increase the authorized number of Directors pursuant to the authority
of Section 2 of this Article II.
Section 6. Meetings
As soon after each Annual Meeting of Shareholders as practicable, the
Directors shall hold an organizational meeting for the purpose of electing
Officers and the transaction of any other business. Other meetings of the
Board may be held at any time upon the call of the Chairman of the Board,
the President, or any two (2) Directors. Meetings of the Board may be held
within or without the State of Ohio. Written notice of the time and place
of each meeting of the Board shall be given to each Director either by
personal delivery, mail, telegram or cablegram at least two (2) days before
the meeting, which notice need not specify the purposes of the meeting.
Meetings of the Directors may be held through any communications equipment
if all persons participating (and such participation shall constitute
"presence" or "attendance" at such meeting) can hear each other. Unless
otherwise specifically stated in the notice thereof, any business may be
transacted at any meeting of the Board.
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Notice of any meeting of the Board may be waived by any Director in
writing, either before or after such meeting, or by his attendance at any
such meeting (including "attendance" or "presence" by means of participation
through any communications equipment as above provided) without protesting
the lack of proper notice prior to or at the commencement of such meeting.
If any meeting is adjourned, notice of the adjournment need not be given if
the time and place to which it is adjourned are fixed and announced at such
meeting.
Section 7. Action of Directors Without a Meeting
Any action which may be taken at a meeting of the Board or at a meeting
of a Committee of Directors may be taken without a meeting if approved and
authorized by a writing or writings signed by all the Directors or members
of the Committee, respectively, which writing or writings shall be filed or
entered upon the records of the Company.
Section 8. Quorum
Five (5) Directors shall be necessary to constitute a quorum for the
transaction of business at a meeting, provided that a majority of the
Directors at a meeting duly held, whether or not a quorum exists, may
adjourn such meeting from time to time.
The act of a majority of the Directors present at a meeting at which a
quorum is present is the act of the Board unless the act of a greater number
is required by the Amended Articles of Incorporation or these Regulations.
Section 9. Committees
The Board of Directors may from time to time appoint three (3) or more
Directors to constitute one or more Committees of Directors. The resolution
establishing each such Committee shall specify a designation by which it
shall be known and shall fix its purpose, powers, authority and duration of
existence. The Board of Directors may delegate to any such Committee any of
the authority of the Board, however conferred, other than that of filling
vacancies among the Directors or in any Committee of Directors.
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The Board of Directors may likewise appoint one or more Directors as
alternate members of any such Committee, who may take the place of any
absent member or members at any meeting of such Committee.
Each such Committee and each member thereof shall serve at the
pleasure of the Board of Directors, shall act only in the intervals between
meetings of the Board, and shall be subject to the control and direction of
the Board. All actions taken by any such Committee shall be reported in
writing to the Board at its first meeting thereafter.
An act or authorization of any act by any such Committee within the
authority delegated to it by the resolution establishing it shall be
effective for all purposes as the act or authorization by the Board of
Directors.
In every case the affirmative vote of a majority of its members at a
meeting, or the written consent of all of the members of any such Committee
without a meeting, shall be necessary for the approval of any action.
In particular, the Board of Directors may create an Executive
Committee in accordance with the foregoing provisions of this Section. If
created, the Executive Committee shall possess and may exercise all of the
powers of the Board in the management and control of the business of the
Company during the intervals between meetings of the Board subject to the
foregoing provisions of this Section. The chairman of the Executive
Committee shall be determined by the Board of Directors from time to time.
All action taken by the Executive Committee shall be reported in writing to
the Board of Directors at its first meeting thereafter.
Section 10. Compensation
For his attendance at each meeting of the Board of Directors or of a
Committee of Directors, or for other services rendered, each Director shall
receive such reasonable compensation, reimbursement for expenses, and other
benefits as the Board shall from time to time determine and irrespective of
any personal interest of any of them. The Board shall also have authority
to provide for reimbursement for expenses and to establish reasonable
compensation and other benefits for services rendered to the Company by each
Officer and may delegate such authority to one or more Officers or
Directors.
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ARTICLE III
RECORD DATES
For any lawful purpose including without limitation the
determination of the Shareholders who are entitled to:
(1) receive notice of or to vote at a Meeting of Shareholders,
(2) receive payment of any dividend or distribution,
(3) receive or exercise rights of purchase of or subscription
for, or exchange or conversion of, shares or other
securities, subject to contract rights with respect thereto,
or
(4) participate in the execution of written consents, waivers, or
releases,
the Board of Directors may fix a record date which shall not be a date
earlier than the date on which the record date is fixed and, in the cases
provided for in clauses (1), (2), and (3) above, shall not be more than
sixty (60) days preceding the date of the Meeting of Shareholders, or the
date fixed for the payment of any dividend or distribution, or the date
fixed for the receipt or the exercise of rights, as the case may be. The
record date for the purpose of the determination of the Shareholders who
are entitled to receive notice of or to vote at a Meeting of Shareholders
shall continue to be the record date for all adjournments of such meeting,
unless the Board of Directors or the persons who shall have fixed the
original record date shall, subject to the limitations set forth in this
Article, fix another date. In case a new record date is so fixed, notice
thereof and of the date to which the meeting shall have been adjourned
shall be given to Shareholders of record as of such date in accordance
with the same requirements as those applying to a meeting newly called.
The Board of Directors may close the share transfer books against
transfers of shares during the whole or any part of the period provided
for in this Article, including the date of the Meeting of Shareholders and
the period ending with the date, if any, to which adjourned.
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ARTICLE IV
OFFICERS
Section 1. General Provisions, Powers and Duties
The Board of Directors may elect a Chairman of the Board and a
Controller, and shall elect a President, one or more Vice Presidents, a
Secretary and a Treasurer, and such other Officers as the Board may from
time to time deem necessary. The Chairman of the Board shall be a Director.
Any two (2) or more of such offices may be held by the same person, but no
Officer shall execute, acknowledge, attest or verify any instrument in more
than one capacity if such instrument is required to be executed,
acknowledged, attested or verified by two (2) or more Officers.
All Officers, as between themselves and the Company, shall
respectively have such authority and perform such duties as are customarily
incident to their respective offices, and as may be specified from time to
time by the Board of Directors, regardless of whether such authority and
duties are customarily incident to such offices. In the absence of any
Officer of the Company, or for any other reason the Board may deem
sufficient, the Board may delegate from time to time the powers or duties of
such Officer, or any of them, to any other Officer or to any Director. The
Board may from time to time delegate to any Officer authority to appoint and
remove subordinate Officers and to prescribe their authority and duties.
Since the lawful purposes of the Company include the acquisition and
ownership of real property, personal property and property in the nature of
patents, copyrights, and trademarks and the protection of the Company's
property rights in its patents, copyrights and trademarks, each of the
Officers of the Company is empowered to execute any power of attorney
necessary to protect, secure, or vest the Company's interest in and to real
property, personal property and its property protectable by patents, trade-
marks and copyright registrations and to secure such patents, copyrights and
trademark registrations.
Section 2. Term of Office and Vacancies
The elected Officers of the Company shall hold office until the
succeeding organizational meeting of the Board of Directors and until their
successors are elected, except in case of resignation, death, removal or
retirement. The Board of Directors may
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remove any Officer at any time, with or without cause, by a majority vote of
the members of the Board then in office. Any vacancy in any office may be
filled by the Board of Directors.
Section 3. Chairman of the Board
The Chairman of the Board, if any, shall preside at all meetings of
the Board of Directors, and shall have such authority and perform such
duties as the Board may determine.
Section 4. President
The President shall preside at all meetings of the Board of Directors
in the absence of the Chairman of the Board unless otherwise determined by
the Board. The President shall have such authority and perform such duties
as the Board of Directors may determine.
Section 5. Chief Executive Officer
The Board of Directors shall determine from time to time which Officer
shall be designated as the Chief Executive Officer of the Company. Subject
to directions of the Board of Directors, he shall have general executive
supervision of the property, business and affairs of the Company, and shall
see that all orders and recommendations of the Board are carried into
effect.
Section 6. Vice Presidents
The Vice President or Vice Presidents shall have such authority and
shall perform such duties as may be delegated to them by the Chief
Executive Officer or as may be determined by the Board of Directors. In
case of the disability or absence of the President, or in case of a vacancy
existing in the office of the President, a Vice President shall be
designated by the Board of Directors to perform all duties and possess all
of the authority of the President until such time as a new President is
elected by the Board.
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Section 7. Secretary
The Secretary shall keep the minutes of the Meetings of Shareholders
and of the Board of Directors and the Executive Committee (unless otherwise
directed by the Executive Committee). He shall keep such books as may be
required by the Board of Directors, give such notice of Shareholders'
meetings and Board meetings as may be required by law or these Regulations,
and perform such other duties as the Shareholders or the Board may determine.
Section 8. Treasurer
The powers and duties of the Treasurer shall be to keep safe all moneys
of the Company which may be deposited from time to time with the Treasurer,
and to pay out said moneys in such manner as may be prescribed by the Board
of Directors, and generally to do and perform all such other duties as
pertain to his office and as may be determined by the Board.
Section 9. Controller
The Controller shall be the chief accounting officer of the Company. He
shall prepare such accounting statistics, records and reports as may be
prescribed by the Board of Directors, and generally do and perform all such
other duties as determined by the Board.
Section 10. Assistant Officers
The Board of Directors may elect one or more Assistant Secretaries,
Assistant Treasurers and/or Assistant Controllers, who shall have such powers
and perform such duties as directed by their respective principal Officers or
as the Board may determine.
Section 11. Other Officers
All other Officers shall have such powers and perform such duties as the
Board of Directors may determine.
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ARTICLE V
CERTIFICATES FOR SHARES
Section 1. Certificates for Shares
Each holder of shares is entitled to one or more certificates for
shares of the Company in such form not inconsistent with law and the
Amended Articles of Incorporation as shall be approved by the Board of
Directors. Each such certificate shall be signed by the Chairman of the
Board or the President, and by the Secretary or Assistant Secretary or the
Treasurer or Assistant Treasurer of the Company, which certificate shall
certify the number and class of shares held by each Shareholder in the
Company, but no certificates for shares shall be executed or delivered
until such shares are fully paid.
When such a certificate is countersigned by an incorporated transfer
agent or registrar, the signature of any of said Officers of the Company
may be a facsimile, engraved, stamped or printed.
Although any Officer of the Company, whose manual or facsimile,
engraved, stamped or printed signature is affixed to such a certificate
ceases to be such Officer before the certificate is delivered, such
certificate shall be effective in all respects when delivered.
Section 2. Transfer of Shares
Shares of the Company shall be transferable upon the books of the
Company by the holders thereof in person or by a duly authorized attorney
upon surrender and cancellation of certificates for a like number of
shares of the same class of shares, with duly executed assignment and
power of transfer endorsed thereon or attached thereto, and with such
proof of authenticity of the signatures to such assignment and power of
transfer as the Company or its agents may reasonably require.
Section 3. Lost, Stolen or Destroyed Certificates
The Company may issue a new certificate for shares in place of any
certificate or certificates heretofore issued by the Company alleged to
have been lost, stolen or destroyed and upon the making of an affidavit of
that fact by the person claiming the certificate of stock to have been
lost, stolen or destroyed.
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When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion, and as a condition
precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificate or certificates, or his legal
representatives, to attest the same in such manner as it shall require
and to give the Company a bond in such sum and containing such terms as
the Board may direct as indemnity against any claim that may be made
against the Company with respect to the certificate or certificates
alleged to have been lost, stolen or destroyed.
Section 4. Transfer Agents and Registrars
The Board of Directors may appoint or revoke the appointment of
transfer agents and registrars and may require all certificates for
shares to bear the signature of such transfer agents and registrars or
any of them.
The Board of Directors shall have authority to make all such
rules and regulations as it may deem expedient concerning the issuance,
transfer and registration of certificates for shares of the Company.
ARTICLE VI
INDEMNIFICATION
Section 1. In General
Upon written request, setting forth the facts of and reasons for
the request, made within a reasonable time after knowledge of the
occurrence of the event for which indemnification, including an
agreement to indemnify, is sought hereunder, the Company shall idemnify
or agree to indemnify any person who was or is a party or is threatened
to be made a party, to any threatened, pending, or completed action,
suit or proceeding, whether civil, criminal, administrative, or
investigative, other than an action by or in the right of the Company
(Sections 2 and 3 hereof), by reason of the fact that he is or was a
Director, Officer, employee, or agent of the Company, or is or was
serving at the request of the Company as a Director, Trustee, Officer,
employee, or agent of another corporation, domestic or foreign,
nonprofit or for profit, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments,
fines, decrees, penalties, amounts paid with the written consent of the
Company upon a plea of nolo contendere, and amounts paid in settlement,
which are actually and reasonably imposed upon or incurred by him in
connection with such action, suit, or proceeding if he acted
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in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, and with respect to any
criminal action or proceedings, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit, or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo
contendere, or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Company, and with respect to any criminal action or proceeding, that he
had reasonable cause to believe that his conduct was unlawful.
Section 2. Derivative Actions
Upon written request, setting forth the facts of and reason for the
request, made within a reasonable time after knowledge of the occurrence
of the event for which indemnification, including an agreement to
indemnify, is sought hereunder, the Company shall indemnify any person
who was or is a party, or is threatened to be made a party to any
threatened, pending, or completed action or suit in the right of the
Company to procure a judgment in the Company's favor (which shall not be
construed to include any claim, action, suit or proceeding brought
directly by the Company) by reason of the fact that he is or was a
Director, Officer, employee or agent of the Company, or is or was serving
at the request of the Company as a Director, Trustee, Officer, employee,
or agent of another corporation, domestic or foreign, nonprofit or for
profit, partnership, joint venture, trust, or other enterprise against
expenses (including attorneys' fees), judgments, fines, decrees, penalties
and amounts paid in settlement, which are actually and reasonably imposed
upon or incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged
to be negligent or guilty of misconduct in a civil matter in the
performance of his duties to the Company, unless and only to the extent
that the Court of Common Pleas, or the Court in which such action or suit
was brought shall determine upon application that, despite the
adjudication of liability for negligence or misconduct, but in view of
all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses as the Court of Common Pleas or
such other Court shall deem proper.
Section 3. Actions by the Company
Notwithstanding anything to the contrary contained in this Article
VI, the
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Company shall not indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending, or completed
action or suit brought directly by the Company to procure a judgment in its
favor (which shall not be construed to include any claim, action, suit or
proceeding of a derivative nature made or brought by any shareholder or
group of shareholders of this Company) by reason of the fact that he is or
was a Director, Officer, employee, or agent of the Company, or is or was
serving at the request of the Company as a Director, Trustee, Officer,
employee or agent of another corporation, domestic or foreign, nonprofit or
for profit, partnership, joint venture, trust, or other enterprise against
any expenses (including attorneys' fees), judgments, settlements, fines,
decrees, amounts paid upon a plea of nolo contendere or otherwise
irrespective of the fact that he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company, except: (a) the Company shall indemnify him for expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense of such action or suit if and to the extent
that such Director, Trustee, Officer, employee, or agent has been
successful on the merits or otherwise in defense of any such action, suit
or proceeding referred to in this Section or in defense of any such
claim, issue or matter, therein, and (b) the Company may, but shall not be
required to, indemnify him for all or any portion of his expenses
(including attorneys' fees) in connection with the settlement of such
action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company.
Section 4. Meritorious or Otherwise Successful Defenses
Notwithstanding the standards of conduct established in Section 1 and
2 of this Article VI, to the extent that a Director, Trustee, Officer,
employee, or agent has been successful on the merits or otherwise in
defense of any action, suit, or proceeding referred to in Section 1 and 2
of this Article VI, or in defense of any claim, issue, or matter therein,
he shall be indemnified against expenses (including attorneys' fees),
actually and reasonably incurred by him in connection therewith.
Section 5. Application of Standards of Conduct
Any indemnification under Sections 1, 2 or 3 or this Article VI,
unless ordered by a court, shall be made by the Company only as authorized
in the specific case upon a determination that indemnification of the
Director, Trustee, Officer, employee, or agent is proper in the
circumstances because he has met the applicable standard of conduct set
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forth in Sections 1, 2 or 3 of this Article VI. Such determination
shall be made (a) by a majority vote of a quorum consisting of Directors of
the Company who were not and are not parties to or threatened with any such
action, suit or proceeding, or (b) if such a quorum is not obtainable or
if a majority vote of a quorum of disinterested Directors so directs, in a
written opinion by independent legal counsel other than an attorney or a
firm having associated with it an attorney who has been retained by or who
has performed services for the Company, or any person to be indemnified
within the past five years, or (c) by the shareholders, or (d) by the
Court of Common Pleas or the Court in which such action, suit, or
proceeding was brought. Any determination made by the disinterested
Directors or by independent legal counsel under this Section 5 shall be
promptly communicated to the person who threatened or brought the action
or suit in the right of the Company under Section 2 or this Article VI.
Section 6. Advance of Expenses
Expenses (including attorneys' fees) incurred in defending any action,
suit or proceeding referred to in Sections 1 or 2 of this Article VI
shall, and in Section 3 of this Article VI may, be paid by the Company in
advance of the final disposition of such action, suit or proceeding as
authorized by the Directors in the specific case upon receipt of an
undertaking by or on behalf of the Director, Trustee, Officer, employee or
agent to repay such amount, unless it shall ultimately be determined that
he is entitled to be indemnified by the Company as authorized in this
Article VI.
Section 7. Other Remedies
The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under the Company's Amended Articles of Incorporation, other
provisions of these Regulations, any agreement, any insurance purchased by
the Company, any vote of the Company's Shareholders or disinterested
Directors, or otherwise, both as to action in an official capacity and as to
action in another capacity while holding such office, and shall continue
as to a person who has ceased to be a Director, Trustee, Officer, employee,
or agent and shall inure to the benefit of the heirs, executors, and
administrators of such a person. The Company, through appropriate action
by its Officers, Directors and/or shareholders, is hereby specifically
authorized to take any and all further action (except as prohibited by
Section 3 of this Article VI) to effectuate any indemnification of any
person which any Ohio corporation may have power to take.
18
<PAGE> 19
Section 8. Insurance
In the discretion of the Board of Directors, the Company may
purchase and maintain insurance on behalf of any person who is or was a
Director, Officer, employee, or agent of the Company, or is or was serving
at the request of the Company as a Director, Trustee, Officer, employee,
or agent of another corporation, domestic or foreign, nonprofit or for
profit, partnership, joint venture, trust, or other enterprise against any
liability asserted against him and incurred by him in any such capacity,
or arising out of his status as such, whether or not the Company otherwise
would have the power to indemnify him against such liability.
Section 9. Definitions
As used in this Article, references to "Company" include all
constituent corporations in a consolidation or merger and the new or
surviving corporation, so that any person who is or was a Director,
Officer, employee, or agent of such a constituent corporation, or is or
was serving at the request of such constituent corporation as a Director,
Trustee, Officer, employee, or agent of another corporation, domestic or
foreign, nonprofit or for profit, partnership, joint venture, trust, or
other enterprise shall stand in the same position under this section with
respect to the new or surviving corporation as he would if he had served
the new or surviving corporation in the same capacity.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Company shall be fixed by resolution of the
Board of Directors and shall remain as fixed until changed by resolution
of the Board from time to time.
ARTICLE VIII
CANCELLATION OF FORMER CODES OF REGULATIONS
This Amended Code of Regulations supersedes all Amended Codes of
Regulations and amendments thereto hertofore adopted.
19
<PAGE> 20
ARTICLE IX
EMERGENCY REGULATIONS
The Directors may adopt, either before or during an emergency, as
that term is defined by the General Corporation Law of Ohio, any emergency
regulations permitted by the General Corporation Law of Ohio which shall
be operative only during such an emergency. In the event the Board of
Directors does not adopt any such emergency regulations, the special rules
provided in the General Corporation Law of Ohio shall be applicable during
an emergency as therein defined.
ARTICLE X
AMENDMENTS
The Company may amend, change or add to this Amended Code of
Regulations for any lawful purpose by the vote or written consent of the
holders of record of shares entitling them to exercise two-thirds of the
voting power of the Company in respect of any such amendment, change or
addition; provided, however, that eighty per cent (80%) of the voting
power of the Company shall be required to amend, change or add to any one
or more of the following Sections of this Amended Code of Regulations,
namely, Section 2 of Article I, Section 5 of Article I, Section 2 of
Article II, Section 3 of Article II, Section 4 of Article II, Section 5 of
Article II, or this Article X. If any such amendment, change or addition
is adopted by written consent without a meeting of the Shareholders, the
Secretary shall enter any such amendment, change or addition in the
records of the Company and mail a copy thereof to each Shareholder of
record who would have been entitled to vote thereon and did not
participate in the adoption thereof.
CERTIFICATE
The undersigned, the duly elected and acting Secretary of The Lamson
& Sessions Co., an Ohio corporation, having its principal office at 2000
Bond Court, 1300 East 9th Street, Cleveland, Ohio 44114, hereby certifies
that the foregoing is a true and correct copy of the current Amended Code
of Regulations of said corporation, and that the foregoing Amended Code of
Regulations are in full force and effect, on the date of this certificate.
Dated: May 13,1980 By D. A. Rowe
-------------------
Secretary
20
<PAGE> 1
Exhibit 10(b)
EMPLOYMENT AGREEMENT
--------------------
This EMPLOYMENT AGREEMENT ("Agreement"), dated as of January 1,
1995, by and between The Lamson & Sessions Co., an Ohio corporation (the
"Company"), and (the "Executive");
----------------
WITNESSETH:
----------
WHEREAS, the Executive is a senior executive of the Company and has
made and is expected to continue to make major contributions to the
profitability, growth and financial strength of the Company;
WHEREAS, the Company recognizes that, as is the case for most
publicly held companies, the possibility of a Change in Control (as that term
is hereafter defined) exists;
WHEREAS, the Company desires to assure itself of both present and
future continuity of management in the event of a Change in Control and desires
to establish certain minimum compensation rights of its key senior executive
officers, including the Executive, applicable in the event of a Change in
Control;
WHEREAS, the Company wishes to ensure that its senior executives are
not practically disabled from discharging their duties upon a Change in
Control;
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits which the Executive could reasonably expect to
receive from the Company absent a Change in Control and, accordingly, although
effective and binding as of the date hereof, this Agreement shall become
operative only upon the occurrence of a Change in Control; and
WHEREAS, the Executive is willing to render services to the Company
on the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, the Company and the Executive agree as follows:
1. OPERATION OF AGREEMENT:
----------------------
(a) This Agreement shall be effective and binding immediately
upon its execution, but, anything in this Agreement to the
contrary notwithstanding, this Agreement shall not become
operative unless and until there shall have occurred a
Change in Control. For purposes of this Agreement, a
"Change in Control" shall have occurred if at any time
during the Term (as that term is hereafter defined) any of
the following events shall occur:
(i) The Company is merged or consolidated or
reorganized into or with another corporation or
other legal person, and as a result of such
merger, consolidation or reorganization less than
a majority of the combined voting power of the
then-outstanding securities of such corporation
or person immediately after such transaction are
held in the aggregate by the holders of Voting
Stock (as that term is hereafter defined) of the
Company immediately prior to such transaction;
L0934.-2 (12/02/94)
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<PAGE> 2
(ii) The Company sells or otherwise transfers all or
substantially all of its assets to any other
corporation or other legal person, and less than
a majority of the combined voting power of the
then-outstanding securities of such corporation
or person immediately after such sale or transfer
is held in the aggregate by the holders of Voting
Stock of the Company immediately prior to such
sale or transfer;
(iii) There is a report filed on Schedule 13D or
Schedule 14D-1 (or any successor schedule, form
or report), each as promulgated pursuant to the
Securities Exchange Act of 1934, as amended (the
"Exchange Act"), disclosing that any person (as
the term "person" is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) has become
the beneficial owner (as the term "beneficial
owner" is defined under Rule 13d-3 or any
successor rule or regulation promulgated under
the Exchange Act) of securities representing 15%
or more of the combined voting power of the then
outstanding securities entitled to vote generally
in the election of directors of the Company
("Voting Stock");
(iv) The Company files any report, proxy statement or
other document with the Securities and Exchange
Commission pursuant to the Exchange Act or any
rules or regulations presently in effect or
hereafter promulgated under such Act disclosing
that a change in control of the Company has or
may have occurred or will or may occur in the
future pursuant to any then-existing contract or
transaction; or
(v) If during any period of two consecutive years,
individuals who at the beginning of any such
period constitute the Directors of the Company
cease for any reason to constitute at least a
majority thereof, unless the election, or the
nomination for election by the Company's
stockholders, of each Director of the Company
first elected during such period was approved by
a vote of at least two-thirds of the Directors of
the Company then still in office who were
Directors of the Company at the beginning of any
such period.
Notwithstanding the foregoing provisions of
Section 1(a)(iii) or 1(a)(iv) hereof, a "Change
in Control" shall not be deemed to have occurred
for purposes of this Agreement solely because (i)
the Company, (ii) an entity in which the Company
directly or indirectly beneficially owns 80% or
more of the voting securities, or (iii) any
Company-sponsored employee stock ownership plan
or any other employee benefit plan of the
Company, either files or becomes obligated to
file a report or a proxy statement under or in
response to Schedule 13D, Schedule 14D-1, Form
8-K or Schedule 14A (or any successor schedule,
form or report or item therein) under the
Exchange Act, disclosing beneficial ownership by
it of shares of Voting Stock, whether in excess
of 15% or otherwise, or because the Company
reports that a Change in Control of the Company
has or may have occurred or will or may occur in
the future by reason of such beneficial
ownership.
(b) Upon the occurrence of a Change in Control at any time
during the Term, this Agreement shall become immediately
operative.
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<PAGE> 3
(c) The period during which this Agreement shall be in effect
(the "Term") shall commence as of the date hereof and shall
expire as of the later of (i) the close of business on
December 31, 1996 or (ii) the expiration of the Period of
Employment (as that term is hereafter defined), provided,
however, that (A) commencing on January 1, 1992 and each
January 1 thereafter prior to the occurrence of a Change in
Control, the term of this Agreement shall automatically be
extended for an additional year unless, not later than
December 30 of the immediately preceding year, the Company
or the Executive shall have given notice that it or he, as
the case may be, does not wish to have the Term extended,
and (B) subject to Section 9 hereof, if, prior to a Change
in Control, the Executive ceases for any reason to be an
officer of the Company, thereupon the Term shall be deemed
to have expired and this Agreement shall immediately
terminate and be of no further effect.
2. EMPLOYMENT; PERIOD OF EMPLOYMENT:
--------------------------------
(a) Subject to the terms and conditions of this Agreement, upon
the occurrence of a Change in Control, the Company shall
continue the Executive in its employ and the Executive
shall remain in the employ of the Company for the period
set forth in Section 2(b) hereof (the "Period of
Employment"), in the position and with substantially the
same duties and responsibilities that he had immediately
prior to the Change in Control, or to which the Company and
the Executive may hereafter mutually agree in writing.
Throughout the Period of Employment, the Executive shall
devote substantially all of his time during normal business
hours (subject to vacations, sick leave and other absences
in accordance with the policies of the Company as in effect
for senior executives immediately prior to the Change in
Control) to the business and affairs of the Company, but
nothing in this Agreement shall preclude the Executive from
devoting reasonable periods of time during normal business
hours to (i) serving as a director, trustee or member of or
participant in any organization or business so long as such
activity would not constitute Competitive Activity (as that
term is hereafter defined) if conducted by the Executive
after the Executive's Termination Date (as that term is
hereafter defined), (ii) engaging in charitable and
community activities, or (iii) managing his personal
investments.
(b) The Period of Employment shall commence on the date of an
occurrence of a Change in Control and, subject only to the
provisions of Section 4 hereof, shall continue until the
earlier of (i) the expiration of the second anniversary of
the occurrence of the Change in Control, (ii) the
Executive's death, or (iii) the Executive's attainment of
age 65; provided, however, that commencing on each
anniversary of the Change of Control, the expiration of the
Period of Employment provided for under clause (i) of this
Section 2(b) shall automatically be extended for an
additional year unless, not later than 90 calendar days
prior to such anniversary date, either the Company or the
Executive shall have given written notice to the other that
the Period of Employment shall not be so extended.
L0934.-2 (12/02/94)
- 3 -
<PAGE> 4
3. COMPENSATION DURING PERIOD OF EMPLOYMENT:
----------------------------------------
(a) Upon the occurrence of a Change in Control, the Executive
shall receive during the Period of Employment (i) annual
base salary at a rate not less than the Executive's annual
fixed or base compensation (payable monthly or otherwise as
in effect for senior executives of the Company immediately
prior to the occurrence of a Change in Control) or such
higher rate as may be determined from time to time by the
Board of Directors of the Company (the "Board") or the
Compensation Committee thereof (the "Committee") (which
base salary at such rate is herein referred to as "Base
Pay") and (ii) an annual amount equal to not less than the
average of the aggregate annual bonus, incentive or other
payments of cash compensation in addition to the amounts
referred to in clause (i) above made or to be made in
regard to services rendered in any calendar year during (1)
the period of two calendar years immediately preceding the
year in which the Change in Control occurred or (2) subject
to the proviso hereinafter set forth, such lesser number of
calendar years in respect of which the Executive shall have
received Incentive Pay, in either case pursuant to any
bonus, incentive, profit-sharing, performance,
discretionary pay or similar policy, plan, program or
arrangement of the Company or any successor thereto
providing benefits at least as great as the benefits
payable thereunder prior to a Change in Control ("Incentive
Pay"), provided, however, that with the prior written
consent of the Executive, nothing herein shall preclude a
change in the mix between Base Pay and Incentive Pay so
long as the aggregate cash compensation received by the
Executive in any one calendar year is not reduced in
connection therewith or as a result thereof, and provided
further, however, that in no event shall any increase in
the Executive's aggregate cash compensation or any portion
thereof in any way diminish any other obligation of the
Company under this Agreement.
(b) For his service pursuant to Section 2(a) hereof, during the
Period of Employment the Executive shall be a full
participant in, and shall be entitled to the perquisites,
benefits and service credit for benefits as provided under,
any and all employee retirement income and welfare benefit
policies, plans, programs or arrangements in which senior
executives of the Company participate, including without
limitation any stock option, stock purchase, stock
appreciation, savings, pension, supplemental executive
retirement or other retirement income or welfare benefit,
deferred compensation, incentive compensation, group and/or
executive life, health, medical/hospital or other insurance
(whether funded by actual insurance or self-insured by the
Company), disability, salary continuation, expense
reimbursement and other employee benefit policies, plans,
programs or arrangements that may now exist or any
equivalent successor policies, plans, programs or
arrangements that may be adopted hereafter by the Company
providing perquisites, benefits and service credit for
benefits at least as great as are payable thereunder prior
to a Change in Control (collectively, "Employee Benefits"),
provided, however, that except as expressly provided in,
and subject to the terms of, Section 5(a)(iii) hereof, the
Executive's rights thereunder shall be governed by the
terms thereof and shall not be enlarged hereunder or
otherwise affected hereby. Subject to the proviso in the
immediately preceding sentence, if and to the extent such
perquisites, benefits or service credit for benefits are
not payable or provided under any such policy, plan,
program or arrangement as a result of the amendment or
L0934.-2 (12/02/94)
- 4 -
<PAGE> 5
termination thereof, then the Company shall itself pay or
provide therefor. Nothing in this Agreement shall preclude
improvement or enhancement of any such Employee
Benefits, provided that no such improvement shall in any
way diminish any other obligation of the Company under this
Agreement.
(c) The Company has determined that the amounts payable
pursuant to this Section 3 constitute reasonable
compensation for services to be rendered during the Period
of Employment.
4. TERMINATION FOLLOWING A CHANGE IN CONTROL:
-----------------------------------------
(a) In the event of the occurrence of a Change in Control, the
Executive's employment may be terminated by the Company
during the Period of Employment and the Executive shall not
be entitled to the benefits provided by Section 5 hereof
only upon the occurrence of one or more of the following
events:
(i) The Executive's death;
(ii) If the Executive shall become permanently
disabled within the meaning of, and begins
actually to receive disability benefits pursuant
to, the long-term disability plan in effect for
senior executives of the Company immediately
prior to the Change in Control; or
(iii) For "Cause", which for purposes of this Agreement
shall mean that, prior to any termination
pursuant to Section 4(b) hereof, the Executive
shall have committed:
(A) an intentional act of fraud, embezzlement
or theft in connection with his duties or
in the course of his employment with the
Company;
(B) intentional wrongful damage to property of
the Company;
(C) intentional wrongful disclosure of secret
processes or confidential information of
the Company; or
(D) intentional wrongful engagement in any
Competitive Activity;
and any such act shall have been materially
harmful to the Company. For purposes of this
Agreement, no act, or failure to act, on the part
of the Executive shall be deemed "intentional" if
it was due primarily to an error in judgment or
negligence, but shall be deemed "intentional"
only if done, or omitted to be done, by the
Executive not in good faith and without
reasonable belief that his action or omission was
in the best interest of the Company.
Notwithstanding the foregoing, the Executive
shall not be deemed to have been terminated for
"Cause" hereunder unless and until there shall
have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote
of not less than three-quarters of the Board then
in office at a meeting of the Board called and
held for such purpose (after reasonable notice to
the
L0934.-2 (12/02/94)
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<PAGE> 6
Executive and an opportunity for the Executive,
together with his counsel, to be heard before the
Board), finding that, in the good faith opinion
of the Board, the Executive had committed an act
set forth above in this Section 4(a)(iii) and
specifying the particulars thereof in detail.
Nothing herein shall limit the right of the
Executive or his beneficiaries to contest the
validity or propriety of any such determination.
(b) In the event of the occurrence of a Change in Control,
during the Period of Employment the Executive shall be
entitled to the benefits as provided in Section 5 hereof
upon the occurrence of one or more of the following events:
(i) Any termination by the Company of the employment
of the Executive prior to the date upon which the
Executive shall have attained age 65, which
termination shall be for any reason other than
for Cause or as a result of the death of the
Executive or by reason of the Executive's
disability and the actual receipt of disability
benefits in accordance with Section 4(a)(ii)
hereof; or
(ii) Termination by the Executive of his employment
with the Company upon the occurrence of any of
the following events:
(A) Failure to elect, reelect or otherwise
maintain the Executive in the office or
position in the Company which the
Executive held immediately prior to a
Change in Control, or the removal of the
Executive as a Director of the Company (or
any successor thereto) if the Executive
shall have been a Director of the Company
immediately prior to the Change in
Control;
(B) A significant adverse change in the nature
or scope of the authorities, powers,
functions, responsibilities or duties
attached to the position with the Company
which the Executive held immediately prior
to the Change in Control, any reduction in
the aggregate of the Executive's Base Pay
and Incentive Pay received from the
Company, or the termination of the
Executive's rights to any Employee
Benefits to which he was entitled
immediately prior to the Change in Control
or a reduction in scope or value thereof
without the prior written consent of the
Executive, any of which is not remedied
within 10 calendar days after receipt by
the Company of written notice from the
Executive of such change, reduction or
termination, as the case may be;
(C) A determination by the Executive made in
good faith that as a result of a Change in
Control and a change in circumstances
thereafter significantly affecting his
position, including without limitation a
change in the scope of the business or
other activities for which he was
responsible immediately prior to the
Change in Control, he has been rendered
substantially unable to carry out, has
been substantially hindered in the
performance of, or has suffered a
substantial reduction in, any of the
authorities, powers, functions,
responsibilities or duties attached to the
L0934.-2 (12/02/94)
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<PAGE> 7
position held by the Executive immediately
prior to the Change in Control, which
situation is not remedied within 10
calendar days after written notice to the
Company from the Executive of such
determination;
(D) The liquidation, dissolution, merger,
consolidation or reorganization of the
Company or transfer of all or a
significant portion of its business and/or
assets, unless the successor or successors
(by liquidation, merger, consolidation,
reorganization or otherwise) to which all
or a significant portion of its business
and/or assets have been transferred
(directly or by operation of law) shall
have assumed all duties and obligations of
the Company under this Agreement pursuant
to Section 11 hereof;
(E) The Company shall relocate its principal
executive offices, or require the
Executive to have his principal location
of work changed, to any location which is
in excess of 50 miles from the location
thereof immediately prior to the Change of
Control or the Company shall require the
Executive to travel away from his office
in the course of discharging his
responsibilities or duties hereunder
significantly more (in terms of either
consecutive days or aggregate days in any
calendar year) than was required of him
prior to the Change of Control without, in
either case, his prior written consent; or
(F) Without limiting the generality or effect
of the foregoing, any material breach of
this Agreement by the Company or any
successor thereto.
(c) A termination by the Company pursuant to Section 4(a)
hereof or by the Executive pursuant to Section 4(b) hereof
shall not affect any rights which the Executive may have
pursuant to any agreement, policy, plan, program or
arrangement of the Company providing Employee Benefits,
which rights shall be governed by the terms thereof. If
this Agreement or the employment of the Executive is
terminated under circumstances in which the Executive is
not entitled to any payments under Sections 3 or 5 hereof,
the Executive shall have no further obligation or liability
to the Company hereunder with respect to his prior or any
future employment by the Company.
5. SEVERANCE COMPENSATION:
----------------------
(a) If, following the occurrence of a Change in Control, the
Company shall terminate the Executive's employment during
the Period of Employment other than pursuant to Section
4(a) hereof, or if the Executive shall terminate his
employment pursuant to Section 4(b) hereof, the Company
shall pay to the Executive the amount specified in Section
5(a)(i) hereof within five business days after the date
(the "Termination Date") that the Executive's employment is
terminated (the effective date of which shall be the date
of termination or such other date that may be specified by
the Executive if the termination is pursuant to Section
4(b) hereof):
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<PAGE> 8
(i) In lieu of any further payments to the Executive
for periods subsequent to the Termination Date, a
lump sum payment (the "Severance Payment") in an
amount equal to the present value (using a
discount rate prescribed for purposes of
valuation computations under Section 280G of the
Code or any successor provision thereto, or if no
such rate is so prescribed, a rate equal to the
then-applicable interest rate prescribed by the
Pension Benefit Guarantee Corporation for benefit
valuations in connection with non-multiemployer
pension plan terminations assuming the immediate
commencement of benefit payments (the "Discount
Rate")) of the sum of (A) the aggregate Base Pay
(at the greater of the highest rate in effect
either immediately preceding the occurrence of
the Change in Control or during the Period of
Employment) for each remaining year or partial
year of the Period of Employment which the
Executive would have received had such
termination or breach not occurred, plus (B) the
aggregate Incentive Pay (calculated in accordance
with the provisions of Section 3(a) hereof),
which the Executive would have received pursuant
to this Agreement during the remainder of the
Period of Employment had his employment continued
for the remainder of the Period of Employment.
Notwithstanding the foregoing provisions of this
Section (a)(i) but subject to the proviso
hereinafter set forth, if the Executive is a
Disqualified Individual (as the term
"Disqualified Individual" is defined in Section
280G of the Code or any successor provision
thereto) and if any portion of the Severance
Payment would be an Excess Parachute Payment (as
the term "Excess Parachute Payment" is defined in
Section 280G of the Code or any successor
provision thereto) but for the application of
this sentence, then the amount of the Severance
Payment otherwise payable to the Executive
pursuant to this Agreement shall be reduced to
the minimum extent necessary (but in no event to
less than zero) so that no portion of the
Severance Payment, as so reduced, constitutes an
Excess Parachute Payment.
(ii) The determination of whether any reduction in the
amount of the Severance Payment is required
pursuant to the last sentence of Section 5(a)(i)
hereof shall be made, if requested by the
Executive or the Company, by Jones, Day, Reavis &
Pogue or such other tax counsel selected by the
Company's independent accountants and acceptable
to the Executive. The fact that the Executive
shall have his right to the Severance Payment
reduced as a result of the existence of the
limitations contained in this Section 5(a) shall
not of itself limit or otherwise affect any
rights of the Executive to any Employee Benefit
(which shall be determined pursuant to Section
5(a)(iii) hereof), or any other right arising
other than pursuant to this Agreement.
(iii) Except to the extent that the payments or
benefits pursuant to this Section 5(a)(iii) would
result in a reduction of the amount of the
Severance Payment pursuant to the last sentence
of Section 5(a)(i) hereof, (A) for the remainder
of the Period of Employment the Company shall
arrange to provide the Executive with Employee
Benefits substantially similar to those which the
Executive was receiving or entitled to receive
immediately prior to the Termination
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<PAGE> 9
Date (and if and to the extent that such benefits
shall not or cannot be paid or provided under
any policy, plan, program or arrangement of the
Company solely due to the fact that the
Executive is no longer an officer or employee of
the Company, then the Company shall itself pay or
provide for the payment to the Executive, his
dependents and beneficiaries, such Employee
Benefits) and (B) without limiting the generality
of the foregoing, the remainder of the Period of
Employment shall be considered service with the
Company for the purpose of service credits under
the Company's retirement income, supplemental
executive retirement and other benefit plans of
the Company applicable to the Executive or his
beneficiaries immediately prior to the
Termination Date. Without otherwise limiting the
purposes or effect of Section 6 hereof, Employee
Benefits payable to the Executive pursuant to
this Section 5(a)(iii) by reason of any "welfare
benefit plan" of the Company (as the term
"welfare benefit plan" is defined in Section
3(1)of the Employee Retirement Income Act of
1974, as amended) shall be reduced to the extent
comparable welfare benefits are actually
received by the Executive from another employer
during such period following the Executive's
Termination Date until the expiration of the
Period of Employment.
(b) There shall be no right of set-off or
counterclaim in respect of any claim, debt or
obligation against any payment to or benefit for
the Executive provided for in this Agreement.
(c) Without limiting the rights of the Executive at
law or in equity, if the Company fails to make
any payment required to be made hereunder on
a timely basis, the Company shall pay interest on
the amount thereof at an annualized rate of
interest equal to the then-applicable Discount
Rate.
6. NO MITIGATION OBLIGATION: The Company hereby acknowledges that it
will be difficult, and may be impossible, for the Executive to find
reasonably comparable employment following the Termination Date and
that the noncompetition covenant contained in Section 7 hereof will
further limit the employment opportunities for the Executive. The
parties hereto expressly agree that the payment of the severance
compensation by the Company to the Executive in accordance with the
terms of this Agreement will be liquidated damages, and that the
Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment
or otherwise, nor shall any profits, income, earnings or other
benefits from any source whatsoever create any mitigation, offset,
reduction or any other obligation on the part of the Executive
hereunder or otherwise, except as expressly provided in Section
5(a)(iii) hereof.
7. COMPETITIVE ACTIVITY: During a period ending on the date of the
first to occur of either the attainment by the Executive of age 65
or one year following the Termination Date, if the Executive shall
have received or shall be receiving benefits under Section 5(a)
hereof, the Executive shall not, without the prior written consent
of the Company, engage in any Competitive Activity. For purposes of
this Agreement, the term "Competitive Activity" shall mean the
Executive's participation, without the written consent of the
Company, in the management of any business enterprise if such
enterprise engages in substantial and direct competition with the
Company and such
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<PAGE> 10
enterprise's sales of any product or service competitive with any
product or service of the Company amounted to 25% of such
enterprise's net sales for its most recently completed fiscal year
and if the Company's net sales of said product or service amounted
to 25% of the Company's net sales for its most recently completed
fiscal year. "Competitive Activity" shall not include (i) the mere
ownership of securities in any such enterprise and the exercise of
rights appurtenant thereto or (ii) participation in the management
of any such enterprise other than in connection with the competitive
operations of such enterprise.
8. LEGAL FEES AND EXPENSES:
-----------------------
(a) It is the intent of the Company that the Executive not be
required to incur the expenses associated with the
enforcement of his rights under this Agreement by
litigation or other legal action because the cost and
expense thereof would substantially detract from the
benefits intended to be extended to the Executive
hereunder. Accordingly, if it should appear to the
Executive that the Company has failed to comply with any of
its obligations under this Agreement or in the event that
the Company or any other person takes any action to declare
this Agreement void or unenforceable, or institutes any
litigation designed to deny, or to recover from, the
Executive the benefits intended to be provided to the
Executive hereunder, the Company irrevocably authorizes the
Executive from time to time to retain counsel of his
choice, at the expense of the Company as hereafter
provided, to represent the Executive in connection with the
initiation or defense of any litigation or other legal
action, whether by or against the Company or any Director,
officer, stockholder or other person affiliated with the
Company, in any jurisdiction. Notwithstanding any existing
or prior attorney-client relationship between the Company
and such counsel, the Company irrevocably consents to the
Executive's entering into an attorney-client relationship
with such counsel, and in that connection the Company and
the Executive agree that a confidential relationship shall
exist between the Executive and such counsel. The Company
shall pay or cause to be paid and shall be solely
responsible for any and all attorneys' and related fees and
expenses incurred by the Executive as a result of the
Company's failure to perform this Agreement or any
provision hereof or as a result of the Company or any
person contesting the validity of enforceability of this
Agreement or any provision hereof as aforesaid.
(b) To ensure that the provisions of this Agreement can be
enforced by the Executive, the Company shall establish
certain trust arrangements ("Trusts") with an independent
banking association as Trustee ("Trustee"). The Company
shall execute and deliver a Trust Agreement ("Trust
Agreement") and a Trust Agreement for Attorneys' Fees
("Trust Agreement for Attorneys' Fees") between the Trustee
and the Company, and when so executed and delivered such
Trust Agreement and Trust Agreement for Attorneys' Fees
shall be deemed to be a part of this Agreement and shall
set forth the terms and conditions relating to payment from
the Trust under the Trust Agreement of compensation and
other benefits pursuant to Sections 3 and 5 hereof owed by
the Company, and payment from the Trust under the Trust
Agreement for Attorneys' Fees of attorneys' and related
fees and expenses pursuant to Section 8(a) hereof owed by
the Company. The Executive shall first make demand on the
Company for any payments due the Executive pursuant to
Section 8(a) hereof prior to making
L0934.-2 (12/02/94)
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<PAGE> 11
demand therefor on the Trustee under the Trust Agreement for
Attorneys' Fees. Payments by such Trustee shall discharge
the Company's liability under Section 8(a) hereof only to
the extent that trust assets are used to satisfy such
liability.
(c) Upon occurrence of a Change in Control, the Company shall
promptly, to the extent it has not previously done so, and
in any event within five (5) business days:
(i) transfer to the Trustee to be added to the
principal of the Trust under the Trust Agreement
a sum equal to the present value on the date of
the Change in Control of the payments to be made
to the Executive under the provisions of Section
5 hereof; provided, however, that the Company
shall not be required to transfer, in the
aggregate, to the Trust under the Trust Agreement
a sum in excess of the maximum amount authorized
from time to time by its Directors. Any payments
of compensation, supplemental pension or other
benefits by the Trustee pursuant to the Trust
Agreement shall, to the extent thereof, discharge
the Company's obligation to pay compensation,
supplemental pension and other benefits
hereunder, it being the intent of the Company
that assets in such Trust be held as security for
the Company's obligation to pay compensation,
supplemental pension and other benefits under
this Agreement; and
(ii) transfer to the Trustee to be added to the
principal of the Trust under the Trust Agreement
for Attorneys' Fees the sum of TWO HUNDRED FIFTY
THOUSAND DOLLARS ($250,000), it being the intent
of the Company that assets in such Trust be held
as security for the company's obligation under
Section 8(a) hereof. The Executive understands
and acknowledges that the entire corpus of the
Trust under the Trust Agreement for Attorneys'
Fees will be $250,000 and that said amount will
be available to discharge not only the
obligations of the Company to the Executive under
Section 8(a) hereof, but also similar obligations
of the Company to other executives under similar
provisions.
9. EMPLOYMENT RIGHTS: Nothing expressed or implied in this Agreement
shall create any right or duty on the part of the Company or the
Executive to have the Executive remain in the employment of the
Company prior to any Change in Control, provided, however, that any
termination of employment of the Executive or the removal of the
Executive from the office or position in the Company following the
commencement of any discussion with a third person that ultimately
results in a Change in Control shall be deemed to be a termination
or removal of the Executive after a Change in Control for purposes
of this Agreement.
10. WITHHOLDING OF TAXES: The Company may withhold from any amounts
payable under this Agreement all federal, state, city or other taxes
as shall be required pursuant to any law or government regulation or
ruling.
11. TAX PAYMENT: Notwithstanding any other provision hereof, unless
such action would be expressly prohibited by applicable law, if any
amount paid or payable pursuant to this Agreement for services to be
rendered during the Period of Employment or in
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<PAGE> 12
connection with the payment of severance compensation pursuant to
Section 5 hereof is subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code"),
the Company will pay to the Executive an additional amount in cash
equal to the amount necessary to cause the aggregate remuneration
received by the Executive under this Agreement for services to be
rendered during the Period of Employment or in connection with the
payment of severance compensation, including such additional cash
payment (net of all federal, state and local income taxes and all
taxes payable as the result of the application of Sections 280G and
4999 of the Code) to be equal to the aggregate remuneration the
Executive would have received under this Agreement for services to
be rendered during the Period of Employment or in connection with
the payment of severance compensation, excluding such additional
payment (net of all federal, state and local income taxes), as if
Sections 280G and 4999 of the Code (and any successor provisions
thereto) had not been enacted into law.
12. SUCCESSORS AND BINDING AGREEMENT:
--------------------------------
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of
the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Executive, expressly
to assume and agree to perform this Agreement in the same
manner and to the same extent the Company would be required
to perform if no such succession had taken place. This
Agreement shall be binding upon and inure to the benefit of
the Company and any successor to the Company, including
without limitation any persons acquiring directly or
indirectly all or substantially all of the business and/or
assets of the Company whether by purchase, merger,
consolidation, reorganization or otherwise (and such
successor shall thereafter be deemed the "Company" for the
purposes of this Agreement), but shall not otherwise be
assignable, transferable or delegable by the Company.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal
representatives, executors, administrators, successors,
heirs, distributees and/or legatees.
(c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other,
assign, transfer or delegate this Agreement or any rights
or obligations hereunder except as expressly provided in
Section 12(a) hereof. Without limiting the generality of
the foregoing, the Executive's right to receive payments
hereunder shall not be assignable, transferable or
delegable, whether by pledge, creation of a security
interest or otherwise, other than by a transfer by his will
or by the laws of descent and distribution and, in the
event of any attempted assignment or transfer contrary to
this Section 12(c), the Company shall have no liability to
pay any amount so attempted to be assigned, transferred or
delegated.
(d) The Company and the Executive recognize that each party
will have no adequate remedy at law for breach by the other
of any of the agreements contained herein and, in the event
of any such breach, the Company and the Executive hereby
agree and consent that the other shall be entitled to a
decree of specific performance, mandamus or other
appropriate remedy to enforce performance of this
Agreement.
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<PAGE> 13
13. NOTICE: For all purposes of this Agreement, all communications
including without limitation notices, consents, requests or
approvals, provided for herein shall be in writing and shall be
deemed to have been duly given when delivered or five business days
after having been mailed by United States registered or certified
mail, return receipt requested, postage prepaid, addressed to the
Company (to the attention of the Secretary of the Company) at its
principal executive office and to the Executive at his principal
residence, or to such other address as any party may have furnished
to the other in writing and in accordance herewith, except that
notices of change of address shall be effective only upon receipt.
14. GOVERNING LAW: The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the
State of Ohio, without giving effect to the principles of conflict
of laws of such State.
15. VALIDITY: If any provision of this Agreement or the application of
any provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement
and the application of such provision to any other person or
circumstances shall not be affected, and the provision so held to be
invalid, unenforceable or otherwise illegal shall be reformed to the
extent (and only to the extent) necessary to make it enforceable,
valid and legal.
16. MISCELLANEOUS: No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge
is agreed to in writing signed by the Executive and the Company. No
waiver by either party hereto at any time of any breach by the other
party hereto or compliance with any condition or provision of this
Agreement to be performed by such other party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time. No agreements or
representations, oral or otherwise expressed or implied with respect
to the subject matter hereof have been made by either party which
are not set forth expressly in this Agreement.
17. COUNTERPARTS: This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but
all of which together will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered as of the date first above written.
THE LAMSON & SESSIONS CO.
By
---------------------------------------
John B. Schulze, President and
Chief Executive Officer
-----------------------------------------
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<PAGE> 1
Exhibit 10(c)
EMPLOYMENT AGREEMENT
--------------------
This EMPLOYMENT AGREEMENT ("Agreement"), dated as of January 1,
1995, by and between The Lamson & Sessions Co., an Ohio corporation (the
"Company"), and A. Corydon Meyer (the "Executive");
WITNESSETH:
----------
WHEREAS, the Executive is a senior executive of the Company and has
made and is expected to continue to make major contributions to the
profitability, growth and financial strength of the Company;
WHEREAS, the Company recognizes that, as is the case for most
publicly held companies, the possibility of a Change in Control (as that term
is hereafter defined) exists;
WHEREAS, the Company desires to assure itself of both present and
future continuity of management in the event of a Change in Control and desires
to establish certain minimum compensation rights of its key senior executive
officers, including the Executive, applicable in the event of a Change in
Control;
WHEREAS, the Company wishes to ensure that its senior executives are
not practically disabled from discharging their duties upon a Change in
Control;
WHEREAS, this Agreement is not intended to alter materially the
compensation and benefits which the Executive could reasonably expect to
receive from the Company absent a Change in Control and, accordingly, although
effective and binding as of the date hereof, this Agreement shall become
operative only upon the occurrence of a Change in Control; and
WHEREAS, the Executive is willing to render services to the Company
on the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, the Company and the Executive agree as follows:
1. OPERATION OF AGREEMENT:
----------------------
(a) This Agreement shall be effective and binding immediately
upon its execution, but, anything in this Agreement to the
contrary notwithstanding, this Agreement shall not become
operative unless and until there shall have occurred a
Change in Control. For purposes of this Agreement, a
"Change in Control" shall have occurred if at any time
during the Term (as that term is hereafter defined) any of
the following events shall occur:
(i) The Company is merged or consolidated or
reorganized into or with another corporation or
other legal person, and as a result of such
merger, consolidation or reorganization less than
a majority of the combined voting power of the
then-outstanding securities of such corporation
or person immediately after such transaction are
held in the aggregate by the holders of Voting
Stock (as that term is hereafter defined) of the
Company immediately prior to such transaction;
L0934.-2 (12/02/94)
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<PAGE> 2
(ii) The Company sells or otherwise transfers all or
substantially all of its assets to any other
corporation or other legal person, and less than
a majority of the combined voting power of the
then-outstanding securities of such corporation
or person immediately after such sale or transfer
is held in the aggregate by the holders of Voting
Stock of the Company immediately prior to such
sale or transfer;
(iii) There is a report filed on Schedule 13D or
Schedule 14D-1 (or any successor schedule, form
or report), each as promulgated pursuant to the
Securities Exchange Act of 1934, as amended (the
"Exchange Act"), disclosing that any person (as
the term "person" is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) has become
the beneficial owner (as the term "beneficial
owner" is defined under Rule 13d-3 or any
successor rule or regulation promulgated under
the Exchange Act) of securities representing 15%
or more of the combined voting power of the then
outstanding securities entitled to vote generally
in the election of directors of the Company
("Voting Stock");
(iv) The Company files any report, proxy statement or
other document with the Securities and Exchange
Commission pursuant to the Exchange Act or any
rules or regulations presently in effect or
hereafter promulgated under such Act disclosing
that a change in control of the Company has or
may have occurred or will or may occur in the
future pursuant to any then-existing contract or
transaction; or
(v) If during any period of two consecutive years,
individuals who at the beginning of any such
period constitute the Directors of the Company
cease for any reason to constitute at least a
majority thereof, unless the election, or the
nomination for election by the Company's
stockholders, of each Director of the Company
first elected during such period was approved by
a vote of at least two-thirds of the Directors of
the Company then still in office who were
Directors of the Company at the beginning of any
such period.
Notwithstanding the foregoing provisions of
Section 1(a)(iii) or 1(a)(iv) hereof, a "Change
in Control" shall not be deemed to have occurred
for purposes of this Agreement solely because (i)
the Company, (ii) an entity in which the Company
directly or indirectly beneficially owns 80% or
more of the voting securities, or (iii) any
Company-sponsored employee stock ownership plan
or any other employee benefit plan of the
Company, either files or becomes obligated to
file a report or a proxy statement under or in
response to Schedule 13D, Schedule 14D-1, Form
8-K or Schedule 14A (or any successor schedule,
form or report or item therein) under the
Exchange Act, disclosing beneficial ownership by
it of shares of Voting Stock, whether in excess
of 15% or otherwise, or because the Company
reports that a Change in Control of the Company
has or may have occurred or will or may occur in
the future by reason of such beneficial
ownership.
(b) Upon the occurrence of a Change in Control at any time
during the Term, this Agreement shall become immediately
operative.
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<PAGE> 3
(c) The period during which this Agreement shall be in effect
(the "Term") shall commence as of the date hereof and shall
expire as of the later of (i) the close of business on
December 31, 1996 or (ii) the expiration of the Period of
Employment (as that term is hereafter defined), provided,
however, that (A) commencing on January 1, 1992 and each
January 1 thereafter prior to the occurrence of a Change in
Control, the term of this Agreement shall automatically be
extended for an additional year unless, not later than
December 30 of the immediately preceding year, the Company
or the Executive shall have given notice that it or he, as
the case may be, does not wish to have the Term extended,
and (B) subject to Section 9 hereof, if, prior to a Change
in Control, the Executive ceases for any reason to be an
officer of the Company, thereupon the Term shall be deemed
to have expired and this Agreement shall immediately
terminate and be of no further effect.
2. EMPLOYMENT; PERIOD OF EMPLOYMENT:
--------------------------------
(a) Subject to the terms and conditions of this Agreement, upon
the occurrence of a Change in Control, the Company shall
continue the Executive in its employ and the Executive
shall remain in the employ of the Company for the period
set forth in Section 2(b) hereof (the "Period of
Employment"), in the position and with substantially the
same duties and responsibilities that he had immediately
prior to the Change in Control, or to which the Company and
the Executive may hereafter mutually agree in writing.
Throughout the Period of Employment, the Executive shall
devote substantially all of his time during normal business
hours (subject to vacations, sick leave and other absences
in accordance with the policies of the Company as in effect
for senior executives immediately prior to the Change in
Control) to the business and affairs of the Company, but
nothing in this Agreement shall preclude the Executive from
devoting reasonable periods of time during normal business
hours to (i) serving as a director, trustee or member of or
participant in any organization or business so long as such
activity would not constitute Competitive Activity (as that
term is hereafter defined) if conducted by the Executive
after the Executive's Termination Date (as that term is
hereafter defined), (ii) engaging in charitable and
community activities, or (iii) managing his personal
investments.
(b) The Period of Employment shall commence on the date of an
occurrence of a Change in Control and, subject only to the
provisions of Section 4 hereof, shall continue until the
earlier of (i) the expiration of the second anniversary of
the occurrence of the Change in Control, (ii) the
Executive's death, or (iii) the Executive's attainment of
age 65; provided, however, that commencing on each
anniversary of the Change of Control, the expiration of the
Period of Employment provided for under clause (i) of this
Section 2(b) shall automatically be extended for an
additional year unless, not later than 90 calendar days
prior to such anniversary date, either the Company or the
Executive shall have given written notice to the other that
the Period of Employment shall not be so extended.
L0934.-2 (12/02/94)
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<PAGE> 4
3. COMPENSATION DURING PERIOD OF EMPLOYMENT:
----------------------------------------
(a) Upon the occurrence of a Change in Control, the Executive
shall receive during the Period of Employment (i) annual
base salary at a rate not less than the Executive's annual
fixed or base compensation (payable monthly or otherwise as
in effect for senior executives of the Company immediately
prior to the occurrence of a Change in Control) or such
higher rate as may be determined from time to time by the
Board of Directors of the Company (the "Board") or the
Compensation Committee thereof (the "Committee") (which
base salary at such rate is herein referred to as "Base
Pay") and (ii) an annual amount equal to not less than the
average of the aggregate annual bonus, incentive or other
payments of cash compensation in addition to the amounts
referred to in clause (i) above made or to be made in
regard to services rendered in any calendar year during (1)
the period of two calendar years immediately preceding the
year in which the Change in Control occurred or (2) subject
to the proviso hereinafter set forth, such lesser number of
calendar years in respect of which the Executive shall have
received Incentive Pay, in either case pursuant to any
bonus, incentive, profit-sharing, performance,
discretionary pay or similar policy, plan, program or
arrangement of the Company or any successor thereto
providing benefits at least as great as the benefits
payable thereunder prior to a Change in Control ("Incentive
Pay"), provided, however, that with the prior written
consent of the Executive, nothing herein shall preclude a
change in the mix between Base Pay and Incentive Pay so
long as the aggregate cash compensation received by the
Executive in any one calendar year is not reduced in
connection therewith or as a result thereof, and provided
further, however, that in no event shall any increase in
the Executive's aggregate cash compensation or any portion
thereof in any way diminish any other obligation of the
Company under this Agreement.
(b) For his service pursuant to Section 2(a) hereof, during the
Period of Employment the Executive shall be a full
participant in, and shall be entitled to the perquisites,
benefits and service credit for benefits as provided under,
any and all employee retirement income and welfare benefit
policies, plans, programs or arrangements in which senior
executives of the Company participate, including without
limitation any stock option, stock purchase, stock
appreciation, savings, pension, supplemental executive
retirement or other retirement income or welfare benefit,
deferred compensation, incentive compensation, group and/or
executive life, health, medical/hospital or other insurance
(whether funded by actual insurance or self-insured by the
Company), disability, salary continuation, expense
reimbursement and other employee benefit policies, plans,
programs or arrangements that may now exist or any
equivalent successor policies, plans, programs or
arrangements that may be adopted hereafter by the Company
providing perquisites, benefits and service credit for
benefits at least as great as are payable thereunder prior
to a Change in Control (collectively, "Employee Benefits"),
provided, however, that except as expressly provided in,
and subject to the terms of, Section 5(a)(iii) hereof, the
Executive's rights thereunder shall be governed by the
terms thereof and shall not be enlarged hereunder or
otherwise affected hereby. Subject to the proviso in the
immediately preceding sentence, if and to the extent such
perquisites, benefits or service credit for benefits are
not payable or provided under any such policy, plan,
program or arrangement as a result of the amendment or
L0934.-2 (12/02/94)
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<PAGE> 5
termination thereof, then the Company shall itself pay or
provide therefor. Nothing in this Agreement shall preclude
improvement or enhancement of any such Employee Benefits,
provided that no such improvement shall in any way
diminish any other obligation of the Company under this
Agreement.
(c) The Company has determined that the amounts payable
pursuant to this Section 3 constitute reasonable
compensation for services to be rendered during the Period
of Employment.
4. TERMINATION FOLLOWING A CHANGE IN CONTROL:
-----------------------------------------
(a) In the event of the occurrence of a Change in Control, the
Executive's employment may be terminated by the Company
during the Period of Employment and the Executive shall not
be entitled to the benefits provided by Section 5 hereof
only upon the occurrence of one or more of the following
events:
(i) The Executive's death;
(ii) If the Executive shall become permanently
disabled within the meaning of, and begins
actually to receive disability benefits pursuant
to, the long-term disability plan in effect for
senior executives of the Company immediately
prior to the Change in Control; or
(iii) For "Cause", which for purposes of this Agreement
shall mean that, prior to any termination
pursuant to Section 4(b) hereof, the Executive
shall have committed:
(A) an intentional act of fraud, embezzlement
or theft in connection with his duties or
in the course of his employment with the
Company;
(B) intentional wrongful damage to property of
the Company;
(C) intentional wrongful disclosure of secret
processes or confidential information of
the Company; or
(D) intentional wrongful engagement in any
Competitive Activity;
and any such act shall have been materially
harmful to the Company. For purposes of this
Agreement, no act, or failure to act, on the part
of the Executive shall be deemed "intentional" if
it was due primarily to an error in judgment or
negligence, but shall be deemed "intentional"
only if done, or omitted to be done, by the
Executive not in good faith and without
reasonable belief that his action or omission was
in the best interest of the Company.
Notwithstanding the foregoing, the Executive
shall not be deemed to have been terminated for
"Cause" hereunder unless and until there shall
have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote
of not less than three-quarters of the Board then
in office at a meeting of the Board called and
held for such purpose (after reasonable notice to
the
L0934.-2 (12/02/94)
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<PAGE> 6
Executive and an opportunity for the Executive,
together with his counsel, to be heard before the
Board), finding that, in the good faith opinion
of the Board, the Executive had committed an act
set forth above in this Section 4(a)(iii) and
specifying the particulars thereof in detail.
Nothing herein shall limit the right of the
Executive or his beneficiaries to contest the
validity or propriety of any such determination.
(b) In the event of the occurrence of a Change in Control,
during the Period of Employment the Executive shall be
entitled to the benefits as provided in Section 5 hereof
upon the occurrence of one or more of the following events:
(i) Any termination by the Company of the employment
of the Executive prior to the date upon which the
Executive shall have attained age 65, which
termination shall be for any reason other than
for Cause or as a result of the death of the
Executive or by reason of the Executive's
disability and the actual receipt of disability
benefits in accordance with Section 4(a)(ii)
hereof; or
(ii) Termination by the Executive of his employment
with the Company upon the occurrence of any of
the following events:
(A) Failure to elect, reelect or otherwise
maintain the Executive in the office or
position in the Company which the
Executive held immediately prior to a
Change in Control, or the removal of the
Executive as a Director of the Company (or
any successor thereto) if the Executive
shall have been a Director of the Company
immediately prior to the Change in
Control;
(B) A significant adverse change in the nature
or scope of the authorities, powers,
functions, responsibilities or duties
attached to the position with the Company
which the Executive held immediately prior
to the Change in Control, any reduction in
the aggregate of the Executive's Base Pay
and Incentive Pay received from the
Company, or the termination of the
Executive's rights to any Employee
Benefits to which he was entitled
immediately prior to the Change in Control
or a reduction in scope or value thereof
without the prior written consent of the
Executive, any of which is not remedied
within 10 calendar days after receipt by
the Company of written notice from the
Executive of such change, reduction or
termination, as the case may be;
(C) A determination by the Executive made in
good faith that as a result of a Change in
Control and a change in circumstances
thereafter significantly affecting his
position, including without limitation a
change in the scope of the business or
other activities for which he was
responsible immediately prior to the
Change in Control, he has been rendered
substantially unable to carry out, has
been substantially hindered in the
performance of, or has suffered a
substantial reduction in, any of the
authorities, powers, functions,
responsibilities or duties attached to the
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<PAGE> 7
position held by the Executive immediately
prior to the Change in Control, which
situation is not remedied within 10
calendar days after written notice to the
Company from the Executive of such
determination;
(D) The liquidation, dissolution, merger,
consolidation or reorganization of the
Company or transfer of all or a
significant portion of its business and/or
assets, unless the successor or successors
(by liquidation, merger, consolidation,
reorganization or otherwise) to which all
or a significant portion of its business
and/or assets have been transferred
(directly or by operation of law) shall
have assumed all duties and obligations of
the Company under this Agreement pursuant
to Section 11 hereof;
(E) The Company shall relocate its principal
executive offices, or require the
Executive to have his principal location
of work changed, to any location which is
in excess of 50 miles from the location
thereof immediately prior to the Change of
Control or the Company shall require the
Executive to travel away from his office
in the course of discharging his
responsibilities or duties hereunder
significantly more (in terms of either
consecutive days or aggregate days in any
calendar year) than was required of him
prior to the Change of Control without, in
either case, his prior written consent; or
(F) Without limiting the generality or effect
of the foregoing, any material breach of
this Agreement by the Company or any
successor thereto.
(c) A termination by the Company pursuant to Section 4(a)
hereof or by the Executive pursuant to Section 4(b) hereof
shall not affect any rights which the Executive may have
pursuant to any agreement, policy, plan, program or
arrangement of the Company providing Employee Benefits,
which rights shall be governed by the terms thereof. If
this Agreement or the employment of the Executive is
terminated under circumstances in which the Executive is
not entitled to any payments under Sections 3 or 5 hereof,
the Executive shall have no further obligation or liability
to the Company hereunder with respect to his prior or any
future employment by the Company.
5. SEVERANCE COMPENSATION:
----------------------
(a) If, following the occurrence of a Change in Control, the
Company shall terminate the Executive's employment during
the Period of Employment other than pursuant to Section
4(a) hereof, or if the Executive shall terminate his
employment pursuant to Section 4(b) hereof, the Company
shall pay to the Executive the amount specified in Section
5(a)(i) hereof within five business days after the date
(the "Termination Date") that the Executive's employment is
terminated (the effective date of which shall be the date
of termination or such other date that may be specified by
the Executive if the termination is pursuant to Section
4(b) hereof):
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<PAGE> 8
(i) In lieu of any further payments to the Executive
for periods subsequent to the Termination Date, a
lump sum payment (the "Severance Payment") in an
amount equal to the present value (using a
discount rate prescribed for purposes of
valuation computations under Section 280G of the
Code or any successor provision thereto, or if no
such rate is so prescribed, a rate equal to the
then-applicable interest rate prescribed by the
Pension Benefit Guarantee Corporation for benefit
valuations in connection with non-multiemployer
pension plan terminations assuming the immediate
commencement of benefit payments (the "Discount
Rate")) of the sum of (A) the aggregate Base Pay
(at the greater of the highest rate in effect
either immediately preceding the occurrence of
the Change in Control or during the Period of
Employment) for each remaining year or partial
year of the Period of Employment which the
Executive would have received had such
termination or breach not occurred, plus (B) the
aggregate Incentive Pay (calculated in accordance
with the provisions of Section 3(a) hereof),
which the Executive would have received pursuant
to this Agreement during the remainder of the
Period of Employment had his employment continued
for the remainder of the Period of Employment.
Notwithstanding the foregoing provisions of this
Section (a)(i) but subject to the proviso
hereinafter set forth, if the Executive is a
Disqualified Individual (as the term
"Disqualified Individual" is defined in Section
280G of the Code or any successor provision
thereto) and if any portion of the Severance
Payment would be an Excess Parachute Payment (as
the term "Excess Parachute Payment" is defined in
Section 280G of the Code or any successor
provision thereto) but for the application of
this sentence, then the amount of the Severance
Payment otherwise payable to the Executive
pursuant to this Agreement shall be reduced to
the minimum extent necessary (but in no event to
less than zero) so that no portion of the
Severance Payment, as so reduced, constitutes an
Excess Parachute Payment.
(ii) The determination of whether any reduction in the
amount of the Severance Payment is required
pursuant to the last sentence of Section 5(a)(i)
hereof shall be made, if requested by the
Executive or the Company, by Jones, Day, Reavis &
Pogue or such other tax counsel selected by the
Company's independent accountants and acceptable
to the Executive. The fact that the Executive
shall have his right to the Severance Payment
reduced as a result of the existence of the
limitations contained in this Section 5(a) shall
not of itself limit or otherwise affect any
rights of the Executive to any Employee Benefit
(which shall be determined pursuant to Section
5(a)(iii) hereof), or any other right arising
other than pursuant to this Agreement.
(iii) Except to the extent that the payments or
benefits pursuant to this Section 5(a)(iii) would
result in a reduction of the amount of the
Severance Payment pursuant to the last sentence
of Section 5(a)(i) hereof, (A) for the remainder
of the Period of Employment the Company shall
arrange to provide the Executive with Employee
Benefits substantially similar to those which the
Executive was receiving or entitled to receive
immediately prior to the Termination
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<PAGE> 9
Date (and if and to the extent that such benefits
shall not or cannot be paid or provided under
any policy, plan, program or arrangement of the
Company solely due to the fact that the
Executive is no longer an officer or
employee of the Company, then the Company shall
itself pay or provide for the payment to the
Executive, his dependents and beneficiaries,
such Employee Benefits) and (B) without limiting
the generality of the foregoing, the remainder
of the Period of Employment shall be considered
service with the Company for the purpose of
service credits under the Company's retirement
income, supplemental executive retirement and
other benefit plans of the Company applicable to
the Executive or his beneficiaries immediately
prior to the Termination Date. Without otherwise
limiting the purposes or effect of Section 6
hereof, Employee Benefits payable to the
Executive pursuant to this Section 5(a)(iii) by
reason of any "welfare benefit plan" of the
Company (as the term "welfare benefit plan" is
defined in Section 3(1)of the Employee Retirement
Income Act of 1974, as amended) shall be reduced
to the extent comparable welfare benefits are
actually received by the Executive from another
employer during such period following the
Executive's Termination Date until the expiration
of the Period of Employment.
(b) There shall be no right of set-off or counterclaim in
respect of any claim, debt or obligation against any
payment to or benefit for the Executive provided for in
this Agreement.
(c) Without limiting the rights of the Executive at law or in
equity, if the Company fails to make any payment required
to be made hereunder on a timely basis, the Company shall
pay interest on the amount thereof at an annualized rate of
interest equal to the then-applicable Discount Rate.
6. NO MITIGATION OBLIGATION: The Company hereby acknowledges that it
will be difficult, and may be impossible, for the Executive to find
reasonably comparable employment following the Termination Date and
that the noncompetition covenant contained in Section 7 hereof will
further limit the employment opportunities for the Executive. The
parties hereto expressly agree that the payment of the severance
compensation by the Company to the Executive in accordance with the
terms of this Agreement will be liquidated damages, and that the
Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment
or otherwise, nor shall any profits, income, earnings or other
benefits from any source whatsoever create any mitigation, offset,
reduction or any other obligation on the part of the Executive
hereunder or otherwise, except as expressly provided in Section
5(a)(iii) hereof.
7. COMPETITIVE ACTIVITY: During a period ending on the date of the
first to occur of either the attainment by the Executive of age 65
or one year following the Termination Date, if the Executive shall
have received or shall be receiving benefits under Section 5(a)
hereof, the Executive shall not, without the prior written consent
of the Company, engage in any Competitive Activity. For purposes of
this Agreement, the term "Competitive Activity" shall mean the
Executive's participation, without the written consent of the
Company, in the management of any business enterprise if such
enterprise engages in substantial and direct competition with the
Company and such
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<PAGE> 10
enterprise's sales of any product or service competitive with any
product or service of the Company amounted to 25% of such
enterprise's net sales for its most recently completed fiscal year
and if the Company's net sales of said product or service amounted
to 25% of the Company's net sales for its most recently completed
fiscal year. "Competitive Activity" shall not include (i) the mere
ownership of securities in any such enterprise and the exercise of
rights appurtenant thereto or (ii) participation in the management
of any such enterprise other than in connection with the competitive
operations of such enterprise.
8. LEGAL FEES AND EXPENSES:
----------------------
(a) It is the intent of the Company that the Executive
not be required to incur the expenses associated with the
enforcement of his rights under this Agreement by
litigation or other legal action because the cost and
expense thereof would substantially detract from the
benefits intended to be extended to the Executive
hereunder. Accordingly, if it should appear to the
Executive that the Company has failed to comply with any of
its obligations under this Agreement or in the event that
the Company or any other person takes any action to declare
this Agreement void or unenforceable, or institutes any
litigation designed to deny, or to recover from, the
Executive the benefits intended to be provided to the
Executive hereunder, the Company irrevocably authorizes the
Executive from time to time to retain counsel of his
choice, at the expense of the Company as hereafter
provided, to represent the Executive in connection with the
initiation or defense of any litigation or other legal
action, whether by or against the Company or any Director,
officer, stockholder or other person affiliated with the
Company, in any jurisdiction. Notwithstanding any existing
or prior attorney-client relationship between the Company
and such counsel, the Company irrevocably consents to the
Executive's entering into an attorney-client relationship
with such counsel, and in that connection the Company and
the Executive agree that a confidential relationship shall
exist between the Executive and such counsel. The Company
shall pay or cause to be paid and shall be solely
responsible for any and all attorneys' and related fees and
expenses incurred by the Executive as a result of the
Company's failure to perform this Agreement or any
provision hereof or as a result of the Company or any
person contesting the validity of enforceability of this
Agreement or any provision hereof as aforesaid.
(b) To ensure that the provisions of this Agreement can be
enforced by the Executive, the Company shall establish
certain trust arrangements ("Trusts") with an independent
banking association as Trustee ("Trustee"). The Company
shall execute and deliver a Trust Agreement ("Trust
Agreement") and a Trust Agreement for Attorneys' Fees
("Trust Agreement for Attorneys' Fees") between the Trustee
and the Company, and when so executed and delivered such
Trust Agreement and Trust Agreement for Attorneys' Fees
shall be deemed to be a part of this Agreement and shall
set forth the terms and conditions relating to payment from
the Trust under the Trust Agreement of compensation and
other benefits pursuant to Sections 3 and 5 hereof owed by
the Company, and payment from the Trust under the Trust
Agreement for Attorneys' Fees of attorneys' and related
fees and expenses pursuant to Section 8(a) hereof owed by
the Company. The Executive shall first make demand on the
Company for any payments due the Executive pursuant to
Section 8(a) hereof prior to making
L0934.-2 (12/02/94)
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<PAGE> 11
demand therefor on the Trustee under the Trust Agreement for
Attorneys' Fees. Payments by such Trustee shall discharge
the Company's liability under Section 8(a) hereof only to
the extent that trust assets are used to satisfy such
liability.
(c) Upon occurrence of a Change in Control, the Company shall
promptly, to the extent it has not previously done so, and
in any event within five (5) business days:
(i) transfer to the Trustee to be added to the
principal of the Trust under the Trust Agreement
a sum equal to the present value on the date of
the Change in Control of the payments to be made
to the Executive under the provisions of Section
5 hereof; provided, however, that the Company
shall not be required to transfer, in the
aggregate, to the Trust under the Trust Agreement
a sum in excess of the maximum amount authorized
from time to time by its Directors. Any payments
of compensation, supplemental pension or other
benefits by the Trustee pursuant to the Trust
Agreement shall, to the extent thereof, discharge
the Company's obligation to pay compensation,
supplemental pension and other benefits
hereunder, it being the intent of the Company
that assets in such Trust be held as security for
the Company's obligation to pay compensation,
supplemental pension and other benefits under
this Agreement; and
(ii) transfer to the Trustee to be added to the
principal of the Trust under the Trust Agreement
for Attorneys' Fees the sum of TWO HUNDRED FIFTY
THOUSAND DOLLARS ($250,000), it being the intent
of the Company that assets in such Trust be held
as security for the company's obligation under
Section 8(a) hereof. The Executive understands
and acknowledges that the entire corpus of the
Trust under the Trust Agreement for Attorneys'
Fees will be $250,000 and that said amount will
be available to discharge not only the
obligations of the Company to the Executive under
Section 8(a) hereof, but also similar obligations
of the Company to other executives under similar
provisions.
9. EMPLOYMENT RIGHTS: Nothing expressed or implied in this Agreement
shall create any right or duty on the part of the Company or the
Executive to have the Executive remain in the employment of the
Company prior to any Change in Control, provided, however, that any
termination of employment of the Executive or the removal of the
Executive from the office or position in the Company following the
commencement of any discussion with a third person that ultimately
results in a Change in Control shall be deemed to be a termination
or removal of the Executive after a Change in Control for purposes
of this Agreement.
10. WITHHOLDING OF TAXES: The Company may withhold from any amounts
payable under this Agreement all federal, state, city or other taxes
as shall be required pursuant to any law or government regulation or
ruling.
11. TAX PAYMENT: Notwithstanding any other provision hereof, unless
such action would be expressly prohibited by applicable law, if any
amount paid or payable pursuant to this Agreement for services to be
rendered during the Period of Employment or in
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<PAGE> 12
connection with the payment of severance compensation pursuant to
Section 5 hereof is subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code"),
the Company will pay to the Executive an additional amount in cash
equal to the amount necessary to cause the aggregate remuneration
received by the Executive under this Agreement for services to be
rendered during the Period of Employment or in connection with the
payment of severance compensation, including such additional cash
payment (net of all federal, state and local income taxes and all
taxes payable as the result of the application of Sections 280G and
4999 of the Code) to be equal to the aggregate remuneration the
Executive would have received under this Agreement for services to
be rendered during the Period of Employment or in connection with
the payment of severance compensation, excluding such additional
payment (net of all federal, state and local income taxes), as if
Sections 280G and 4999 of the Code (and any successor provisions
thereto) had not been enacted into law.
12. SUCCESSORS AND BINDING AGREEMENT:
--------------------------------
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of
the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Executive, expressly
to assume and agree to perform this Agreement in the same
manner and to the same extent the Company would be required
to perform if no such succession had taken place. This
Agreement shall be binding upon and inure to the benefit of
the Company and any successor to the Company, including
without limitation any persons acquiring directly or
indirectly all or substantially all of the business and/or
assets of the Company whether by purchase, merger,
consolidation, reorganization or otherwise (and such
successor shall thereafter be deemed the "Company" for the
purposes of this Agreement), but shall not otherwise be
assignable, transferable or delegable by the Company.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal
representatives, executors, administrators, successors,
heirs, distributees and/or legatees.
(c) This Agreement is personal in nature and neither of the
parties hereto shall, without the consent of the other,
assign, transfer or delegate this Agreement or any rights
or obligations hereunder except as expressly provided in
Section 12(a) hereof. Without limiting the generality of
the foregoing, the Executive's right to receive payments
hereunder shall not be assignable, transferable or
delegable, whether by pledge, creation of a security
interest or otherwise, other than by a transfer by his will
or by the laws of descent and distribution and, in the
event of any attempted assignment or transfer contrary to
this Section 12(c), the Company shall have no liability to
pay any amount so attempted to be assigned, transferred or
delegated.
(d) The Company and the Executive recognize that each party
will have no adequate remedy at law for breach by the other
of any of the agreements contained herein and, in the event
of any such breach, the Company and the Executive hereby
agree and consent that the other shall be entitled to a
decree of specific performance, mandamus or other
appropriate remedy to enforce performance of this
Agreement.
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<PAGE> 13
13. NOTICE: For all purposes of this Agreement, all communications
including without limitation notices, consents, requests or
approvals, provided for herein shall be in writing and shall be
deemed to have been duly given when delivered or five business days
after having been mailed by United States registered or certified
mail, return receipt requested, postage prepaid, addressed to the
Company (to the attention of the Secretary of the Company) at its
principal executive office and to the Executive at his principal
residence, or to such other address as any party may have furnished
to the other in writing and in accordance herewith, except that
notices of change of address shall be effective only upon receipt.
14. GOVERNING LAW: The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the
State of Ohio, without giving effect to the principles of conflict
of laws of such State.
15. VALIDITY: If any provision of this Agreement or the application of
any provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement
and the application of such provision to any other person or
circumstances shall not be affected, and the provision so held to be
invalid, unenforceable or otherwise illegal shall be reformed to the
extent (and only to the extent) necessary to make it enforceable,
valid and legal.
16. MISCELLANEOUS: No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge
is agreed to in writing signed by the Executive and the Company. No
waiver by either party hereto at any time of any breach by the other
party hereto or compliance with any condition or provision of this
Agreement to be performed by such other party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time. No agreements or
representations, oral or otherwise expressed or implied with respect
to the subject matter hereof have been made by either party which
are not set forth expressly in this Agreement.
17. COUNTERPARTS: This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but
all of which together will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered as of the date first above written.
THE LAMSON & SESSIONS CO.
By
----------------------------------
John B. Schulze, President and
Chief Executive Officer
------------------------------------
A. Corydon Meyer
L0934.-2 (12/02/94)
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<PAGE> 1
Exhibit 10(d)
THE LAMSON & SESSIONS CO.
1988 INCENTIVE EQUITY PERFORMANCE PLAN
(AS AMENDED ON DECEMBER 20, 1990)
SECTION 1. PURPOSE.
The 1988 Incentive Equity Performance Plan (the "Plan"), is intended to
encourage key executives and managerial employees of The Lamson & Sessions Co.
(the "Company") and its Subsidiaries or Affiliates to become owners of Stock of
the Company in order to increase their interest in the Company's long-term
success, to provide incentive equity opportunities which are competitive with
other similarly situated corporations and to stimulate the efforts of such
employees by giving suitable recognition for services which contribute
materially to the Company's success.
SECTION 2. DEFINITIONS.
For purposes of the Plan, the following terms shall be defined as set forth
below:
(a) "Affiliate" means any entity other than the Company and its
Subsidiaries which the Board designates as an "Affiliate" for purposes of
this Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Cause" means a felony conviction of a participant or the failure
of a participant to contest prosecution for a felony, or a participant's
willful misconduct or dishonesty, any of which is directly and materially
harmful to the business or reputation of the Company or any Subsidiary or
Affiliate.
(d) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.
(e) "Committee" means the Committee referred to in Section 3 of the
Plan. If at any time a Committee shall not be in existence, then the
functions of the Committee specified in the Plan shall be exercised by the
Board.
(f) "Deferral Period" means the initial period of time during which
shares of Deferred Stock awarded pursuant to Section 8 are subject to
deferral limitations under Section 8(c).
(g) "Deferred Stock" means an award made pursuant to Section 8 of the
right to receive Stock at the end of a specified deferral period.
(h) "Disability" means permanent and total disability as determined
under the Company's long term disability program.
(i) "Disinterested Person" shall have the meaning set forth in Rule
16b-3(d)(3) as promulgated by the Securities and Exchange Commission under
the Securities Exchange Act of 1934, or any successor definition adopted by
the Commission.
(j) "Early Retirement" means retirement, with the consent for purposes
of this Plan of the Committee (or any officer designated by the Committee)
at or prior to the time of retirement, from active employment with the
Company or any Subsidiary or Affiliate pursuant to the early retirement
provisions of the applicable pension plan of such employer.
1
<PAGE> 2
(k) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
(l) "Company" means The Lamson & Sessions Co., a corporation organized
under the laws of the State of Ohio, or any successor corporation to it.
(m) "Elective Deferral Period" means the deferral period described in
Section 8(c)(v).
(n) "Fair Market Value" means, as of any given date, the mean between
the highest and lowest quoted selling price, regular way, of the Stock on
the New York Stock Exchange or, if no such sale of Stock occurs on the New
York Stock Exchange on such date, the fair market value of the Stock as
determined by the Committee in good faith.
(o) "Incentive Stock Option" means any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of Section
422A of the Code.
(p) "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
(q) "Normal Retirement" means retirement from active employment with
the Company or any Subsidiary or Affiliate on or after the normal
retirement date specified in the applicable pension plan of such employer.
(r) "Plan" means The Lamson & Sessions Co. 1988 Incentive Equity
Performance Plan, as hereinafter amended from time to time.
(s) "Restriction Period" means the period of time during which shares
of Stock awarded to a participant pursuant to Sections 8(a) and (b) remain
subject to the restrictions referred to in Section 8(b).
(t) "Restricted Stock" means an award of shares of stock that is
subject to restrictions under Section 8.
(u) "Retirement" means Normal or Early Retirement.
(v) "Rule 16b-3" as promulgated and amended from time to time by the
Securities and Exchange Commission pursuant to Section 16(b) of the
Exchange Act.
(w) "Stock" means the Common Shares, without par value, of the
Company.
(x) "Stock Appreciation Right" means the right granted under Section 7
to surrender to the Company all or a portion of a Stock Option in exchange
for a payment in cash or Stock.
(y) "Stock Option" or "Option" means any option to purchase shares of
Stock granted pursuant to Section 6.
(z) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations (other than the last corporation in the unbroken chain) owns
stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain.
In addition, the terms "Approval Date," "Change in Control," "Potential Change
in Control," "Change in Control Price" and "Voting Stock" shall have meanings
set forth in Section 9.
2
<PAGE> 3
SECTION 3. ADMINISTRATION.
The Plan shall be administered by the Compensation and Organization
Committee of the Board of Directors, which shall consist of not less than three
Disinterested Persons who are appointed by, and serve at the pleasure of, the
Board.
The Committee shall have the power and authority to grant to eligible
employees Stock Options, Stock Appreciation Rights, Restricted Stock and
Deferred Stock.
In particular, the Committee shall have the authority:
(i) to select the key employees of the Company, its Subsidiaries and
Affiliates to whom Stock Options and other awards may from time to time be
granted;
(ii) to determine whether and to what extent Stock Options, Stock
Appreciation Rights, Restricted Stock and Deferred Stock are granted;
(iii) to determine the number of shares to be covered by each such
award granted;
(iv) to determine the terms and conditions, not inconsistent with the
terms hereof, of any award granted (including, but not limited to, the
share price and any restriction or limitation on, or any vesting,
acceleration or forfeiture waiver regarding, any award, based on such
factors and criteria as the Committee shall determine, in its sole
discretion);
(v) to determine and adjust the performance goals and measurements
applicable to performance-based Deferred Stock and Restricted Stock awards
to include or exclude the impact of extraordinary or unusual items, events
or circumstances and/or to reflect change in applicable tax or accounting
rules and other developments;
(vi) to determine whether and under what circumstances a Stock Option
may be settled in cash, Deferred Stock and/or Restricted Stock under
Section 6(j); and
(vii) to determine whether, to what extent and under what
circumstances Stock and other amounts payable with respect to an award
shall be deferred.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable; to interpret the terms and provisions of the
Plan and any Stock Option or other award granted and any agreements relating
thereto; and to otherwise supervise the administration of the Plan.
All decisions made by the Committee pursuant to the provisions hereof shall
be made in the Committee's sole discretion and shall be final and binding on all
persons.
SECTION 4. ELIGIBILITY.
Officers and other key employees of the Company, its Subsidiaries and its
Affiliates (but excluding members of the Committee and any person who serves
only as a director) who are responsible for or contribute to the management,
growth and/or profitability of the business of the Company, its Subsidiaries or
its Affiliates are eligible to be granted Stock Options, Stock Appreciation
Rights, Restricted Stock or Deferred Stock awards.
The participants under the Plan shall be selected from time to time by the
Committee, in its sole discretion, from among those eligible.
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<PAGE> 4
SECTION 5. STOCK SUBJECT TO PLAN.
The total number of shares of Stock reserved and available for distribution
pursuant to Stock Options or other awards hereunder shall be 500,000 shares.
Such shares may consist, in whole or in part, of authorized and unissued shares
or treasury shares.
Subject to Section 7(b)(iv), if any shares of Stock that have been optioned
cease to be subject to a Stock Option, or if any such shares of Stock that are
subject to any Restricted Stock or Deferred Stock award granted hereunder are
forfeited or any such Option or other award otherwise terminates without a
payment being made to the participant in the form of Stock, such shares shall
again be available for distribution in connection with future awards under the
Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, Stock dividend, or other change in corporate structure
affecting the Stock, a substitution or adjustment shall be made in the aggregate
number of shares reserved for issuance under the Plan, in the number and option
price of shares subject to outstanding Options granted under the Plan, and in
the number of shares subject to other outstanding awards granted under the Plan
as may be determined to be appropriate by the Board, provided that the number of
shares subject to any award shall always be a whole number. Such adjusted option
price shall also be used to determine the amount payable by the Company upon the
exercise of any Stock Appreciation Right associated with any Stock Option.
SECTION 6. STOCK OPTIONS.
Stock Options may be granted alone or in addition to other awards granted
under the Plan. Any Stock Option granted under the Plan shall be in such form as
the Committee may from time to time approve and the provisions of Stock Option
awards need not be the same with respect to each optionee.
Stock Options granted under the Plan may be of two types: (i) Incentive
Stock Options; and (ii) Non-Qualified Stock Options (provided that Incentive
Stock Options may not be granted to employees of Affiliates). The Committee may
grant to any optionee Incentive Stock Options, Non-Qualified Stock Options, or
both types of Stock Options (in each case with or without Stock Appreciation
Rights). To the extent that any Stock Option does not qualify as an Incentive
Stock Option, it shall constitute a separate Non-Qualified Stock Option.
Anything in the Plan to the contrary notwithstanding, no term of this Plan
relating to Incentive Stock Options shall be interpreted, amended or altered,
nor shall any discretion or authority granted under the Plan be so exercised, so
as to disqualify the Plan under Section 422A of the Code, or, without the
consent of the optionee(s) affected, to disqualify any Incentive Stock Option
under such Section 422A.
Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions not
inconsistent with the terms of the Plan, as the Committee deems appropriate:
(a) Exercise Price. The exercise price per share of Stock purchasable
under a Stock Option shall be no less than the Fair Market Value on the day
the Option is granted.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than ten
years after the date such Option is granted and no Non-Qualified Stock
Option shall be exercisable more than ten years and one day after the date
such Option is granted.
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<PAGE> 5
(c) Exercise of Options. Options shall become exercisable at such
time or times and subject to such terms and conditions (including, without
limitation, installment exercise provisions) as shall be determined by the
Committee, provided, however, that, except as provided in Section 6(f) or
(g) (in the case of Disability) and Section 9, unless otherwise determined
by the Committee at or after grant, no Stock Option shall be exercisable
prior to the first anniversary date of the granting of the option. If the
Committee provides that any Stock Option is exercisable only in
installments, the Committee may waive such installment exercise provisions
at any time in whole or in part based on performance and/or such other
factors as the Committee may determine.
(d) Method of Exercise. Options may be exercised in whole or in part
by giving written notice of exercise to the Company specifying the number
of shares to be purchased. Such notice shall be accompanied by payment in
full of the purchase price, either by certified or bank check, or such
other instrument as may be permitted in accordance with rules or procedures
adopted by the Committee.
As determined by the Committee, at or after grant, payment in full or
in part may also be made in the form of unrestricted Stock already owned by
the optionee or, in the case of the exercise of a Non-Qualified Stock
Option, Restricted Stock or Deferred Stock subject to an award hereunder
(based in each case, on the Fair Market Value on the date the option is
exercised, as determined by the Committee), provided, however, that, in the
case of an Incentive Stock Option, the right to make a payment in the form
of already owned shares may be authorized only at the time the Option is
granted.
If payment of the option exercise price of a Non-Qualified Stock
Option is made in whole or in part in the form of Restricted Stock or
Deferred Stock, the shares received upon the exercise of such Stock Option
shall be restricted or deferred, (as the case may be, in accordance with
the original terms of the Restricted Stock award or Deferred Stock award in
question) equal in number to the number of shares of Restricted Stock or
Deferred Stock surrendered upon the exercise of such Option.
No shares of Stock shall be transferred until full payment therefor
has been made. An optionee shall generally have the rights of a shareholder
with respect to shares subject to the Option only when the optionee has
given written notice of exercise, has paid in full for such shares and, if
requested, given the representation described in Section 12(a).
(e) Non-Transferability of Options. No Stock Option shall be
transferable by the optionee otherwise than by will or by the laws of
descent and distribution, and all Stock Options shall be exercisable,
during the optionee's lifetime, only by the optionee.
At the request of an optionee, Stock purchased upon exercise of an
Option may be issued or transferred into the name of the optionee and
another person jointly with rights of survivorship.
(f) Termination by Death. Subject to Section 6(i), if an optionee's
employment by the Company or any Subsidiary or Affiliate terminates by
reason of death, any Stock Option held by such optionee may thereafter be
exercised, to the extent it was exercisable at the time of death or on such
accelerated basis as the Committee may determine at or after grant, by the
legal representative of the estate or by the legatee of the optionee under
the will of the optionee, for a period of one year (or such other period up
to three years as the Committee may specify) from the date of death or
until the expiration of the stated term of such Stock Option, whichever
period is shorter.
(g) Termination by Reason of Disability or Retirement. Subject to
Section 6(i), if an optionee's employment by the Company or any Subsidiary
or Affiliate terminates by reason of Disability or Retirement, any Stock
Option held by such optionee may thereafter be exercised by the optionee,
to
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<PAGE> 6
the extent it was exercisable at the time of such termination or on such
accelerated basis as the Committee may determine at or after grant, for a
period of three years (or such shorter period as the Committee may specify
at grant) from the date of such termination of employment or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter, provided, however, that, if the optionee dies within such
three-year period (or such shorter period), any unexercised Stock Option
held by such optionee shall thereafter be exercisable, to the extent to
which it was exercisable at the time of death, for a period of one year
from the date of such death or until the expiration of the stated term of
such Stock Option, whichever period is the shorter. In the event of
termination of employment by reason of Disability or Retirement, if an
Incentive Stock Option is exercised after the expiration of the exercise
periods that apply for purposes of Section 422A of the Code, such Stock
Option shall thereafter be treated as a Non-Qualified Stock Option.
(h) Other Termination of Employment. Unless otherwise determined by
the Committee at or after grant, if an optionee's employment by the Company
or any Subsidiary or Affiliate terminates for any reason other than death,
Disability or Retirement, the optionee will have three months from the date
of termination to exercise any and all Stock Options that are then
exercisable, except that, if the termination was for Cause, any and all
Options shall be immediately cancelled.
(i) Incentive Stock Option Limitations. To the extent required for
"incentive stock option" status under Section 422A of the Code, the
aggregate Fair Market Value (determined as of the time of grant) of the
Stock with respect to which Incentive Stock Options granted after 1986 are
exercisable for the first time by the optionee during any calendar year
under the Plan and any other stock option plan of the Company or any
Subsidiary or parent corporation (within the meaning of Section 425 of the
Code) or any predecessor of any such corporation, in each case after 1986
shall not exceed $100,000.
The Committee may provide at grant, to the extent permitted under
Section 422A of the Code, that, if (i) a participant's employment with the
Company or its Subsidiaries is terminated by reason of death, Disability or
Retirement and (ii) the portion of any Incentive Stock Option that is
otherwise exercisable during the post-termination period specified under
Sections 6(f), (g) or (h), applied without regard to this Section 6(i), is
greater than the portion of such Option that is exercisable as an
"incentive stock option" during such post-termination period under Section
422A, such post-termination period shall automatically be extended (but not
beyond the original option term) to the extent necessary to permit the
optionee to exercise such Incentive Stock Option either as an Incentive
Stock Option or, if exercised after the expiration of the applicable
exercise periods under Section 422A(a), as a Non-Qualified Stock Option.
The Committee is also authorized to provide at grant for a similar
extension of the post-termination exercise period in the event of a Change
in Control or a Potential Change in Control.
(j) Cashout of Option; Settlement of Spread Value in Deferred or
Restricted Stock. On receipt of written notice to exercise, the Committee
may, in its sole discretion, elect to cashout all or part of the portion of
the Stock Option(s) to be exercised with respect to Deferred or Restricted
Stock by paying the optionee an amount, in cash or Stock, equal to the
excess of the Fair Market Value of the Stock over the option price (the
"Spread Value") on the effective date of such cashout.
Cashouts relating to options held by optionees who are actually or
potentially subject to Section 16(b) of the Exchange Act shall comply with
the "window period" provisions of Rule 16b-3 referred to in Section
7(b)(ii), to the extent applicable; in addition, in the case of cashouts of
Non-Qualified
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Stock Options held by such optionees, the Committee may determine Fair
Market Value under the pricing rule set forth in Section 7(b)(ii)(B).
In addition, if the option agreement so provides at grant or is
amended after grant and prior to exercise to so provide (with the
optionee's consent), the Committee may require that all or part of the
shares of be issued with respect to (i) the Spread Value payable in the
event of a cashout of an unexercised Stock Option or (ii) the Spread Value
portion of an exercised Stock Option take the form of Deferred or
Restricted Stock, which shall be valued on the date of the cashout or
exercise on the basis of the Fair Market Value of such Deferred or
Restricted Stock determined without regard to the deferral limitations
and/or forfeiture restrictions involved.
SECTION 7. STOCK APPRECIATION RIGHTS.
(a) Grant and Exercise. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan. In
the case of a Non-Qualified Stock Option, such rights may be granted either
at or after the time of the grant of such Stock Option. In the case of an
Incentive Stock Option, such rights may be granted only at the time of the
grant of such Stock Option.
A Stock Appreciation Right or applicable portion thereof granted with
respect to a given Stock Option shall terminate and no longer be
exercisable upon the termination or exercise of the related Stock Option,
except that, unless otherwise determined by the Committee at the time of
grant, a Stock Appreciation Right granted with respect to less than the
full number of shares covered by a related Stock Option shall not be
reduced until the number of shares covered by an exercise or termination of
the related Stock Option exceeds the number of shares not covered by the
Stock Appreciation Right.
A Stock Appreciation Right may be exercised by an optionee, in
accordance with Section 7(b), by surrendering the applicable portion of the
related Stock Option in accordance with procedures established by the
Committee for such purposes. Upon such exercise and surrender, the optionee
shall be entitled to receive an amount determined in the manner prescribed
in Section 7(b). Stock Options which have been so surrendered shall no
longer be exercisable to the extent the related Stock Appreciation Rights
have been exercised.
(b) Terms and Conditions. Stock Appreciation Rights shall be subject
to such terms and conditions, not inconsistent with the provisions of the
Plan, as shall be determined from time to time by the Committee, including
the following:
(i) Stock Appreciation Rights shall be exercisable only at such time
or times and to the extent that the Stock Options to which they relate are
exercisable, in accordance with the provisions of Section 6 and this
Section 7 of the Plan, provided that a Stock Appreciation Right shall not
be exercisable during the first six months of its term by any optionee
except in the event of death of Disability of the optionee prior to the
expiration of the six-month period.
(ii) Upon the exercise of a Stock Appreciation Right, an optionee
shall be entitled to receive an amount in cash and/or shares of Stock in
the aggregate equal in value to the excess of the Fair Market Value of one
share of Stock over the option price per share specified in the related
Stock Option multiplied by the number of shares in respect of which the
Stock Appreciation Right shall have been exercised, with the Committee
having the right to determine the form of payment.
(iii) Stock Appreciation Rights shall be transferable only when and to
the extent that the underlying Stock Option would be transferable under
Section 6(e) of the Plan.
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(iv) Upon the exercise of a Stock Appreciation Right, the Stock Option
or part thereof to which Stock Appreciation Right is related shall be
deemed to have been exercised for the purpose of the limitation set forth
in Section 3 of the Plan on the number of shares of Stock to be issued
under the Plan, but only to the extent of the number of shares of Stock
issued under the Stock Appreciation Right based on the value of the Stock
Appreciation Right.
(v) The Committee may provide, at the time of grant, that such Stock
Appreciation Right can be exercised only in the event of a Change in
Control and/or a Potential Change in Control, subject to such terms and
conditions as the Committee may specify at grant.
(vi) The Committee may also provide that, in the event of a Change in
Control and/or a Potential Change in Control, the amount to be paid upon
the exercise of a Stock Appreciation Right shall be based on the Change in
Control Price, subject to such terms and conditions as the Committee may
specify at grant.
SECTION 8. AWARDS OF RESTRICTED STOCK AND DEFERRED STOCK.
(a) Administration. Shares of Restricted Stock and/or Deferred Stock may be
issued either alone or in addition to other awards granted under the Plan. The
Committee shall determine the officers and key employees of the Company and its
Subsidiaries or Affiliates to whom, and the time or times at which, such grants
will be made, the number of shares to be awarded, the price (if any) to be paid
under Section 8(b)(i) by the recipient of a Restricted Stock award, the time or
times within which such awards may be subject to forfeiture, and all other
conditions of the awards.
The Committee may condition grants of Restricted Stock and/or Deferred
Stock upon the attainment of specified performance goals or such other factors
or criteria as the Committee may determine.
The provisions of Restricted Stock and Deferred Stock awards need not be
the same with respect to each recipient.
(b) Restrictions and Conditions Applicable to Restricted Stock Awards.
Restricted Stock Awards shall be subject to the following restrictions and
conditions:
(i) The purchase price for shares of Restricted Stock shall be equal
to or less than their par value and may be zero.
(ii) Awards of Restricted Stock must be accepted within a period of 60
days (or such shorter periods as the Committee may specify at grant) after
the award date, by executing a Restricted Stock Award Agreement and paying
whatever price (if any) is required under Section 8(b)(i).
The prospective recipient of a Restricted Stock award shall not have
any rights with respect to such award, unless and until such recipient has
executed an agreement evidencing the award and has delivered a fully
executed copy thereof of the Company, and has otherwise complied with the
applicable terms and conditions of such award.
(iii) Each participant receiving a Restricted Stock award shall be
issued a stock certificate in respect of such shares of Restricted Stock.
Such certificate shall be registered in the name of such participant, and
shall bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such award, substantially in the following form:
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"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of The Lamson & Sessions Co. 1988 Incentive Equity Performance
Plan and an Agreement entered into between the registered owner and The
Lamson & Sessions Co. Copies of such Plan and Agreement are on file in the
offices of The Lamson & Sessions Co., Beachwood, Ohio."
The Committee may require that the stock certificates evidencing such
shares be held in custody by the Company until the restrictions thereon
shall have lapsed, and that, as a condition of any Restricted Stock award,
the participant shall have delivered a stock power, endorsed in blank,
relating to the Stock covered by such award.
(iv) Subject to the provisions of this Plan and the applicable award
agreement, during a period set by the Committee commencing with the date of
such award (the "Restriction Period"), the participant shall not be
permitted to sell, transfer, pledge, assign or otherwise encumber shares of
Restricted Stock awarded under the Plan.
Based on service, performance and/or such other factors or criteria as
the Committee may determine, the Committee may, however, at or after grant
provide for the lapse of such restrictions in installments and/or may
accelerate or waive such restrictions in whole or in part.
(v) Except as provided in this Section 8(b), the recipient shall have,
with respect to the shares of Restricted Stock covered by any award, all of
the rights of a shareholder of the Company, including the right to vote the
shares, and the right to receive any dividends, provided, however, that
unless otherwise determined by the Committee, any dividends on such shares
shall be automatically deferred and reinvested in additional Restricted
Stock subject to the same restrictions as the underlying award, to the
extent shares are available under Section 3.
(vi) Except as otherwise provided in this Section 8(b) and in the
applicable award agreement, upon termination of a participant's employment
with the Company or any Subsidiary or Affiliate for any reason during the
Restriction Period for a given award, all shares still subject to
restriction shall be forfeited by the participant, provided, however, the
Committee may provide for waiver of the restrictions in the event of
termination of employment due to death, Disability or Retirement.
(vii) In the event of hardship or other special circumstances of a
participant whose employment with the Company or any Subsidiary or
Affiliate is involuntarily terminated (other than for Cause), the Committee
may waive in whole or in part any or all remaining restrictions with
respect to any or all of the participant's Restricted Stock, based on such
factors and criteria as the Committee may deem appropriate.
(viii) If and when the Restriction Period expires without a prior
forfeiture of the Restricted Stock subject to such Restriction Period,
unrestricted certificates for such shares shall be delivered to the
participant.
(c) Terms and Conditions Applicable to Deferred Stock Awards. Deferred
Stock Awards shall be subject to the following terms and conditions:
(i) Subject to the provisions of this Plan and the applicable award
agreement, Deferred Stock awards may not be sold, transferred, pledged,
assigned or otherwise encumbered during the period specified by the
Committee for purposes of such award (the "Deferral Period"). At the
expiration of the Deferral Period (or the Elective Deferral Period defined
in Section 8(c)(v), where applicable),
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share certificates shall be delivered to the participant, or his legal
representative, in a number equal to the number of shares covered by the
Deferred Stock award.
Based on service, performance and/or such other factors or criteria as
the Committee may determine, the Committee may, however, at or after grant,
accelerate the vesting of all or any part of any Deferred Stock award
and/or waive the deferral limitations for all or any part of such award.
(ii) Unless otherwise determined by the Committee, amounts equal to
any dividends that would have been payable during the Deferral Period with
respect to the number of shares covered by a Deferred Stock award if such
shares had been outstanding shall be automatically deferred and deemed to
be reinvested in additional Deferred Stock, subject to the same deferral
limitations as the underlying award.
(iii) Except to the extent otherwise provided in this Section 8(c) and
in the applicable award agreement, upon termination of a participant's
employment with the Company or any Subsidiary or Affiliate for any reason
during the Deferral Period for a given award, the Deferred Stock covered by
such award shall be forfeited by the participant, provided, however, the
Committee may provide for accelerated vesting in the event of termination
of employment due to death, Disability or Retirement.
(iv) In the event of hardship or other special circumstances of a
participant whose employment with the Company or any Subsidiary or
Affiliate is involuntarily terminated (other than for Cause), the Committee
may waive in whole or in part any or all of the remaining deferral
limitations imposed hereunder with respect to any or all of the
participant's Deferred Stock, based on such factors and criteria as the
Committee deems appropriate.
(v) A participant may elect to further defer receipt of Deferred Stock
for a specified period or until a specified event (the "Elective Deferral
Period"), subject in each case to the Committee's approval and to such
terms as are determined by the Committee. Subject to any exceptions adopted
by the Committee, such election must generally be made at least twelve
months prior to completion of the Deferral Period for the Deferred Stock
award in question (or for the applicable installment of such an award).
(vi) Each award shall be confirmed by, and subject to the terms of, a
Deferred Stock agreement executed by the Company and the participant.
SECTION 9. CHANGE IN CONTROL PROVISIONS.
(a) Impact of Event. In the event of:
(x) a "Change in Control" as defined in Section 9(b), or
(y) a "Potential Change in Control" as defined in Section 9(c),
the Committee or the Board may provide that one or more of the following
acceleration and valuation provisions shall apply:
(i) Any or all Stock Appreciation Rights outstanding for at least six
months on the date that such Change in Control or Potential Change in
Control is determined to have occurred and any or all Stock Options awarded
under this Plan not previously exercisable and vested shall become fully
exercisable and vested.
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(ii) The restrictions and deferral limitations applicable to any or
all Restricted Stock and Deferred Stock awards shall lapse and such shares
and awards shall be fully vested.
(iii) The value of any or all outstanding Stock Options, Restricted
Stock and Deferred Stock awards shall be cashed out on the basis of the
"Change in Control Price" as defined in Section 9(d) as of the date such
Change in Control or such Potential Change in Control is determined to have
occurred or such other date as the Committee may determine prior to the
Change in Control.
(b) Definition of "Change in Control". For purposes of Section 9(a), a
"Change in Control" means the happening of any of the following:
(i) The Company is merged or consolidated or reorganized into or with
another corporation or other legal person, and as a result of such merger,
consolidation or reorganization less than a majority of the combined voting
power of the then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate by the holders
of Voting Stock (as that term is hereafter defined) of the Company
immediately prior to such transaction;
(ii) The Company sells or otherwise transfers all or substantially all
of its assets to any other corporation or other legal person, and less than
a majority of the combined voting power of the then-outstanding securities
of such corporation or person immediately after such sale or transfer is
held in the aggregate by the holders of Voting Stock of the Company
immediately prior to such sale or transfer;
(iii) There is a report filed on Schedule 13D or Schedule 14D-1 (or
any successor schedule, form or report), each as promulgated pursuant to
the Exchange Act, disclosing that any person (as the term "person" is used
in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the
beneficial owner (as the term "beneficial owner" is defined under Rule
13d-3 or any successor rule or regulation promulgated under the Exchange
Act) of securities representing 15% or more of the combined voting power of
the then-outstanding securities entitled to vote generally in the election
of directors of the Company ("Voting Stock");
(iv) The Company files any report, proxy statement or other document
with the Securities and Exchange Commission pursuant to the Exchange Act or
any rules or regulations presently in effect or hereafter promulgated under
such Act disclosing that a Change in Control of the Company has or may have
occurred or will or may occur in the future pursuant to any then-existing
contract or transaction; or
(v) If during any period of two consecutive years, individuals who at
the beginning of any such period constitute the Board cease for any reason
to constitute at least a majority thereof, unless the election, or the
nomination for election by the Company's shareholders, of each member of
the Board first elected during such period was approved by a vote of at
least two-thirds of the Board then still in office who were members of the
Board at the beginning of any such period.
Notwithstanding the foregoing provisions of Section 9(b)(iii) or 9(b)(iv)
hereof, a Change in Control shall not be deemed to have occurred for purposes of
Section 9(a) solely because (i) the Company, (ii) an entity in which the Company
directly or indirectly beneficially owns 80% or more of the voting securities,
or (iii) any Company-sponsored employee stock ownership plan or any other
employee benefit plan of the Company, either files or becomes obligated to file
a report or a proxy statement under or in response to Schedule 13D, Schedule
14D-1, Form 8-K or Schedule 14A (or any successor schedule,
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form or report or item therein) under the Exchange Act, disclosing beneficial
ownership by it of shares of Voting Stock, whether in excess of 15% or
otherwise, or because the Company reports that a Change in Control of the
Company has or may have occurred or will or may occur in the future by reason of
such beneficial ownership.
(c) Definition of "Potential Change in Control". For purposes of Section
9(a), a "Potential Change in Control" means the happening of any one of the
following:
(i) The entering into an agreement by the Company, the consummation of
which would result in a Change in Control of the Company as defined in
Section 9(b); or
(ii) The acquisition of beneficial ownership, directly or indirectly,
by any entity, person or group (other than the Company or a Subsidiary or
any Company employee benefit plan) (including any trustee of such plan
acting as such trustee) of securities of the Company representing 5% or
more of the combined voting power of the Company's outstanding securities,
and the adoption by the Board of a resolution to the effect that a
"Potential Change in Control" of the Company has occurred for the purposes
of this Plan.
(d) Change in Control Price. For the purposes of this Section 9, "Change in
Control Price" means the highest price per share paid in any transaction
reported on the New York Stock Exchange Composite Index, or paid or offered in
any bona fide transaction related to an actual or Potential Change in Control of
the Company, at the time during the preceding sixty-day period as determined by
the Committee, except that, in the case of Incentive Stock Options and Stock
Appreciation Rights relating to Incentive Stock Options, such price shall be
based only on transactions reported for the date as of which the Committee
decides to cashout such options.
SECTION 10. AMENDMENTS AND TERMINATION.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made which would impair the rights of an
optionee or participant under a Stock Option, Stock Appreciation Right or
Deferred Stock award theretofore granted, without the optionee's or
participant's consent, or which, without the approval of the Company's
stockholders, would:
(a) except as expressly provided in the Plan, increase the total number of
shares reserved for purposes of the Plan;
(b) change the class of employees eligible to participate in the Plan;
(c) extend the maximum option period under Section 6(b) of the Plan; or
(d) increase materially the benefits under the Plan.
The Committee may amend the terms of any Stock Option or other award
theretofore granted, prospectively or retroactively, but no such amendment shall
impair the rights of any holder without the holder's consent. The Committee may
also substitute new Stock Options for previously granted Stock Options,
including previously granted Stock Options having higher option prices.
Subject to the above provisions, the Board shall have authority to amend
the Plan to take into account changes in applicable tax and securities laws and
accounting rules, as well as other developments.
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SECTION 11. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing contained herein shall give any
such participant or optionee any rights that are greater than those of a general
creditor of the Company. The Committee may authorize the creation of trusts or
other arrangements to meet the obligations created under the Plan to deliver
Stock or payments hereunder consistent with the foregoing.
SECTION 12. GENERAL PROVISIONS.
(a) The Committee may require each person purchasing shares pursuant to a
Stock Option or Restricted Stock award under the Plan to represent to and agree
with the Company in writing that the optionee or participant is acquiring the
shares without a view to distribution thereof. The certificates for such shares
may include any legend which the Committee deems appropriate to reflect any
restrictions on transfer.
All certificates for shares of Stock or other securities delivered under
the Plan shall be subject to such stock-transfer orders and other restrictions
as the Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Stock is then listed and any applicable Federal or state securities
law, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
(b) Nothing contained in this Plan shall prevent the Company, a subsidiary
or an Affiliate from adopting other or additional compensation arrangements for
its employees.
(c) The adoption of the Plan shall not confer upon any employee of the
Company or any Subsidiary or Affiliate any right to continued employment with
the Company or a Subsidiary or Affiliate, as the case may be, nor shall it
interfere in any way with the right of the Company or any Subsidiary or
Affiliate to terminate the employment of any of its employees at any time.
(d) No later than the date as of which an amount first becomes includible
in the gross income of the optionee for Federal income tax purposes with respect
to any Stock Option or other award under the Plan, the participant shall pay to
the Company, or make any arrangements satisfactory to the Committee regarding
the payment of any Federal, state or local taxes of any kind required by law to
be withheld with respect to such amount. Unless otherwise determined by the
Company, withholding obligations may be settled with Stock, including Stock that
is part of the award that gives rise to the withholding requirement.
The obligations of the Company under the Plan shall be conditional on such
payment or arrangements, and the Company and its Subsidiaries or Affiliates
shall, to the extent permitted by law, have the right to deduct any such taxes
from the payment(s) otherwise due to the participant.
(e) The Committee shall establish such procedures as it deems appropriate
for a participant to designate a beneficiary to whom any amounts payable in the
event of the participant's death are to be paid.
(f) The Plan and all awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Ohio.
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SECTION 13. EFFECTIVE DATE OF PLAN.
The Plan shall be effective on the date it is approved by the stockholders
of the Company. Grants made prior to such stockholder approval shall be
contingent on such approval.
SECTION 14. TERM OF PLAN.
No Stock Option, Stock Appreciation Right, Restricted Stock or Deferred
Stock shall be granted pursuant to the Plan on or after the tenth anniversary of
the effective date of the Plan, but awards granted prior to such tenth
anniversary may extend beyond that date.
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Exhibit 10(g)
INDEMNIFICATION AGREEMENT
-------------------------
This Indemnification Agreement ("Agreement") is made as of the
______ day of ___________, 19__, by and between The Lamson & Sessions Co., an
Ohio corporation (the "Company"), and ________________________ (the
"Indemnitee"), a director of the Company.
RECITALS
--------
A. The Indemnitee is presently serving as a director of the
Company and the Company desires the Indemnitee to continue in that capacity.
The Indemnitee is willing, subject to certain conditions including without
limitation the execution and performance of this Agreement by the Company, to
continue in that capacity.
B. In addition to the indemnification to which the Indemnitee
is entitled under the Amended Code of Regulations of the Company (the
"Regulations"), the Company has obtained, at its sole expense, insurance
protecting the Company and its officers and directors including the Indemnitee
against certain losses arising out of actual or threatened actions, suits or
proceedings to which such persons may be made or threatened to be made parties.
However, as a result of circumstances having no relation to, and beyond the
control of, the Company and the Indemnitee, the scope of that insurance has
been reduced and there can be no assurance of the continuation or renewal of
that insurance.
Accordingly, and in order to induce the Indemnitee to continue to
serve in his present capacity, the Company and the Indemnitee agree as follows:
1. CONTINUED SERVICE. The Indemnitee shall continue to
serve, at the will of the Company or in accordance with a separate contract, to
the extent that such a contract is in effect at the time in question, as a
director of the Company so long as he is duly elected and qualified in
accordance with the Regulations or until he resigns in writing in accordance
with applicable law.
2. INITIAL INDEMNITY. (a) The Company shall indemnify
the Indemnitee, if or when he is a party or is threatened to be made a party to
any threatened, pending, or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Company), by reason of the fact that he is or was a director
of the Company or is or was serving at the request of the Company as a
director, trustee, officer, employee or agent of another corporation, domestic
or foreign, nonprofit or for profit, partnership, joint venture, trust, or
other enterprise, or by reason of any action alleged to have been taken or
omitted in any such capacity, against any and all costs, charges, expenses
(including without limitation fees and expenses of attorneys and/or others; all
such costs, charges and expenses being herein jointly referred to as
"Expenses"), judgments, fines and amounts paid in settlement, actually and
reasonably incurred by the Indemnitee in connection therewith including any
appeal of or from any judgment or decision, unless it is proved by clear and
convincing evidence in a court of competent jurisdiction that the Indemnitee's
action or failure to act involved an act or omission undertaken with deliberate
intent to cause injury to the Company or undertaken with reckless disregard for
the best interests of the Company. In addition, with respect to any criminal
action or proceeding, indemnification hereunder shall be made only if the
Indemnitee had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the Indemnitee did not satisfy the foregoing
standard of conduct to the extent applicable thereto.
L0346 (02/21/95) - 1 -
<PAGE> 2
(b) The Company shall indemnify the Indemnitee, if or when he
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding by or in the right of the Company (except
to the extent a court of competent jurisdiction determines such indemnity is
prohibited by law or the Company's Regulations) to procure a judgment in its
favor, by reason of the fact that the Indemnitee is or was a director of the
Company or is or was serving at the request of the Company as a director,
trustee, officer, employee or agent of another corporation, domestic or
foreign, nonprofit or for profit, partnership, joint venture, trust or other
enterprise, against any and all Expenses actually and reasonably incurred by
the Indemnitee in connection with the defense or settlement thereof or any
appeal of or from any judgment or decision, unless it is proved by clear and
convincing evidence in a court of competent jurisdiction that the Indemnitee's
action or failure to act involved an act or omission undertaken with deliberate
intent to cause injury to the Company or undertaken with reckless disregard for
the best interests of the Company, except that no indemnification shall be made
in respect of any action or suit in which the only liability asserted against
Indemnitee is pursuant to Section 1701.95 of the Ohio Revised Code.
(c) Any indemnification under Section 2(a) or 2(b) (unless
ordered by a court) shall be made by the Company only as authorized in the
specific case upon a determination that indemnification of the Indemnitee is
proper in the circumstances because he has met the applicable standard of
conduct set forth in Section 2(a) or 2(b). Such authorization shall be made
(i) by the directors of the Company (the "Board") by a majority vote of a
quorum consisting of directors who were not and are not parties to or
threatened with such action, suit or proceeding, or (ii) if such a quorum of
disinterested directors is not available or if a majority of such quorum so
directs, in a written opinion by independent legal counsel (designated for such
purpose by the Board) which shall not be an attorney, or a firm having
associated with it an attorney, who has been retained by or who has performed
services for the Company, or any person to be indemnified, within the five
years preceding such determination, or (iii) by the shareholders of the Company
(the "Shareholders"), or (iv) by the court in which such action, suit or
proceeding was brought.
(d) To the extent that the Indemnitee has been successful on
the merits or otherwise, including without limitation the dismissal of an
action without prejudice, in defense of any action, suit or proceeding referred
to in Section 2(a) or 2(b), or in defense of any claim, issue or matter
therein, he shall be indemnified against Expenses actually and reasonably
incurred by him in connection therewith. Expenses incurred by the Indemnitee
in defending any such action, suit or proceeding shall be paid by the Company
as they are incurred in advance of the final disposition of such action, suit
or proceeding under the procedure set forth in Section 4(b) hereof.
(e) For purposes of this Agreement, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on the Indemnitee with respect to any
employee benefit plan; references to "serving at the request of the Company"
shall include any service as a director, officer, employee or agent of the
Company which imposes duties on, or involves services by, the Indemnitee with
respect to an employee benefit plan, its participants or beneficiaries;
references to the masculine shall include the feminine and references to the
singular shall include the plural and VICE VERSA.
3. ADDITIONAL INDEMNIFICATION. Pursuant to Section
1701.13(E)(6) of the Ohio Revised Code (the "ORC"), without limiting any right
which the Indemnitee may have pursuant to Section 2 hereof or any other
provision of this Agreement or the Amended Articles of Incorporation (the
"Articles"), the Regulations, the ORC, any policy of insurance or otherwise,
but subject to any limitation on the maximum permissible indemnity which may
exist under applicable law at the time of any request for indemnity hereunder
and subject to the following provisions of
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<PAGE> 3
this Section 3, the Company shall indemnify the Indemnitee against any amount
which he is or becomes obligated to pay relating to or arising out of any claim
made against him because of any act, failure to act, or neglect or breach of
duty, including any actual or alleged error, misstatement, or misleading
statement which he commits, suffers, permits or acquiesces in while acting in
his capacity as a director of the Company (including actions, suits or
proceedings by or in the right of the Company). The payments which the Company
is obligated to make pursuant to this Section 3 shall include without
limitation any and all Expenses, judgments, fines and amounts paid in
settlement, actually and reasonably incurred by the Indemnitee in connection
therewith including any appeal of or from any judgment or decision; PROVIDED
HOWEVER, that the Company shall not be obligated under this Section 3 to make
any payment in connection with any claim against the Indemnitee:
(a) to the extent of any fine or similar governmental
imposition which the Company is prohibited by applicable law from paying
which results from a final, nonappealable order; or
(b) to the extent based upon or attributable to the Indemnitee
having actually realized a personal gain or profit to which he was not
legally entitled, including without limitation profit from the purchase
and sale by the Indemnitee of equity securities of the Company which are
recoverable by the Company pursuant to Section 16(b) of the Securities
Exchange Act of 1934, or profit arising from transactions in publicly
traded securities of the Company which were effected by the Indemnitee
in violation of Section 10(b) of the Securities Exchange Act of 1934, or
Rule 10b-5 as promulgated thereunder.
A determination as to whether the Indemnitee shall be entitled to
indemnification under this Section 3 shall be made in accordance with Section
4(a) hereof. Expenses incurred by the Indemnitee in defending any claim to
which this Section 3 applies shall be paid by the Company as they are incurred
in advance of the final disposition of such claim under the procedure set forth
in Section 4(b) hereof.
4. CERTAIN PROCEDURES RELATING TO INDEMNIFICATION. (a) For
purposes of pursuing his rights to indemnification under Section 3 hereof, the
Indemnitee shall (i) submit to the Board a sworn statement of request for
indemnification (the "Indemnification Statement") averring that he is entitled
to indemnification hereunder; and (ii) present to the Company reasonable
evidence of all amounts for which indemnification is requested. Submission of
an Indemnification Statement to the Board shall create a presumption that the
Indemnitee is entitled to indemnification hereunder, and the Company shall,
within 60 calendar days after submission of the Indemnification Statement, make
the payments requested in the Indemnification Statement to or for the benefit
of the Indemnitee, unless (i) within such 60 calendar day period the Board
shall resolve by vote of a majority of the directors at a meeting at which a
quorum is present that the Indemnitee is not entitled to indemnification under
Section 3 hereof, (ii) such vote shall be based upon clear and convincing
evidence (sufficient to rebut the foregoing presumption), and (iii) the
Indemnitee shall have received within such period notice in writing of such
vote, which notice shall disclose with particularity the evidence upon which
the vote is based. The foregoing notice shall be sworn to by all persons who
participated in the vote and voted to deny indemnification. The provisions of
this Section 4(a) are intended to be procedural only and shall not affect the
right of Indemnitee to indemnification under Section 3 of this Agreement so
long as Indemnitee follows the prescribed procedure and any determination by
the Board that Indemnitee is not entitled to indemnification and any failure to
make the payments requested in the Indemnification Statement shall be subject
to judicial review by any court of competent jurisdiction.
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<PAGE> 4
(b) For purposes of obtaining payments of Expenses in advance
of final disposition pursuant to the second sentence of Section 2(d) or the
last sentence of Section 3 hereof, the Indemnitee shall submit to the Company a
sworn request for advancement of Expenses (the "Undertaking") averring that he
has reasonably incurred actual Expenses in defending an action, suit or
proceeding referred to in Section 2(a) or 2(b) or any claim referred to in
Section 3, or pursuant to Section 8 hereof. If at the time of the Indemnitee's
act or omission at issue, the Articles or Regulations of the Company prohibit
such advances by specific reference to ORC Section 1701.13(E)(5)(a) or if the
only liability asserted against the Indemnitee in the subject action, suit or
proceeding is pursuant to ORC Section 1701.95, the Undertaking shall include a
provision (Part A) by which he undertakes to (a) repay such amount if it is
proved by clear and convincing evidence in a court of competent jurisdiction
that the Indemnitee's action or failure to act involved an act or omission
undertaken with deliberate intent to cause injury to the Company or undertaken
with reckless disregard for the best interests of the Company and (b)
reasonably cooperate with the Company concerning the action, suit, proceeding
or claim. In all cases, the Undertaking shall include a provision (Part B) by
which he undertakes to repay such amount if it ultimately is determined that he
is not entitled to be indemnified by the Company under this Agreement or
otherwise. In the event that the Indemnitee is eligible to and does execute
both Part A and Part B of the Undertaking, the Expenses which are paid by the
Company pursuant thereto shall be required to be repaid by the Indemnitee only
if he is required to do so under the terms of both Part A and Part B of the
Undertaking. Upon receipt of the Undertaking, the Company shall thereafter
promptly pay such Expenses of the Indemnitee as are noticed to the Company in
writing and in reasonable detail arising out of the matter described in the
Undertaking. No security shall be required in connection with any Undertaking.
5. LIMITATION ON INDEMNITY. Notwithstanding anything
contained herein to the contrary, the Company shall not be required hereby to
indemnify the Indemnitee with respect to any action, suit or proceeding that
was initiated by the Indemnitee unless (i) such action, suit or proceeding was
initiated by the Indemnitee to enforce any rights to indemnification arising
hereunder and such person shall have been formally adjudged to be entitled to
indemnity by reason hereof, (ii) authorized by another agreement to which the
Company is a party whether heretofore or hereafter entered, or (iii) otherwise
ordered by the court in which the suit was brought.
6. SUBROGATION; DUPLICATION OF PAYMENTS. (a) In the event of
payment under this Agreement, the Company shall be subrogated to the extent of
such payment to all of the rights of recovery of Indemnitee, who shall execute
all papers required and shall do everything that may be necessary to secure
such rights, including the execution of such documents necessary to enable the
Company effectively to bring suit to enforce such rights.
(b) The Company shall not be liable under this Agreement to
make any payment in connection with any claim made against Indemnitee to the
extent Indemnitee has actually received payment (under any insurance policy,
the Company's Regulations or otherwise) of the amounts otherwise payable
hereunder.
7. RATIFICATION; AMENDMENTS TO ARTICLES OR REGULATIONS. (a)
The Company may, at its option, propose at any future meeting of Shareholders
that this Agreement be ratified by the Shareholders; if the Shareholders vote
not to ratify this Agreement, the Company shall have the right to amend or
terminate this Agreement without the consent of the Indemnitee; provided,
however, that no such amendment or termination shall deny or diminish the
Indemnitee's rights to indemnity pursuant hereto (or the procedures set forth
herein to obtain indemnification) as applied to any act or failure to act
occurring in whole or in part prior to the date of such amendment or
termination (whether or not a claim hereunder is made before or after such
date).
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<PAGE> 5
(b) No amendment to the Articles or the Regulations shall be
effective to deny or diminish the Indemnitee's rights to indemnity pursuant
hereto (or the procedures set forth herein to obtain indemnification) as
applied to any act or failure to act occurring in whole or in part prior to the
date (the "Effective Date") upon which the amendment was approved by the
Shareholders (whether or not a claim hereunder is made before or after the
Effective Date). In the event that the Company shall adopt any amendment to
its Articles or Regulations to deny or diminish the Indemnitee's rights to
indemnity hereto, such amendment shall apply only to acts or failures to act
occurring entirely after the Effective Date.
8. FEES AND EXPENSES OF ENFORCEMENT; SECURITY. It is the
intent of the Company that the Indemnitee not be required to incur the expenses
associated with the enforcement of his rights under this Agreement by
litigation or other legal actions because the cost and expense thereof would
substantially detract from the benefits intended to be extended to the
Indemnitee hereunder. Accordingly, if it should appear to the Indemnitee that
the Company has failed to comply with any of its obligations under this
Agreement or in the event that the Company or any other person takes any action
to declare this Agreement void or unenforceable, or institutes any action, suit
or proceeding to deny, or to recover from, the Indemnitee the benefits intended
to be provided to the Indemnitee hereunder, the Company irrevocably authorizes
the Indemnitee from time to time to retain counsel of his choice, at the
expense of the Company as hereafter provided, to represent the Indemnitee in
connection with the initiation or defense of any litigation or other legal
action, whether by or against the Company or any director, officer, shareholder
or other person affiliated with the Company, in any jurisdiction. Regardless
of the outcome thereof, the Company shall pay and be solely responsible for any
and all costs, charges and expenses, including without limitation fees and
expenses of attorneys and others, reasonably incurred by the Indemnitee
pursuant to this Section 8. To ensure that the provisions of this Section 8
can be enforced by Indemnitee, the Company may establish a trust pursuant to
which reasonable legal fees and other expenses associated with a litigation or
other legal action to enforce this and other similar agreements can be funded.
9. MERGER OR CONSOLIDATION. In the event that the Company
shall be a constituent corporation in a consolidation, merger or other
reorganization, the Company, if it shall not be the surviving, resulting or
acquiring corporation therein, shall require as a condition thereto that the
surviving, resulting or acquiring corporation agree to assume all of the
obligations of the Company hereunder and to indemnify the Indemnitee to the
full extent provided herein. Whether or not the Company is the resulting,
surviving or acquiring corporation in any such transaction, the Indemnitee
shall also stand in the same position under this Agreement with respect to the
resulting, surviving or acquiring corporation as he would have with respect to
the Company if its separate existence had continued.
10. NONEXCLUSIVITY AND SEVERABILITY. (a) The rights to
indemnification provided by this Agreement shall not be exclusive of any other
rights of indemnification to which the Indemnitee may be entitled under the
Articles, the Regulations, the ORC or any other statute, any insurance policy,
agreement or vote of shareholders or directors or otherwise, as to any actions
or failures to act by the Indemnitee, and shall continue after he has ceased to
be a director, officer, employee or agent of the Company or other entity for
which his service gives rise to a right hereunder, and shall inure to the
benefit of his heirs, executors and administrators. In the event of any
payment under this Agreement, the Company shall be subrogated to the extent
thereof to all rights of recovery previously vested in the Indemnitee, who
shall execute all instruments and take all other actions as shall be reasonably
necessary for the Company to enforce such right.
L0346 (02/21/95) - 5 -
<PAGE> 6
(b) If any provision of this Agreement or the application of
any provision hereof to any person or circumstances is held invalid,
unenforceable, or otherwise illegal, the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal shall be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid and legal.
11. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio, without giving
effect to the principles of conflict of laws thereof.
12. MODIFICATION. This Agreement and the rights and duties of
the Indemnitee and the Company hereunder may be modified only by an instrument
in writing signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
THE LAMSON & SESSIONS CO.
By ______________________________________
John B. Schulze, Chairman of the Board
and Chief Executive Officer
______________________________________
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<PAGE> 7
Exhibit 10(g)
INDEMNIFICATION AGREEMENT
-------------------------
This Indemnification Agreement ("Agreement") is made as of the
______ day of ___________, 19__, by and between The Lamson & Sessions Co., an
Ohio corporation (the "Company"), and ________________________ (the
"Indemnitee"), an officer of the Company.
RECITALS
--------
A. The Indemnitee is presently serving as an officer of the
Company and the Company desires the Indemnitee to continue in that capacity.
The Indemnitee is willing, subject to certain conditions including without
limitation the execution and performance of this Agreement by the Company, to
continue in that capacity.
B. In addition to the indemnification to which the Indemnitee
is entitled under the Amended Code of Regulations of the Company (the
"Regulations"), the Company has obtained, at its sole expense, insurance
protecting the Company and its officers and directors including the Indemnitee
against certain losses arising out of actual or threatened actions, suits or
proceedings to which such persons may be made or threatened to be made parties.
However, as a result of circumstances having no relation to, and beyond the
control of, the Company and the Indemnitee, the scope of that insurance has
been reduced and there can be no assurance of the continuation or renewal of
that insurance.
Accordingly, and in order to induce the Indemnitee to continue to
serve in his present capacity, the Company and the Indemnitee agree as follows:
1. CONTINUED SERVICE. The Indemnitee shall continue to
serve, at the will of the Company or in accordance with a separate contract, to
the extent that such a contract is in effect at the time in question, as an
officer of the Company until his resignation, removal from office or death.
2. INITIAL INDEMNITY. (a) The Company shall indemnify
the Indemnitee, if or when he is a party or is threatened to be made a party to
any threatened, pending, or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Company), by reason of the fact that he is or was an officer
of the Company or is or was serving at the request of the Company as a
director, trustee, officer, employee or agent of another corporation, domestic
or foreign, nonprofit or for profit, partnership, joint venture, trust, or
other enterprise, or by reason of any action alleged to have been taken or
omitted in any such capacity, against any and all costs, charges, expenses
(including without limitation fees and expenses of attorneys and/or others; all
such costs, charges and expenses being herein jointly referred to as
"Expenses"), judgments, fines and amounts paid in settlement, actually and
reasonably incurred by the Indemnitee in connection therewith including any
appeal of or from any judgment or decision, unless it is proved by clear and
convincing evidence in a court of competent jurisdiction that the Indemnitee's
action or failure to act involved an act or omission undertaken with delib-
erate intent to cause injury to the Company or undertaken with reckless
disregard for the best interests of the Company. In addition, with respect to
any criminal action or proceeding, indemnification hereunder shall be made only
if the Indemnitee had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement or conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the Indemnitee did not satisfy
the foregoing standard of conduct to the extent applicable thereto.
L0311 (02/21/95) - 1 -
<PAGE> 8
(b) The Company shall indemnify the Indemnitee, if or when he
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding by or in the right of the Company (except
to the extent a court of competent jurisdiction determines such indemnity is
prohibited by law or the Company's Regulations) to procure a judgment in its
favor, by reason of the fact that the Indemnitee is or was an officer of the
Company or is or was serving at the request of the Company as a director,
trustee, officer, employee or agent of another corporation, domestic or
foreign, nonprofit or for profit, partnership, joint venture, trust or other
enterprise, against any and all Expenses actually and reasonably incurred by
the Indemnitee in connection with the defense or settlement thereof or any
appeal of or from any judgment or decision, unless it is proved by clear and
convincing evidence in a court of competent jurisdiction that the Indemnitee's
action or failure to act involved an act or omission undertaken with deliberate
intent to cause injury to the Company or undertaken with reckless disregard for
the best interests of the Company.
(c) Any indemnification under Section 2(a) or 2(b) (unless
ordered by a court) shall be made by the Company only as authorized in the
specific case upon a determination that indemnification of the Indemnitee is
proper in the circumstances because he has met the applicable standard of
conduct set forth in Section 2(a) or 2(b). Such authorization shall be made
(i) by the directors of the Company (the "Board") by a majority vote of a
quorum consisting of directors who were not and are not parties to or
threatened with such action, suit or proceeding, or (ii) if such a quorum of
disinterested directors is not available or if a majority of such quorum so
directs, in a written opinion by independent legal counsel (designated for such
purpose by the Board) which shall not be an attorney, or a firm having
associated with it an attorney, who has been retained by or who has performed
services for the Company, or any person to be indemnified, within the five
years preceding such determination, or (iii) by the shareholders of the Company
(the "Shareholders"), or (iv) by the court in which such action, suit or
proceeding was brought.
(d) To the extent that the Indemnitee has been successful on
the merits or otherwise, including without limitation the dismissal of an
action without prejudice, in defense of any action, suit or proceeding referred
to in Section 2(a) or 2(b), or in defense of any claim, issue or matter
therein, he shall be indemnified against Expenses actually and reasonable
incurred by him in connection therewith. Expenses incurred by the Indemnitee
in defending any such action, suit or proceeding shall be paid by the Company
as they are incurred in advance of the final disposition of such action, suit
or proceeding under the procedure set forth in Section 4(b) hereof.
(e) For purposes of this Agreement, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on the Indemnitee with respect to any
employee benefit plan; references to "serving at the request of the Company"
shall include any service as a director, officer, employee or agent of the
Company which imposes duties on, or involves services by, the Indemnitee with
respect to an employee benefit plan, its participants or beneficiaries;
references to the masculine shall include the feminine and references to the
singular shall include the plural and VICE VERSA.
3. ADDITIONAL INDEMNIFICATION. Pursuant to Section
1701.13(E)(6) of the Ohio Revised Code (the "ORC"), without limiting any right
which the Indemnitee may have pursuant to Section 2 hereof or any other
provision of this Agreement or the Amended Articles of Incorporation (the
"Articles"), the Regulations, the ORC, any policy of insurance or otherwise,
but subject to any limitation on the maximum permissible indemnity which may
exist under applicable law at the time of any request for indemnity hereunder
and subject to the following provisions of this Section 3, the Company shall
indemnify the Indemnitee against any amount which he is or becomes obligated to
pay relating to or arising out of any claim made against him because of any
L0311 (02/21/95) - 2 -
<PAGE> 9
act, failure to act, or neglect or breach of duty, including any actual or
alleged error, misstatement, or misleading statement which he commits, suffers,
permits or acquiesces in while acting in his capacity as an officer of the
Company (including actions, suits or proceedings by or in the right of the
Company). The payments which the Company is obligated to make pursuant to this
Section 3 shall include without limitation any and all Expenses, judgments,
fines and amounts paid in settlement, actually and reasonably incurred by the
Indemnitee in connection therewith including any appeal of or from any judgment
or decision; PROVIDED HOWEVER, that the Company shall not be obligated under
this Section 3 to make any payment in connection with any claim against the
Indemnitee:
(a) to the extent of any fine or similar governmental
imposition which the Company is prohibited by applicable law from paying
which results from a final, nonappealable order; or
(b) to the extent based upon or attributable to the Indemnitee
having actually realized a personal gain or profit to which he was not
legally entitled, including without limitation profit from the purchase
and sale by the Indemnitee of equity securities of the Company which are
recoverable by the Company pursuant to Section 16(b) of the Securities
Exchange Act of 1934, or profit arising from transactions in publicly
traded securities of the Company which were effected by the Indemnitee
in violation of Section 10(b) of the Securities Exchange Act of 1934, or
Rule 10b-5 as promulgated thereunder.
A determination as to whether the Indemnitee shall be entitled to
indemnification under this Section 3 shall be made in accordance with Section
4(a) hereof. Expenses incurred by the Indemnitee in defending any claim to
which this Section 3 applies shall be paid by the Company as they are incurred
in advance of the final disposition of such claim under the procedure set forth
in Section 4(b) hereof.
4. CERTAIN PROCEDURES RELATING TO INDEMNIFICATION. (a) For
purposes of pursuing his rights to indemnification under Section 3 hereof, the
Indemnitee shall (i) submit to the Board a sworn statement of request for
indemnification (the "Indemnification Statement") averring that he is entitled
to indemnification hereunder; and (ii) present to the Company reasonable
evidence of all amounts for which indemnification is requested. Submission of
an Indemnification Statement to the Board shall create a presumption that the
Indemnitee is entitled to indemnification hereunder, and the Company shall,
within 60 calendar days after submission of the Indemnification Statement, make
the payments requested in the Indemnification Statement to or for the benefit
of the Indemnitee, unless (i) within such 60 calendar day period the Board
shall resolve by vote of a majority of the directors at a meeting at which a
quorum is present that the Indemnitee is not entitled to indemnification under
Section 3 hereof, (ii) such vote shall be based upon clear and convincing
evidence (sufficient to rebut the foregoing presumption), and (iii) the
Indemnitee shall have received within such period notice in writing of such
vote, which notice shall disclose with particularity the evidence upon which
the vote is based. The foregoing notice shall be sworn to by all persons who
participated in the vote and voted to deny indemnification. The provisions of
this Section 4(a) are intended to be procedural only and shall not affect the
right of Indemnitee to indemnification under Section 3 of this Agreement so
long as Indemnitee follows the prescribed procedure and any determination by
the Board that Indemnitee is not entitled to indemnification and any failure to
make the payments requested in the Indemnification Statement shall be subject
to judicial review by any court of competent jurisdiction.
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<PAGE> 10
(b) For purposes of obtaining payments of Expenses in advance
of final disposition pursuant to the second sentence of Section 2(d) or the
last sentence of Section 3 hereof, the Indemnitee shall submit to the Company a
sworn request for advancement of Expenses (the "Undertaking") (i) averring that
he has reasonably incurred actual Expenses in defending an action, suit or
proceeding referred to in Section 2(a) or 2(b) or any claim referred to in
Section 3, or pursuant to Section 8 hereof; and (ii) undertaking to repay such
amount if it ultimately is determined that he is not entitled to be indemnified
by the Company under this Agreement or otherwise. Upon receipt of the
undertaking, the Company shall thereafter promptly pay such Expenses of the
Indemnitee as are noticed to the Company in writing and in reasonable detail
arising out of the matter described in the Undertaking. No security shall be
required in connection with any Undertaking.
5. LIMITATION ON INDEMNITY. Notwithstanding anything
contained herein to the contrary, the Company shall not be required hereby to
indemnify the Indemnitee with respect to any action, suit or proceeding that
was initiated by the Indemnitee unless (i) such action, suit or proceeding was
initiated by the Indemnitee to enforce any rights to indemnification arising
hereunder and such person shall have been formally adjudged to be entitled to
indemnity by reason hereof, (ii) authorized by another agreement to which the
Company is a party whether heretofore or hereafter entered, or (iii) otherwise
ordered by the court in which the suit was brought.
6. SUBROGATION; DUPLICATION OF PAYMENTS. (a) In the event of
payment under this Agreement, the Company shall be subrogated to the extent of
such payment to all of the rights of recovery of Indemnitee, who shall execute
all papers required and shall do everything that may be necessary to secure
such rights, including the execution of such documents necessary to enable the
Company effectively to bring suit to enforce such rights.
(b) The Company shall not be liable under this Agreement to
make any payment in connection with any claim made against Indemnitee to the
extent Indemnitee has actually received payment (under any insurance policy,
the Company's Regulations or otherwise) of the amounts otherwise payable
hereunder.
7. RATIFICATION; AMENDMENTS TO ARTICLES OR REGULATIONS. (a)
The Company may, at its option, propose at any future meeting of Shareholders
that this Agreement be ratified by the Shareholders; if the Shareholders vote
not to ratify this Agreement, the Company shall have the right to amend or
terminate this Agreement without the consent of the Indemnitee; provided,
however, that no such amendment or termination shall deny or diminish the
Indemnitee's rights to indemnity pursuant hereto (or the procedures set forth
herein to obtain indemnification) as applied to any act or failure to act
occurring in whole or in part prior to the date of such amendment or
termination (whether or not a claim hereunder is made before or after such
date).
(b) No amendment to the Articles or the Regulations shall be
effective to deny or diminish the Indemnitee's rights to indemnity pursuant
hereto (or the procedures set forth herein to obtain indemnification) as
applied to any act or failure to act occurring in whole or in part prior to the
date (the "Effective Date") upon which the amendment was approved by the
Shareholders (whether or not a claim hereunder is made before or after the
Effective Date). In the event that the Company shall adopt any amendment to
its Articles or Regulations to deny or diminish the Indemnitee's rights to
indemnity hereto, such amendment shall apply only to acts or failures to act
occurring entirely after the Effective Date.
L0311 (02/21/95) - 4 -
<PAGE> 11
8. FEES AND EXPENSES OF ENFORCEMENT; SECURITY. It is the
intent of the Company that the Indemnitee not be required to incur the expenses
associated with the enforcement of his rights under this Agreement by
litigation or other legal actions because the cost and expense thereof would
substantially detract from the benefits intended to be extended to the
Indemnitee hereunder. Accordingly, if it should appear to the Indemnitee that
the Company has failed to comply with any of its obligations under this
Agreement or in the event that the Company or any other person takes any action
to declare this Agreement void or unenforceable, or institutes any action, suit
or proceeding to deny, or to recover from, the Indemnitee the benefits intended
to be provided to the Indemnitee hereunder, the Company irrevocably authorizes
the Indemnitee from time to time to retain counsel of his choice, at the
expense of the Company as hereafter provided, to represent the Indemnitee in
connection with the initiation or defense of any litigation or other legal
action, whether by or against the Company or any director, officer, shareholder
or other person affiliated with the Company, in any jurisdiction. Regardless
of the outcome thereof, the Company shall pay and be solely responsible for any
and all costs, charges and expenses, including without limitation fees and
expenses of attorneys and others, reasonably incurred by the Indemnitee
pursuant to this Section 8. To ensure that the provisions of this Section 8
can be enforced by Indemnitee, the Company may establish a trust pursuant to
which reasonable legal fees and other expenses associated with a litigation or
other legal action to enforce this and other similar agreements can be funded.
9. MERGER OR CONSOLIDATION. In the event that the Company
shall be a constituent corporation in a consolidation, merger or other
reorganization, the Company, if it shall not be the surviving, resulting or
acquiring corporation therein, shall require as a condition thereto that the
surviving, resulting or acquiring corporation agree to assume all of the
obligations of the Company hereunder and to indemnify the Indemnitee to the
full extent provided herein. Whether or not the Company is the resulting,
surviving or acquiring corporation in any such transaction, the Indemnitee
shall also stand in the same position under this Agreement with respect to the
resulting, surviving or acquiring corporation as he would have with respect to
the Company if its separate existence had continued.
10. NONEXCLUSIVITY AND SEVERABILITY. (a) The rights to
indemnification provided by this Agreement shall not be exclusive of any other
rights of indemnification to which the Indemnitee may be entitled under the
Articles, the Regulations, the ORC or any other statute, any insurance policy,
agreement or vote of shareholders or directors or otherwise, as to any actions
or failures to act by the Indemnitee, and shall continue after he has ceased to
be a director, officer, employee or agent of the Company or other entity for
which his service gives rise to a right hereunder, and shall inure to the
benefit of his heirs, executors and administrators. In the event of any
payment under this Agreement, the Company shall be subrogated to the extent
thereof to all rights of recovery previously vested in the Indemnitee, who
shall execute all instruments and take all other actions as shall be reasonably
necessary for the Company to enforce such right.
(b) If any provision of this Agreement or the application of
any provision hereof to any person or circumstances is held invalid,
unenforceable, or otherwise illegal, the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal shall be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid and legal.
11. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio, without giving
effect to the principles of conflict of laws thereof.
L0311 (02/21/95) - 5 -
<PAGE> 12
12. MODIFICATION. This Agreement and the rights and duties of
the Indemnitee and the Company hereunder may be modified only by an instrument
in writing signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
THE LAMSON & SESSIONS CO.
By _________________________________
John B. Schulze, Chairman of the
Board and Chief Executive Officer
_________________________________
L0311 (02/21/95) - 6 -
<PAGE> 1
Exhibit 10(m)
AMENDMENT NO. 2 AND CONSENT
Dated as of March 1, 1994
TO
LOAN AGREEMENT
Dated as of February 13, 1992
THIS AMENDMENT NO. 2 AND WAIVER TO LOAN AGREEMENT
("Amendment") is entered into as of March 1, 1994 by and among
THE LAMSON & SESSIONS CO., an Ohio corporation (the "Borrower"),
GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation ("GE
Capital"), as the sole "Lender" (as defined in the Loan Agreement
referred to below) and GE Capital as agent for the Lenders (in
such capacity, the "Agent").
PRELIMINARY STATEMENT
A. The Borrower, the Lender and the Agent are parties
to that certain Loan Agreement dated as of February 13, 1992, as
amended by that certain Amendment No. 1 and Waiver dated as of
February 11, 1993 (as the same may be further amended, restated,
supplemented or otherwise modified from time to time, the "Loan
Agreement"). Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to them in the Loan
Agreement.
B. The Borrower has requested that the Agent consent
to the execution by the Borrower of certain documents in
connection with the refinancing of those certain Series 1988
Industrial Development Revenue Serial Bonds issued by the City of
Bowling Green, Ohio under that certain Indenture of Trust dated
as of September 1, 1988 between the City of Bowling Green, Ohio
and Ameritrust Company National Association (the "Existing
Bowling Green IRB"), which consent is required pursuant to
SECTIONS 8.3 and 8.19 of the Loan Agreement. The Agent has
agreed to consent to such action subject to the terms and
conditions hereinafter set forth. The Borrower, the Lender and
the Agent have also agreed to amend the Loan Agreement on the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises set
forth above, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
Borrower, the Lender and the Agent hereby agree as follows:
SECTION 1. AMENDMENTS TO THE LOAN AGREEMENT.
Effective as of the date first above written, subject to the
satisfaction of the conditions precedent set forth in SECTION 3
below, the Loan Agreement is hereby amended as follows:
<PAGE> 2
(a) SECTION 1.1 of the Loan Agreement is amended to
delete the definition of "Bowling Green IRB" contained
therein in its entirety and to substitute the following
therefor:
"BOWLING GREEN IRB" shall mean those certain
Series 1994 Industrial Development Revenue Serial Bonds
issued by the City of Bowling Green, Ohio under that
certain Indenture of Trust dated as of March 1, 1994
(as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the terms
and provisions of this Agreement) between the City of
Bowling Green, Ohio and The Fifth Third Bank, an Ohio
banking association.
(b) SECTION 2.1 of the Loan Agreement is amended to
delete the term "(214) 220-2100" where it appears therein
and to substitute the term "(312) 419-5915" therefor.
(c) SECTION 12.13(a) of the Loan Agreement is amended
to delete the notice address for GE Capital (whether as
Lender or as Agent) in its entirety and substitute the
following therefor:
General Electric Capital Corporation
190 S. LaSalle Street, Suite 1200
Chicago, Illinois 60603
Attention: Manager-Portfolio Operations
Telecopier No.: (312) 419-5992
(d) SECTION 12.13(a) of the Loan Agreement is further
amended to delete the word "and" where it appears therein
and to delete the notice address for General Electric
Capital Corporation in Dallas, Texas which appears
thereafter in its entirety.
SECTION 2. CONSENT. Effective as of the date first
above written, subject to the satisfaction of the conditions
precedent set forth in SECTION 3 below, the Agent hereby
consents, pursuant to SECTIONS 8.3 and 8.19 of the Loan
Agreement, to (i) the refinancing of the Existing Bowling Green
IRB and the termination of the indenture, letter of credit,
reimbursement agreements, loan agreements and other instruments,
documents or agreements executed and/or delivered by Borrower in
connection therewith, the issuance of those certain Series 1994
Industrial Development Revenue Serial Bonds issued by the City of
Bowling Green, Ohio under that certain Indenture of Trust dated
as of March 1, 1994 between the City of Bowling Green, Ohio and
The Fifth Third Bank (the "New Bowling Green IRB"), and (ii) the
execution and/or delivery by the Borrower of the indentures,
-2-
<PAGE> 3
letters of credit, reimbursement agreements, loan agreements or
other instruments, documents or agreements to be executed and/or
delivered by the Borrower in connection with the New Bowling
Green IRB, including without limitation, (A) that certain Open-
End Mortgage and Security Agreement dated as of March 1, 1994, in
favor of Mid American National Bank and Trust Company, a national
banking association ("Mid Am"), and (B) that certain
Reimbursement Agreement dated as of March 1, 1994 between Mid Am
and the Borrower (such documents being hereinafter referred to
collectively as the "Bowling Green IRB Documents").
SECTION 3. CONDITIONS PRECEDENT. This Amendment shall
become effective and be deemed effective as of the date first
above written upon receipt by the Agent of the following:
(i) four (4) copies of this Amendment duly executed
by the Borrower, the Lender and the Agent;
(ii) Reaffirmations of Guaranty and Security Agreement
in substantially the form of EXHIBIT A attached hereto, duly
executed by each of Carlon Chimes and Youngstown Steel Door;
(iii) Lien Subordination/Mortgagee Agreement in
substantially the form of EXHIBIT B attached hereto, duly
executed by Mid Am and the Agent;
(iv) evidence satisfactory to the Agent of the
termination of the Existing Bowling Green IRB and the
termination of the indenture, letter of credit,
reimbursement agreement, loan agreements and other
instruments, documents or agreements executed and/or
delivered by the Borrower in connection therewith; and
(v) copies of each of the Bowling Green IRB Documents
executed by each of the parties thereto in form and
substance satisfactory to the Agent.
SECTION 4. COVENANTS, REPRESENTATIONS AND WARRANTIES
OF THE BORROWER.
4.1 Except to the extent that any representation or
warranty expressly is made only with respect to an earlier date,
upon the effectiveness of this Amendment, the Borrower hereby
reaffirms all covenants, representations and warranties made by
it in the Loan Agreement to the extent the same are not amended
hereby and agrees that all such covenants, representations and
warranties shall be deemed to have been re-made as of the
effective date of this Amendment.
-3-
<PAGE> 4
4.2 The Borrower hereby represents and warrants that
this Amendment constitutes the legal, valid and binding
obligation of the Borrower enforceable against the Borrower in
accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights
generally and general principles of equity which may limit the
availability of equitable remedies.
SECTION 5. REFERENCE TO AND EFFECT ON THE LOAN
AGREEMENT.
5.1 Upon the effectiveness of this Amendment, each
reference in the Loan Agreement to "this Agreement," "hereun-
der," "hereof," "herein," "hereby" or words of like import shall
mean and be a reference to the Loan Agreement as amended hereby,
and each reference to the Loan Agreement in any other document,
instrument or agreement executed and/or delivered in connection
with the Loan Agreement shall mean and be a reference to the Loan
Agreement as amended hereby.
5.2 Except as specifically amended hereby, the Loan
Agreement and other documents, instruments and agreements
executed and/or delivered in connection therewith shall remain in
full force and effect and are hereby ratified and confirmed.
5.3 The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or
remedy of any Lender or the Agent under the Loan Agreement or any
of the other Loan Documents, nor constitute a waiver of any
provision contained therein, except as specifically set forth
herein.
SECTION 6. GOVERNING LAW. THIS AMENDMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS
(AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS) AND DECISIONS OF
THE STATE OF ILLINOIS.
SECTION 7. EXECUTION IN COUNTERPARTS. This Amendment
may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all
of which taken together shall constitute but one and the same
instrument.
SECTION 8. HEADINGS. Section headings in this
Amendment are included herein for convenience or reference only
and shall not constitute a part of this Amendment for any other
purpose.
-4-
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereto
duly authorized as of the date first written above.
THE LAMSON & SESSIONS CO.
By: /s/ Allan J. Zambie
---------------------------
Title:
GENERAL ELECTRIC CAPITAL CORPORATION, as
the Agent and as the sole Lender
By: /s/
---------------------------
Title:
-5-
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereto
duly authorized as of the date first written above.
THE LAMSON & SESSIONS CO.
By:
----------------------------
Title:
GENERAL ELECTRIC CAPITAL CORPORATION, as
the Agent and as the sole Lender
By: /s/ Shaun Pettit
----------------------------
Title: Region Operations Manager
-5-
<PAGE> 7
EXHIBIT A
to
Amendment
Form of Reaffirmation of Guaranty and Security Agreement
--------------------------------------------------------
(Attached.)
<PAGE> 8
REAFFIRMATION OF GUARANTY AND SECURITY AGREEMENT
The undersigned hereby (i) acknowledges receipt of that
certain Amendment No. 2 and Consent to Loan Agreement of even
date herewith (the "Amendment") to the Loan Agreement dated as of
February 13, 1992 (as such Loan Agreement may be amended,
restated, supplemented or otherwise modified from time to time,
the "Loan Agreement") among THE LAMSON & SESSIONS CO. (the
"Borrower"), GENERAL ELECTRIC CAPITAL CORPORATION ("GE Capital"),
as a "Lender" (as defined in the Loan Agreement) and GE Capital,
as agent for the Lenders (in such capacity, the "Agent"), and
that certain Lien Subordination/Mortgagee Agreement referred to
in the Amendment, (ii) reaffirms all of its obligations under
that certain Guaranty and Security Agreement dated as of February
13, 1992 ("Guaranty and Security Agreement"), made by the
undersigned in favor of the Lenders, and (iii) acknowledges and
agrees that such Guaranty and Security Agreement remains in full
force and effect notwithstanding the Amendment and the Lien
Subordination/Mortgagee Agreement, and that such Guaranty and
Security Agreement is hereby ratified and confirmed.
Date:
-------------------
[Names of Guarantor]
By:
--------------------------------
Title:
<PAGE> 9
EXHIBIT B
to
Amendment
Form of Lien Subordination/Mortgagee Agreement
----------------------------------------------
(Attached.)
<PAGE> 10
This document was prepared by
and after recording return to:
George Mullin
Sidley & Austin
One First National Plaza
Chicago, IL 60603
LIEN SUBORDINATION/MORTGAGEE AGREEMENT
--------------------------------------
THIS LIEN SUBORDINATION/MORTGAGEE AGREEMENT
("Agreement") is made as of March 1, 1994 by and between Mid
American National Bank and Trust Company, a national banking
association ("Mid Am"), and General Electric Capital Corporation,
a New York corporation ("GE Capital") as the sole "Lender" and as
"Agent" (as each term is defined below).
PRELIMINARY STATEMENT
A. The Lamson & Sessions Co., an Ohio corporation
("Borrower"), is the mortgagor under that certain Open-End
Mortgage and Security Agreement dated as of March 1, 1994 (the
"Mid Am Mortgage"), between Borrower and Mid Am covering the
premises located at 501 Poe Road, Bowling Green, Ohio (the
"Premises"), recorded in Volume , Page of the Mortgage
Records of Wood County, Ohio. Unless otherwise defined herein,
any capitalized term used herein that is defined in the Mid Am
Mortgage shall have the meaning specified for such term in the
Mid Am Mortgage as in effect on the date hereof.
B. Mid Am is the current mortgagee of the Premises
under the Mid Am Mortgage and has not assigned such Mid Am
Mortgage or any of its rights thereunder to any other party.
C. Borrower has certain of its assets located on the
Premises.
D. Borrower has entered into a Loan Agreement (as the
same may hereafter be amended, supplemented or otherwise modified
from time to time, the "Loan Agreement") dated as of February 13,
1992 with certain financial institutions party thereto
(collectively, the "Lenders") and GE Capital, as agent (the
"Agent") for itself and the Lenders (the Agent and the Lenders
and their respective successors and assigns being hereinafter
referred to collectively as the "Secured Parties").
E. As a condition to the Secured Parties' agreeing to
make loans and other financial accommodations and extensions of
credit to Borrower pursuant to the Loan Agreement, the Secured
Parties have required, and the Borrower previously granted, among
other things, liens on all of Borrower's property located on the
<PAGE> 11
Premises ("Collateral") and a mortgage in favor of the Agent for
the benefit of the Secured Parties covering Borrower's fee
interest in the Premises (the "Agent's Mortgage").
NOW, THEREFORE, In consideration of the premises set
forth above, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Mid Am,
the Agent, and the Lenders hereby agree as follows:
Mid Am's lien and security interest in the Mortgaged
Property created pursuant to the Mid Am Mortgage shall be prior
and senior to all liens and security interests of the Agent in
the Mortgaged Property created pursuant to documents executed in
connection with the Loan Agreement, notwithstanding the order of
any filing of the Mid Am Mortgage or the Agent's Mortgage, or the
order of any filing of UCC financing statements in favor of Mid
Am pursuant to the Mid Am Mortgage or UCC financing statements in
favor of the Agent pursuant to documents executed in connection
with the Loan Agreement.
Mid Am hereby agrees not to materially modify or amend
the Mid Am Mortgage without the prior written consent of the
Agent.
Mid Am hereby certifies and agrees that:
(i) To the best of its knowledge, the Mid Am
Mortgage is in full force and effect and there are no
amendments, modifications, or supplements, whether oral
or written, thereto;
(ii) It has not declared a default under the Mid
Am Mortgage nor, to the best of its knowledge, has it
received any notice of a default under the Mid Am
Mortgage;
(iii) To the best of its knowledge, there are no
disputes, actions, suits, condemnation proceedings,
claims, or rights of setoff pending or threatened with
respect to the Mid Am Mortgage or the Premises;
(iv) If, for any reason whatsoever, it either
deems itself entitled to take possession of the
Premises during the term of the Mid Am Mortgage or
intends to sell or otherwise transfer all or any part
of its interest in the Premises, it will notify the
Agent at least ten (10) days before taking such action;
and
(v) If, for any reason whatsoever, it has taken
possession of the Premises and the Borrower defaults on
its obligations to the Secured Parties and, as a
-2-
<PAGE> 12
result, the Agent undertakes to enforce its security
interest in the Collateral, it will: (A) permit the
Agent to, and will not hinder, delay or impede the
Agent in its efforts to, assemble all of the Collateral
located on the Premises that is not Mortgaged property
including, without limitation, all books, correspond-
ence, credit files, records, invoices, bills of lading
and other documents relating to any of the foregoing,
(B) permit the Agent to remove the Collateral that is
not Mortgaged Property from the Premises within a
reasonable time, not to exceed thirty (30) days after
the Agent declares the default and (C) not hinder the
Agent's actions in enforcing its liens on the Collat-
eral that is not Mortgaged Property.
Any notice(s) required or desired to be given hereunder
shall be directed to the party to be notified at the address
stated herein.
The agreements contained herein shall continue in force
until the earlier of (i) the date on which the Mid Am Mortgage is
released or satisfied or (ii) the date on which all of Borrower's
obligations and liabilities to the Secured Parties are paid and
satisfied in full and all financing arrangements between the
Secured Parties and Borrower have been terminated.
Each of the Agent and Mid Am will notify all successor
transferees and mortgagees of the existence of this agreement.
This agreement may not be modified or terminated orally and shall
be binding upon the successors, assigns and personal representa-
tives of each of the Agent and Mid Am, and upon any purchasers,
including any mortgagee, from each of the Agent and Mid Am.
This Agreement may be executed by one or more of the
parties to the Agreement on any number of separate counterparts
and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
MID AM AGREES THAT NOTHING CONTAINED IN THIS AGREEMENT
SHALL BE CONSTRUED AS AN ASSUMPTION BY THE AGENT OR ANY OF THE
OTHER SECURED PARTIES OF ANY OBLIGATIONS OF BORROWER CONTAINED IN
THE MID AM MORTGAGE.
THIS AGREEMENT SHALL NOT IMPAIR OR OTHERWISE AFFECT
BORROWER'S OBLIGATIONS TO PERFORM ITS OBLIGATIONS TO MID AM
PURSUANT TO THE TERMS OF THE MID AM MORTGAGE.
-3-
<PAGE> 13
REAFFIRMATION OF GUARANTY AND SECURITY AGREEMENT
The undersigned hereby (i) acknowledges receipt of that
certain Amendment No. 2 and Consent to Loan Agreement of even
date herewith (the "Amendment") to the Loan Agreement dated as of
February 13, 1992 (as such Loan Agreement may be amended,
restated, supplemented or otherwise modified from time to time,
the "Loan Agreement") among THE LAMSON & SESSIONS CO. (the
"Borrower"), GENERAL ELECTRIC CAPITAL CORPORATION ("GE Capital"),
as a "Lender" (as defined in the Loan Agreement) and GE Capital,
as agent for the Lenders (in such capacity, the "Agent"), and
that certain Lien Subordination/Mortgagee Agreement referred to
in the Amendment, (ii) reaffirms all of its obligations under
that certain Guaranty and Security Agreement dated as of February
13, 1992 ("Guaranty and Security Agreement"), made by the
undersigned in favor of the Lenders, and (iii) acknowledges and
agrees that such Guaranty and Security Agreement remains in full
force and effect notwithstanding the Amendment and the Lien
Subordination/Mortgagee Agreement, and that such Guaranty and
Security Agreement is hereby ratified and confirmed.
Date: 3/1/94
------------
CARLON CHIMES CO.
By: /s/ Allan J. Zambie
--------------------------
Title: Secretary
<PAGE> 14
REAFFIRMATION OF GUARANTY AND SECURITY AGREEMENT
The undersigned hereby (i) acknowledges receipt of that
certain Amendment No. 2 and Consent to Loan Agreement of even
date herewith (the "Amendment") to the Loan Agreement dated as of
February 13, 1992 (as such Loan Agreement may be amended,
restated, supplemented or otherwise modified from time to time,
the "Loan Agreement") among THE LARSON & SESSIONS CO. (the
"Borrower"), GENERAL ELECTRIC CAPITAL CORPORATION ("GE Capital"),
as a "Lender" (as defined in the Loan Agreement) and GE Capital,
as agent for the Lenders (in such capacity, the "Agent"), and
that certain Lien Subordination/Mortgagee Agreement referred to
in the Amendment, (ii) reaffirms all of its obligations under
that certain Guaranty and Security Agreement dated as of February
13, 1992 ("Guaranty and Security Agreement"), made by the
undersigned in favor of the Lenders, and (iii) acknowledges and
agrees that such Guaranty and Security Agreement remains in full
force and effect notwithstanding the Amendment and the Lien
Subordination/Mortgagee Agreement, and that such Guaranty and
Security Agreement is hereby ratified and confirmed.
Date: 3/1/94
-------------
THE YOUNGSTOWN STEEL DOOR COMPANY
By: /s/ Allan J. Zambie
-------------------------
Title: Secretary
<PAGE> 1
Exhibit 10(n)
EXECUTION COPY
AMENDMENT NO. 3
Dated as of March 31, 1994
TO
LOAN AGREEMENT
Dated as of February 13, 1992
THIS AMENDMENT NO. 3 TO LOAN AGREEMENT ("Amendment") is
entered into as of March 31, 1994 by and among THE LAMSON &
SESSIONS CO., an Ohio corporation (the "Borrower"), GENERAL
ELECTRIC CAPITAL CORPORATION, a New York corporation ("GE
Capital"), as the sole "Lender" (as defined in the Loan Agreement
referred to below) and GE Capital as agent for the Lenders (in
such capacity, the "Agent").
PRELIMINARY STATEMENT
A. The Borrower, the Lender and the Agent are parties
to that certain Loan Agreement dated as of February 13, 1992, as
amended by that certain Amendment No. 1 and Waiver dated as of
February 11, 1993, and that certain Amendment No. 2 and Consent
dated as of March 1, 1994 (as the same may be further amended,
restated, supplemented or otherwise modified from time to time,
the "Loan Agreement"). Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to them
in the Loan Agreement.
B. The Borrower has requested that the Lender and the
Agent make certain amendments to the Loan Agreement, and the
Borrower, the Lender and the Agent have agreed to amend the Loan
Agreement on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises set
forth above, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
Borrower, the Lender and the Agent hereby agree as follows:
SECTION 1. AMENDMENTS TO THE LOAN AGREEMENT.
Effective as of the date first above written, subject to the
satisfaction of the conditions precedent set forth in SECTION 2
below, the Loan Agreement is hereby amended as follows:.
1.1 SECTION 2.3(f) of the Loan Agreement is amended by
adding the following proviso before the period at the end of the
second sentence thereof:
"PROVIDED, HOWEVER, that the Net Cash Proceeds of
$2,228,733.41 from the sale of the Borrower's
warehouse/fabrication plant located at 7900 All
American City Way, Paramount, California 90723, shall
be applied to the outstanding installments of principal
of the Term Loan in the order of maturity beginning
<PAGE> 2
with the quarterly installment payable on March 31,
1994"
1.2 SECTION 7.3 of the Loan Agreement is amended to
delete in their entirety SECTIONS 7.3(a), 7.3(b), 7.3(c), 7.3(d),
7.3(e) and 7.3(f) thereof and to substitute the following
therefor:
"(a) at all times during each Fiscal Quarter set forth
below, Consolidated Working Capital equal to or greater than
the amount set forth opposite such Fiscal Quarter below:
Minimum Consolidated
Fiscal Quarter Ending Working Capital
--------------------- --------------------
March 31, 1994 $35,000,000
June 30, 1994 $35,000,000
September 30, 1994 $33,000,000
December 31, 1994 $30,000,000
March 31, 1995 and
each Fiscal Quarter
thereafter $42,000,000
(b) at all times during each of the Fiscal Years set
forth below, a Consolidated Current Ratio equal to or
greater than the ratio set forth opposite such Fiscal Year
below:
Fiscal Year Ratio
----------- -----
1994 1.5 to 1.0
1995 and each
Fiscal Year thereafter 2.0 to 1.0
(c) at all times during each Fiscal Quarter set forth
below, a Consolidated Funded Debt to Consolidated Tangible
Net Worth Ratio, equal to or less than the ratio set forth
opposite such Fiscal Quarter below:
Fiscal Quarter Ending Ratio
--------------------- -----
March 31, 1994 8.9 to 1.0
-2-
<PAGE> 3
June 30, 1994 8.5 to 1.0
September 30, 1994 9.2 to 1.0
December 31, 1994 10.0 to 1.0
March 31, 1995 and
each Fiscal Quarter
thereafter 1.0 to 1.0
(d) at the end of each Fiscal Quarter set forth below,
a Consolidated EBITDA to Consolidated Interest Expense Ratio
for the period from the beginning of each Fiscal Year in
which such Fiscal Quarter occurs to the end of such Fiscal
Quarter, equal to or greater than the ratio set forth
opposite such Fiscal Quarter below:
Fiscal Quarter Ratio
-------------- -----
March 31, 1994 1.25 to 1.0
June 30, 1994 2.00 to 1.0
September 30, 1994 2.00 to 1.0
December 31, 1994 2.00 to 1.0
March 31, 1995 and
each Fiscal Quarter
thereafter 2.50 to 1.0
(e) at the end of each Fiscal Quarter set forth below,
a Consolidated EBITDA to Consolidated Debt Service Ratio for
the period from the beginning of each Fiscal Year in which
such Fiscal Quarter occurs to the end of such Fiscal
Quarter, equal to or greater than the ratio set forth
opposite such Fiscal Quarter below:
Fiscal Quarter Ratio
-------------- -----
March 31, 1994 -0.05 to 1.0
June 30, 1994 0.40 to 1.0
September 30, 1994 0.45 to 1.0
December 31, 1994 0.50 to 1.0
-3-
<PAGE> 4
Each Fiscal Quarter
during the 1995
Fiscal Year 1.70 to 1.0
Each Fiscal Quarter
during each Fiscal
Year thereafter 2.00 to 1.0
(f) at the end of each Fiscal Quarter set forth below,
Consolidated EBITDA for the period from the beginning of the
Fiscal Year in which such Fiscal Quarter occurs to the end
of such Fiscal Quarter, equal to or greater than the amount
set forth opposite such Fiscal Quarter below:
Fiscal Quarter Amount
-------------- ------
March 31, 1994 $ 2,332,000
June 30, 1994 $ 7,634,000
September 30, 1994 $11,884,000
December 31, 1994 $15,200,000
December 31, 1995 and
the last day of each
Fiscal Year thereafter $25,000,000"
1.3 SECTION 8.9 of the Loan Agreement is amended to
delete the table contained therein in its entirety and to
substitute the following table therefor:
"Fiscal Year Maximum Capital Expenditures
----------- ----------------------------
1994 $ 9,000,000
1995 and each
Fiscal Year thereafter $11,000,000"
SECTION 2. CONDITIONS PRECEDENT. This Amendment shall
become effective and be deemed effective as of the date first
above written upon receipt by the Agent of the following:
(i) four (4) copies of this Amendment duly executed by
the Borrower, the Lender and the Agent; and
-4-
<PAGE> 5
(ii) Reaffirmations of Guaranty and Security Agreement
in substantially the form of EXHIBIT A attached hereto, duly
executed by each of Carlon Chimes and Youngstown Steel Door.
SECTION 3. COVENANTS, REPRESENTATIONS AND WARRANTIES
OF THE BORROWER.
3.1 Except to the extent that any representation or
warranty is expressly made only with respect to an earlier date,
upon the effectiveness of this Amendment, the Borrower hereby
reaffirms all covenants, representations and warranties made by
it in the Loan Agreement to the extent the same are not amended
hereby and agrees that all such covenants, representations and
warranties shall be deemed to have been re-made as of the
effective date of this Amendment.
3.2 The Borrower hereby represents and warrants that
this Amendment constitutes the legal, valid and binding
obligation of the Borrower enforceable against the Borrower in
accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights
generally and general principles of equity which may limit the
availability of equitable remedies.
SECTION 4. REFERENCE TO AND EFFECT ON THE LOAN
AGREEMENT.
4.1 Upon the effectiveness of this Amendment, each
reference in the Loan Agreement to "this Agreement," "hereunder,"
"hereof," "herein," "hereby" or words of like import shall mean
and be a reference to the Loan Agreement as amended hereby, and
each reference to the Loan Agreement in any other document,
instrument or agreement executed and/or delivered in connection
with the Loan Agreement shall mean and be a reference to the Loan
Agreement as amended hereby.
4.2 Except as specifically amended hereby, the Loan
Agreement and other documents, instruments and agreements
executed and/or delivered in connection therewith shall remain in
full force and effect and are hereby ratified and confirmed.
4.3 The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or
remedy of any Lender or the Agent under the Loan Agreement or any
of the other Loan Documents, nor constitute a waiver of any
provision contained therein, except as specifically set forth
herein.
-5-
<PAGE> 6
SECTION 5. GOVERNING LAW. THIS AMENDMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS
(AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS) AND DECISIONS OF
THE STATE OF ILLINOIS.
SECTION 6. EXECUTION IN COUNTERPARTS. This Amendment
may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all
of which taken together shall constitute but one and the same
instrument.
SECTION 7. HEADINGS. Section headings in this
Amendment are included herein for convenience or reference only
and shall not constitute a part of this Amendment for any other
purpose.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereto
duly authorized as of the date first written above.
THE LAMSON AND SESSIONS CO.
By: /s/ Allan J. Zambie
-------------------------
Name: Allan J. Zambie
Title: Vice President-Secretary &
General Counsel
GENERAL ELECTRIC CAPITAL
CORPORATION, as the Agent
and as the sole Lender
By:
-------------------------
Name:
Title:
-6-
<PAGE> 7
SECTION 5. GOVERNING LAW. THIS AMENDMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS
(AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS) AND DECISIONS OF
THE STATE OF ILLINOIS.
SECTION 6. EXECUTION IN COUNTERPARTS. This Amendment
may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all
of which taken together shall constitute but one and the same
instrument.
SECTION 7. HEADINGS. Section headings in this
Amendment are included herein for convenience or reference only
and shall not constitute a part of this Amendment for any other
purpose.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereto
duly authorized as of the date first written above.
THE LAMSON AND SESSIONS CO.
By:
-------------------------------
Name:
Title:
GENERAL ELECTRIC CAPITAL
CORPORATION, as the Agent
and as the sole Lender
By: /s/ Shaun Pettit
-------------------------------
Name: Shaun Pettit
Title: Region Operations Manager
-6-
<PAGE> 8
EXHIBIT A
to
Amendment
Form of Reaffirmation of Guaranty and Security Agreement
--------------------------------------------------------
(Attached.)
<PAGE> 9
REAFFIRMATION OF GUARANTY AND SECURITY AGREEMENT
The undersigned hereby (i) acknowledges receipt of that
certain Amendment No. 3 to Loan Agreement of even date herewith
(the "Amendment") to the Loan Agreement dated as of February 13,
1992 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the "Loan Agreement") among
THE LAMSON & SESSIONS CO. (the "Borrower"), GENERAL ELECTRIC
CAPITAL CORPORATION ("GE Capital"), as a "Lender" (as defined in
the Loan Agreement) and GE Capital, as agent for the Lenders (in
such capacity, the "Agent"), (ii) reaffirms all of its
obligations under that certain Guaranty and Security Agreement
dated as of February 13, 1992 ("Guaranty and Security
Agreement"), made by the undersigned in favor of the Lenders, and
(iii) acknowledges and agrees that such Guaranty and Security
Agreement remains in full force and effect notwithstanding the
Amendment, and that such Guaranty and Security Agreement is
hereby ratified and confirmed.
Date:
------------------
[Names of Guarantor]
By:
-------------------------------
Title:
<PAGE> 10
REAFFIRMATION OF GUARANTY AND SECURITY AGREEMENT
The undersigned hereby (i) acknowledges receipt of that
certain Amendment No. 3 to Loan Agreement of even date herewith
(the "Amendment") to the Loan Agreement dated as of February 13,
1992 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the "Loan Agreement") among
THE LAMSON & SESSIONS CO. (the "Borrower"), GENERAL ELECTRIC
CAPITAL CORPORATION ("GE Capital"), as a "Lender" (as defined in
the Loan Agreement) and GE Capital, as agent for the Lenders (in
such capacity, the "Agent"), (ii) reaffirms all of its
obligations under that certain Guaranty and Security Agreement
dated as of February 13, 1992 ("Guaranty and Security
Agreement"), made by the undersigned in favor of the Lenders, and
(iii) acknowledges and agrees that such Guaranty and Security
Agreement remains in full force and effect notwithstanding the
Amendment, and that such Guaranty and Security Agreement is
hereby ratified and confirmed.
Date: 4/15/94
-------------
THE YOUNGSTOWN STEEL DOOR COMPANY
By: /s/ Allan J. Zambie
----------------------------
Title: Secretary
<PAGE> 11
REAFFIRMATION OF GUARANTY AND SECURITY AGREEMENT
The undersigned hereby (i) acknowledges receipt of that
certain Amendment No. 3 to Loan Agreement of even date herewith
(the "Amendment") to the Loan Agreement dated as of February 13,
1992 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the "Loan Agreement") among
THE LAMSON & SESSIONS CO. (the "Borrower"), GENERAL ELECTRIC
CAPITAL CORPORATION ("GE Capital"), as a "Lender" (as defined in
the Loan Agreement) and GE Capital, as agent for the Lenders (in
such capacity, the "Agent"), (ii) reaffirms all of its
obligations under that certain Guaranty and Security Agreement
dated as of February 13, 1992 ("Guaranty and Security
Agreement"), made by the undersigned in favor of the Lenders, and
(iii) acknowledges and agrees that such Guaranty and Security
Agreement remains in full force and effect notwithstanding the
Amendment, and that such Guaranty and Security Agreement is
hereby ratified and confirmed.
Date: 4/15/94
-------------
CARLON CHIMES CO.
By: /s/ Allan J. Zambie
----------------------------
Title: Secretary
-10-
<PAGE> 1
Exhibit 10(o)
EXECUTION COPY
AMENDMENT NO. 4 AND CONSENT
Dated as of May __, 1994
to
LOAN AGREEMENT
Dated as of February 13, 1992
THIS AMENDMENT NO. 4 AND CONSENT TO LOAN AGREEMENT ("Amendment") is
entered into as of May __, 1994 by and among THE LAMSON & SESSIONS CO., an Ohio
corporation (the "Borrower"), GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation ("GE Capital"), as the sole "Lender" (as defined in the Loan
Agreement referred to below) and GE Capital as agent for the Lenders (in such
capacity, the "Agent").
PRELIMINARY STATEMENT
A. The Borrower, the Lender and the Agent are parties to that certain
Loan Agreement dated as of February 13, 1992, as amended by that certain
Amendment No. 1 and Waiver dated as of February 11, 1993, that certain
Amendment No. 2 and Consent dated as of March 1, 1994, and that certain
Amendment No. 3 dated as of March 31, 1994 (as the same may be further amended,
restated, supplemented or otherwise modified from time to time, the "Loan
Agreement"). Capitalized terms used herein and not otherwise defined shall
have the meanings ascribed to them in the Loan Agreement.
B. The Borrower proposes to sell substantially all of the assets of its
Midland Steel Products Co. division (the "Midland Sale") to Iochpe-Maxion
Ohio, Inc. ("IMO") pursuant to an Asset Purchase Agreement dated May 4, 1994
between the Borrower and IMO (the "Asset Purchase Agreement"). In connection
with the Midland Sale, the Borrower proposes to lease its plant located at
10615 Madison Avenue, Cleveland, Ohio 44102 (the "Cleveland Plant") to IMO (the
"Cleveland Plant Lease") pursuant to a Lease between the Borrower and IMO dated
as of the date hereof (the "Cleveland Plant Lease Agreement").
C. The Borrower has requested that the Agent and the Lender consent
to the Midland Sale and the Cleveland Plant Lease, and the Agent and the Lender
have agreed to provide such consent subject to the terms hereof. The Borrower,
the Lender and the Agent have also agreed to amend the Loan Agreement on the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises set forth above, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Borrower, the Lender and the Agent hereby agree as
follows:
<PAGE> 2
SECTION 1. CONSENT AND WAIVER. Effective as of the date first written
above, and subject to the satisfaction of the conditions precedent set forth in
SECTION 3 below, the Agent and the Lender consent to the Midland Sale pursuant
to the terms of the Asset Purchase Agreement and consent to the Cleveland Plant
Lease to IMO pursuant to the terms of the Cleveland Plant Lease Agreement. The
Agent and the Lender waive any noncompliance with SECTIONS 7.1, 8.8 or 8.10 of
the Loan Agreement and SECTION 6(M) of the Security Agreement which would exist
as a result of the Midland Sale or the Cleveland Lease or the execution of the
Asset Purchase Agreement or the Cleveland Plant Lease Agreement.
SECTION 2. AMENDMENTS TO THE LOAN AGREEMENT; APPLICATION OF PROCEEDS
FROM ASSET PURCHASE AGREEMENT AND CLEVELAND PLANT LEASE.
The Borrower, the Lender and the Agent agree that they will negotiate in
good faith to (a) amend the financial covenants set forth in SECTION 7.3 of the
Loan Agreement to reflect the effect of the Midland Sale (such amendments being
referred to as the "Financial Covenant Amendments") and (b) agree to a mutually
acceptable application to the Obligations of (i) the "Purchase Price" under and
as defined in the Asset Purchase Agreement (the "Purchase Price"), including
any post-closing adjustment amount payable to the Borrower under Section 3.4 of
the Asset Purchase Agreement, (ii) rent payments under the Cleveland Plant
Lease, and (iii) payment for the purchase of the Cleveland Plant and the
underlying real estate by IMO under Article Thirty or Article Thirty-One of the
Cleveland Plant Lease or otherwise (such applications being referred to
collectively as the "Proceeds Application"). On the "Closing Date" under and
as defined in the Asset Purchase Agreement (the "Closing Date"), if the
Borrower, the Agent and the Lender have not then agreed to a different Proceeds
Application, the Purchase Price received by the Borrower under the Asset
Purchase Agreement shall be applied to a prepayment of the Revolving Credit
Loan. On June 10, 1994, if the Borrower, the Agent and the Lender have not
then agreed upon the Financial Covenant Amendments and Proceeds Application,
the Borrower shall make a mandatory prepayment on the Term Loan in an amount
equal to the lesser of (A) the Purchase Price payable to the Borrower on the
Closing Date MINUS the Reduction in Availability which results on the Closing
Date from the Midland Sale, and (B) the outstanding balance of the Term Loan.
Unless and until the Borrower, the Agent and the Lender agree upon the
Financial Covenant Amendments and Proceeds Application, all payments of rent
under the Cleveland Plant Lease and all proceeds of the sale of the Cleveland
Plant shall be applied to the prepayment of the Term Loan, to the extent
outstanding, and then to the Revolving Credit Loan. After the Borrower, the
Agent and
-2-
<PAGE> 3
the Lender have agreed upon the Financial Covenant Amendments and Proceeds
Application, the Purchase Price, the Cleveland Plant Lease rents, and the
proceeds of any sale of the Cleveland Plant shall be applied in accordance with
the agreed upon Proceeds Application.
SECTION 3. CONDITIONS PRECEDENT. This Amendment shall become
effective and be deemed effective as of the date first above written upon
satisfaction of the following conditions precedent:
(a) the Agent shall have received the following:
(i) four (4) copies of this Amendment duly executed by the Borrower,
the Lender and the Agent;
(ii) Reaffirmations of Guaranty and Security Agreement in
substantially the form of EXHIBIT A attached hereto, duly executed by
each of Carlon Chimes and Youngstown Steel Door; and
(iii) an Assignment of Purchase Agreement Rights with respect to the
Asset Purchase Agreement, executed by the Borrower and acknowledged by IMO;
(b) All mortgage release and UCC financing statement partial releases
which the Agent or the Lender have been required to execute pursuant to the
Asset Purchase Agreement shall be in form and substance satisfactory to the
Agent and the Lender;
(c) Any amendment or modification to the Asset Purchase Agreement
after May 4, 1994 shall be reasonably satisfactory to the Agent;
(d) The "Closing" under and as defined in the Asset Purchase Agreement
shall have occurred and the Agent and the Lender shall have received a
certificate of the chief financial officer of the Borrower to that effect;
(e) The Cleveland Plant Lease Agreement shall have been executed by the
Borrower and IMO in a form reasonably satisfactory to the Agent, the
"Commencement Date" under and as defined thereunder shall have occurred, and
the Agent and the Lender shall have received a certificate of the chief
financial officer of the Borrower to that effect;
(f) The Agent shall have received the amount of the Purchase Price
payable on the Closing Date for application in accordance with Section 2 of this
Amendment; and
-3-
<PAGE> 4
(g) The Agent, IMO and the Borrower shall each have executed and
delivered a Non-Disturbance, Subordination and Attornment Agreement with
respect to the Cleveland Plant Lease in form and substance reasonably
satisfactory to the Agent.
SECTION 4. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
4.1 Except to the extent that any representation or warranty
expressly is made only with respect to an earlier date, upon the effectiveness
of this Amendment, the Borrower hereby reaffirms all covenants, representations
and warranties made by it in the Loan Agreement to the extent the same are not
amended hereby and agrees that all such covenants, representations and
warranties shall be deemed to have been re-made as of the effective date of
this Amendment. In addition, the Borrower covenants and agrees that it will
not amend or agree to amend the Asset Purchase Agreement or the Cleveland Plant
Lease Agreement without the prior written consent of the Agent.
4.2 The Borrower hereby represents and warrants that this Amendment
constitutes the legal, valid and binding obligation of the Borrower enforceable
against the Borrower in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and general
principles of equity which may limit the availability of equitable remedies.
SECTION 5. REFERENCE TO AND EFFECT ON THE LOAN AGREEMENT.
5.1 Upon the effectiveness of this Amendment, each reference in the
Loan Agreement to "this Agreement," "hereunder," "hereof," "herein," "hereby" or
words of like import shall mean and be a reference to the Loan Agreement as
amended hereby, and each reference to the Loan Agreement in any other document,
instrument or agreement executed and/or delivered in connection with the Loan
Agreement shall mean and be a reference to the Loan Agreement as amended
hereby.
5.2 Except as specifically amended hereby, the Loan Agreement and other
documents, instruments and agreements executed and/or delivered in connection
therewith shall remain in full force and effect and are hereby ratified and
confirmed.
5.3 The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of any Lender or the Agent
under the Loan Agreement or any of the other Loan Documents, nor constitute a
waiver of any
-4-
<PAGE> 5
provision contained therein, except as specifically set forth herein.
SECTION 6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF
LAW PROVISIONS) AND DECISIONS OF THE STATE OF ILLINOIS.
SECTION 7. EXECUTION IN COUNTERPARTS. This Amendment may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute but one and the
same instrument.
SECTION 8. HEADINGS. Section headings in this Amendment are included
herein for convenience or reference only and shall not constitute a part of
this Amendment for any other purpose.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereto duly authorized as of the date
first written above.
THE LAMSON & SESSIONS CO.
By:___________________________
Title: Executive Vice President,
Treasurer and Chief
Financial Officer
GENERAL ELECTRIC CAPITAL CORPORATION,
as the Agent and as the sole Lender
By:___________________________
Title:
-5-
<PAGE> 6
EXHIBIT A
to
Amendment
FORM OF REAFFIRMATION OF GUARANTY AND SECURITY AGREEMENT
--------------------------------------------------------
(Attached)
<PAGE> 7
REAFFIRMATION OF GUARANTY AND SECURITY AGREEMENT
The undersigned hereby (i) acknowledges receipt of that certain
Amendment No. 4 and Consent of even date herewith (the "Amendment") to the Loan
Agreement dated as of February 13, 1992 (as such Loan Agreement may be amended,
restated, supplemented or otherwise modified from time to time, the "Loan
Agreement") among THE LAMSON & SESSIONS CO. (the "Borrower"), GENERAL ELECTRIC
CAPITAL CORPORATION ("GE Capital"), as a "Lender" (as defined in the Loan
Agreement) and GE Capital, as agent for the Lenders (in such capacity, the
"Agent"), (ii) reaffirms all of its obligations under that certain Guaranty and
Security Agreement dated as of February 13, 1992 ("Guaranty and Security
Agreement"), made by the undersigned in favor of the Lenders, and (iii)
acknowledges and agrees that such Guaranty and Security Agreement remains in
full force and effect notwithstanding the Amendment, and that such Guaranty and
Security Agreement is hereby ratified and confirmed.
Date: May __, 1994
CARLON CHIMES CO.
By: __________________________
Title: Vice President and
Treasurer
JRL94B07.SE2 (2/22/95 4:51pm)
<PAGE> 8
REAFFIRMATION OF GUARANTY AND SECURITY AGREEMENT
The undersigned hereby (i) acknowledges receipt of that certain
Amendment No. 4 and Consent of even date herewith (the "Amendment") to the Loan
Agreement dated as of February 13, 1992 (as such Loan Agreement may be amended,
restated, supplemented or otherwise modified from time to time, the "Loan
Agreement") among THE LAMSON & SESSIONS CO. (the "Borrower"), GENERAL ELECTRIC
CAPITAL CORPORATION ("GE Capital"), as a "Lender" (as defined in the Loan
Agreement) and GE Capital, as agent for the Lenders (in such capacity, the
"Agent"), (ii) reaffirms all of its obligations under that certain Guaranty and
Security Agreement dated as of February 13, 1992 ("Guaranty and Security
Agreement"), made by the undersigned in favor of the Lenders, and (iii)
acknowledges and agrees that such Guaranty and Security Agreement remains in
full force and effect notwithstanding the Amendment, and that such Guaranty and
Security Agreement is hereby ratified and confirmed.
Date: May __, 1994
THE YOUNGSTOWN STEEL DOOR COMPANY
By: __________________________
Title: Treasurer
JRL94B07.SE2 (2/22/95 4:51pm)
<PAGE> 1
Exhibit 10(p)
AMENDMENT NO. 5
Dated as of June 10, 1994
TO
LOAN AGREEMENT
Dated as of February 13, 1992
THIS AMENDMENT NO. 5 TO LOAN AGREEMENT ("Amendment") is entered into as
of June 10, 1994 by and among THE LAMSON & SESSIONS CO., an Ohio corporation
(the "Borrower"), GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation
("GE Capital"), as the sole "Lender" (as defined in the Loan Agreement referred
to below) and GE Capital as agent for the Lenders (in such capacity, the
"Agent").
PRELIMINARY STATEMENT
A. The Borrower, the Lender and the Agent are parties to that certain
Loan Agreement dated as of February 13, 1992, as amended by that certain
Amendment No. 1 and Waiver dated as of February 11, 1993, that certain
Amendment No. 2 and Consent dated as of March 1, 1994, that certain Amendment
No. 3 dated as of March 31, 1994, and that certain Amendment No. 4 and Consent
("Amendment No. 4") dated as of May 27, 1994 (as the same may be further
amended, restated, supplemented or otherwise modified from time to time, the
"Loan Agreement"). Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to them in the Loan Agreement, or if
not defined in the Loan Agreement, the meanings ascribed to them in Amendment
No. 4.
B. In Amendment No. 4, the Borrower, the Lender and the Agent agreed
to negotiate in good faith to agree to, among other things, (1) Financial
Covenant Amendments to reflect the effect of the Midland Sale, and (2) to agree
upon the application of the Purchase Price to the Obligations. The Borrower,
the Lender and the Agent have agreed upon Financial Covenant Amendments and the
application of the Purchase Price to the Obligations, and have agreed to amend
the Loan Agreement on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises set forth above, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Borrower, the Lender and the Agent hereby agree as
follows:
SECTION 1. AMENDMENTS TO THE LOAN AGREEMENT. Effective as of the date
first above written, subject to the satisfaction of the conditions precedent
set forth in SECTION 3 below, the Loan Agreement is hereby amended as follows:
<PAGE> 2
1.1 SECTION 1.1 of the Loan Agreement is amended by deleting clause
(A)(i) in the definition of "Borrowing Base" and substituting the following
therefor:
"(i) fifty percent (50%) of the aggregate value of the Eligible
Inventory PLUS"
1.2 SECTION 7.3 of the Loan Agreement is amended to delete in their
entirety SECTIONS 7.3(A), 7.3(B), 7.3(C), 7.3(D), 7.3(E) and 7.3(F) thereof and
to substitute the following therefor:
<TABLE>
"(a) at all times during each Fiscal Quarter set forth below, Consolidated
Working Capital equal to or greater than the amount set forth opposite such
Fiscal Quarter below:
<CAPTION>
MINIMUM CONSOLIDATED
FISCAL QUARTER ENDING WORKING CAPITAL
<S> <C>
March 31, 1994 $30,000,000
June 30, 1994 $30,000,000
September 30, 1994 $28,000,000
December 31, 1994 $25,000,000
March 31, 1995 and
each Fiscal Quarter
thereafter $42,000,000
</TABLE>
<TABLE>
(b) at all times during each of the Fiscal Years set forth below, a
Consolidated Current Ratio equal to or greater than the ratio set forth
opposite such Fiscal Year below:
<CAPTION>
FISCAL YEAR RATIO
<S> <C>
1994 1.5 to 1.0
1995 and each
Fiscal Year thereafter 2.0 to 1.0
</TABLE>
<TABLE>
(c) at all times during each Fiscal Quarter set forth below, a
Consolidated Funded Debt to Consolidated Tangible Net Worth Ratio, equal
to or less than the ratio set forth opposite such Fiscal Quarter below:
-2-
<PAGE> 3
<CAPTION>
FISCAL QUARTER ENDING RATIO
<S> <C>
March 31, 1994 19 to 1.0
June 30, 1994 12 to 1.0
September 30, 1994 10 to 1.0
December 31, 1994 8 to 1.0
March 31, 1995 and
each Fiscal Quarter
thereafter 1.0 to 1.0
</TABLE>
<TABLE>
(d) at the end of each Fiscal Quarter set forth below, a Consolidated
EBITDA to Consolidated Interest Expense Ratio for the period from the
beginning of each Fiscal Year in which such Fiscal Quarter occurs to the
end of such Fiscal Quarter, equal to or greater than the ratio set forth
opposite such Fiscal Quarter below:
<CAPTION>
FISCAL QUARTER RATIO
<S> <C>
March 31, 1994 (6.5) to 1.0
June 30, 1994 (1.5) to 1.0
September 30, 1994 0.75 to 1.0
December 31, 1994 1.23 to 1.0
March 31, 1995 and
each Fiscal Quarter
thereafter 2.50 to 1.0
</TABLE>
<TABLE>
(e) at the end of each Fiscal Quarter set forth below, a Consolidated
EBITDA to Consolidated Debt Service Ratio for the period from the beginning
of each Fiscal Year in which such Fiscal Quarter occurs to the end of such
Fiscal Quarter, equal to or greater than the ratio set forth opposite such
Fiscal Quarter below:
<CAPTION>
FISCAL QUARTER RATIO
<S> <C>
March 31, 1994 (6.5) to 1.0
June 30, 1994 (1.85) to 1.0
-3-
<PAGE> 4
September 30, 1994 (0.50) to 1.0
December 31, 1994 (0.18) to 1.0
Each Fiscal Quarter
during the 1995
Fiscal Year 1.70 to 1.0
Each Fiscal Quarter
during each Fiscal
Year thereafter 2.00 to 1.0
</TABLE>
<TABLE>
(f) at the end of each Fiscal Quarter set forth below, Consolidated
EBITDA for the period from the beginning of the Fiscal Year in which such
Fiscal Quarter occurs to the end of such Fiscal Quarter, equal to or greater
than the amount set forth opposite such Fiscal Quarter below:
<CAPTION>
FISCAL QUARTER AMOUNT
<S> <C>
March 31, 1994 $(7,633,000)
June 30, 1994 $(2,000,000)
September 30, 1994 $ 3,500,000
December 31, 1994 $ 7,500,000
December 31, 1995 and
the last day of each
Fiscal Year thereafter $25,000,000"
</TABLE>
SECTION 2. APPLICATION OF PURCHASE PRICE.
The Borrower, the Lender and the Agent agree that out of the
Purchase Price, $6,771,266.59 shall be applied as a prepayment to the Term
Loan, such prepayment to be applied to the payments due under the Term Loan in
the inverse order of maturity. Lender and Agent also agree that the
installments due on the Term Loan of $21,266.59 on September 30, 1994 and
$750,000 on December 31, 1994 shall be deferred and such amounts shall be added
to the last installment of principal due on the Term Loan (such installment
being determined after giving effect to the prepayment agreed upon in the
preceding sentence).
SECTION 3. CONDITIONS PRECEDENT. This Amendment shall become
effective and be deemed effective as of the date first above written upon
receipt by the Agent of the following:
-4-
<PAGE> 5
(i) four (4) copies of this Amendment duly executed by the Borrower,
the Lender and the Agent; and
(ii) Reaffirmations of Guaranty and Security Agreement in
substantially the form of EXHIBIT A attached hereto, duly executed by each
of Carlon Chimes and Youngstown Steel Door.
SECTION 4. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
4.1 Except to the extent that any representation or warranty is
expressly made only with respect to an earlier date, upon the effectiveness of
this Amendment, the Borrower hereby reaffirms all covenants, representations
and warranties made by it in the Loan Agreement to the extent the same are not
amended hereby and agrees that all such covenants, representations and
warranties shall be deemed to have been re-made as of the effective date of
this Amendment.
4.2 The Borrower hereby represents and warrants that this Amendment
constitutes the legal, valid and binding obligation of the Borrower enforceable
against the Borrower in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and general
principles of equity which may limit the availability of equitable remedies.
SECTION 5. REFERENCE TO AND EFFECT ON THE LOAN AGREEMENT.
5.1 Upon the effectiveness of this Amendment, each reference in the
Loan Agreement to "this Agreement," "hereunder," "hereof," "herein," "hereby"
or words of like import shall mean and be a reference to the Loan Agreement as
amended hereby, and each reference to the Loan Agreement in any other document,
instrument or agreement executed and/or delivered in connection with the Loan
Agreement shall mean and be a reference to the Loan Agreement as amended
hereby.
5.2 Except as specifically amended hereby, the Loan Agreement and
other documents, instruments and agreements executed and/or delivered in
connection therewith shall remain in full force and effect and are hereby
ratified and confirmed.
5.3 The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of any Lender or the
Agent under the Loan Agreement or any of the other Loan Documents, nor
constitute a waiver of any
-5-
<PAGE> 6
provision contained therein, except as specifically set forth herein.
SECTION 6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF
LAW PROVISIONS) AND DECISIONS OF THE STATE OF ILLINOIS.
SECTION 7. EXECUTION IN COUNTERPARTS. This Amendment may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute but one and the
same instrument.
SECTION 8. HEADINGS. Section headings in this Amendment are included
herein for convenience or reference only and shall not constitute a part of
this Amendment for any other purpose.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereto duly authorized as of the date
first written above.
THE LAMSON AND SESSIONS CO.
By:___________________________
Name:
Title:
GENERAL ELECTRIC CAPITAL
CORPORATION, as the Agent
and as the sole Lender
By:___________________________
Name:
Title:
-6-
<PAGE> 7
EXHIBIT A
to
Amendment
FORM OF REAFFIRMATION OF GUARANTY AND SECURITY AGREEMENT
(Attached.)
<PAGE> 8
REAFFIRMATION OF GUARANTY AND SECURITY AGREEMENT
The undersigned hereby (i) acknowledges receipt of that certain
Amendment No. 5 to Loan Agreement of even date herewith (the "Amendment") to
the Loan Agreement dated as of February 13, 1992 (as the same may be amended,
restated, supplemented or otherwise modified from time to time, the "Loan
Agreement") among THE LAMSON & SESSIONS CO. (the "Borrower"), GENERAL ELECTRIC
CAPITAL CORPORATION ("GE Capital"), as a "Lender" (as defined in the Loan
Agreement) and GE Capital, as agent for the Lenders (in such capacity, the
"Agent"), (ii) reaffirms all of its obligations under that certain Guaranty and
Security Agreement dated as of February 13, 1992 ("Guaranty and Security
Agreement"), made by the undersigned in favor of the Lenders, and (iii)
acknowledges and agrees that such Guaranty and Security Agreement remains in
full force and effect notwithstanding the Amendment, and that such Guaranty and
Security Agreement is hereby ratified and confirmed.
Dated as of June 10, 1994
[Names of Guarantor]
By: __________________________
Title:
<PAGE> 9
REAFFIRMATION OF GUARANTY AND SECURITY AGREEMENT
The undersigned hereby (i) acknowledges receipt of that certain
Amendment No. 5 to Loan Agreement of even date herewith (the "Amendment") to
the Loan Agreement dated as of February 13, 1992 (as the same may be amended,
restated, supplemented or otherwise modified from time to time, the "Loan
Agreement") among THE LAMSON & SESSIONS CO. (the "Borrower"), GENERAL ELECTRIC
CAPITAL CORPORATION ("GE Capital"), as a "Lender" (as defined in the Loan
Agreement) and GE Capital, as agent for the Lenders (in such capacity, the
"Agent"), (ii) reaffirms all of its obligations under that certain Guaranty and
Security Agreement dated as of February 13, 1992 ("Guaranty and Security
Agreement"), made by the undersigned in favor of the Lenders, and (iii)
acknowledges and agrees that such Guaranty and Security Agreement remains in
full force and effect notwithstanding the Amendment, and that such Guaranty and
Security Agreement is hereby ratified and confirmed.
Dated as of June 10, 1994
THE YOUNGSTOWN STEEL DOOR COMPANY
By: __________________________
Title:
<PAGE> 10
REAFFIRMATION OF GUARANTY AND SECURITY AGREEMENT
The undersigned hereby (i) acknowledges receipt of that certain
Amendment No. 5 to Loan Agreement of even date herewith (the "Amendment") to
the Loan Agreement dated as of February 13, 1992 (as the same may be amended,
restated, supplemented or otherwise modified from time to time, the "Loan
Agreement") among THE LAMSON & SESSIONS CO. (the "Borrower"), GENERAL ELECTRIC
CAPITAL CORPORATION ("GE Capital"), as a "Lender" (as defined in the Loan
Agreement) and GE Capital, as agent for the Lenders (in such capacity, the
"Agent"), (ii) reaffirms all of its obligations under that certain Guaranty and
Security Agreement dated as of February 13, 1992 ("Guaranty and Security
Agreement"), made by the undersigned in favor of the Lenders, and (iii)
acknowledges and agrees that such Guaranty and Security Agreement remains in
full force and effect notwithstanding the Amendment, and that such Guaranty and
Security Agreement is hereby ratified and confirmed.
Dated as of June 10, 1994
CARLON CHIMES CO.
By: __________________________
Title:
JRL94B49.SEC (2/22/95 4:59pm)
-10-
<PAGE> 1
Exhibit 10(q)
EXECUTION COPY
AMENDMENT NO. 6
Dated as of September 30, 1994
TO
LOAN AGREEMENT
Dated as of February 13, 1992
THIS AMENDMENT NO. 6 TO LOAN AGREEMENT ("Amendment") is entered into as
of September 30, 1994 by and among THE LAMSON & SESSIONS CO., an Ohio
corporation (the "Borrower"), GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation ("GE Capital"), as the sole "Lender" (as defined in the Loan
Agreement referred to below) and GE Capital as agent for the Lenders (in such
capacity, the "Agent").
PRELIMINARY STATEMENT
A. The Borrower, the Lender and the Agent are parties to that certain
Loan Agreement dated as of February 13, 1992 (as amended by that certain
Amendment No. 1 and Waiver dated as of February 11, 1993, that certain
Amendment No. 2 and Consent dated as of March 1, 1994, that certain Amendment
No. 3 dated as of March 31, 1994, that certain Amendment No. 4 and Consent
dated as of May 27, 1994 and that certain Amendment No. 5 dated as of June 10,
1994, the "Loan Agreement"). Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to them in the Loan Agreement.
B. The Borrower, the Lender and the Agent have agreed to amend the
Loan Agreement on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises set forth above, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Borrower, the Lenders and the Agent hereby agree as
follows:
SECTION 1. AMENDMENTS TO THE LOAN AGREEMENT. Effective as of the date
first above written, subject to the satisfaction of the conditions precedent
set forth in SECTION 2 below, the Loan Agreement is hereby amended as follows:
1.1 SECTION 1.1 of the Credit Agreement is amended to delete the
definitions "Intercreditor Agreement" and "National City Bank Subordinated
Liens" contained therein in their entirety.
1.2 SECTION 1.1 of the Credit Agreement is amended to delete the
following phrase from the definition "Leasehold Mortgage" contained therein:
<PAGE> 2
"(other than with respect to Borrower's leasehold interest on the Real
Estate located at 25701 Science Park Drive, Cleveland, Ohio 44122 which
is subject to a prior leasehold mortgage in favor of National City Bank
and in respect of which the Leasehold Mortgage thereon shall create a
second priority Lien thereon)"
1.3 SECTION 5.23 of the Credit Agreement is amended to delete the
phrase "(other than the National City Bank Subordinated Liens)" contained
therein.
1.4 SECTION 8.8 of the Loan Agreement is amended (a) to delete ";
and" from the end of CLAUSE (E) of such Section and substitute a period
thereof and (b) to delete CLAUSES (F) and (G) of such Section in their
entirety.
SECTION 2. CONDITIONS PRECEDENT. This Amendment shall become
effective and be deemed effective as of the date first above written upon
receipt by the Agent of the following:
(i) four (4) copies of this Amendment duly executed by the Borrower,
the Lender and the Agent;
(ii) a Certificate of Secretary of the Borrower certifying (A) the
names and signatures of the officers of the Borrower authorized to execute
the Amendment, and (B) that attached thereto is a true and complete copy of
the resolutions of the Borrower's Board of Directors approving and
authorizing the execution, delivery and performance of the Amendment
documents referred to in CLAUSE (A) above; and
(iii) Reaffirmations of Guaranty and Security Agreement in
substantially the form of EXHIBIT A attached hereto, duly executed by each
of Carlon Chimes and Youngstown Steel Door.
SECTION 3. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
3.1 Upon the effectiveness of this Amendment, the Borrower hereby
reaffirms all covenants, representations and warranties made by it in the Loan
Agreement to the extent the same are not amended hereby and agrees that all
such covenants, representations and warranties shall be deemed to have been
re-made as of the effective date of this Amendment.
3.2 The Borrower hereby represents and warrants that this Amendment
constitutes the legal, valid and binding obligation of the Borrower enforceable
against the Borrower in accordance with its terms, except as enforceability may
be
-2-
<PAGE> 3
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and general principles
of equity which may limit the availability of equitable remedies.
SECTION 4. REFERENCE TO AND EFFECT ON THE LOAN AGREEMENT.
4.1 Upon the effectiveness of this Amendment, each reference in the
Loan Agreement to "this Agreement," "hereunder," "hereof," "herein," "hereby"
or words of like import shall mean and be a reference to the Loan Agreement as
amended hereby, and each reference to the Loan Agreement in any other document,
instrument or agreement executed and/or delivered in connection with the Loan
Agreement shall mean and be a reference to the Loan Agreement as amended
hereby.
4.2 Except as specifically amended hereby, the Loan Agreement and
other documents, instruments and agreements executed and/or delivered in
connection therewith shall remain in full force and effect and are hereby
ratified and confirmed.
4.3 The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of any Lender or the
Agent under the Loan Agreement or any of the other Loan Documents, nor
constitute a waiver of any provision contained therein, except as specifically
set forth herein.
SECTION 5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF
LAW PROVISIONS) AND DECISIONS OF THE STATE OF ILLINOIS.
SECTION 6. EXECUTION IN COUNTERPARTS. This Amendment may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute but one and the
same instrument.
SECTION 7. HEADINGS. Section headings in this Amendment are included
herein for convenience or reference only and shall not constitute a part of
this Amendment for any other purpose.
-3-
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereto duly authorized as of the date
first written above.
THE LAMSON AND SESSIONS CO.
By:___________________________
Name:
Title:
GENERAL ELECTRIC CAPITAL
CORPORATION, as the Agent
and as the sole Lender
By:___________________________
Name:
Title:
-4-
<PAGE> 5
EXHIBIT A
to
Amendment
FORM OF REAFFIRMATION OF GUARANTY AND SECURITY AGREEMENT
(Attached.)
-5-
<PAGE> 6
REAFFIRMATION OF GUARANTY AND SECURITY AGREEMENT
The undersigned hereby (i) acknowledges receipt of that certain
Amendment No. 6 to Loan Agreement of even date herewith (the "Amendment") to
the Loan Agreement dated as of February 13, 1992 (as amended from time to time
prior to the date hereof, the "Loan Agreement") among THE LAMSON & SESSIONS CO.
(the "Borrower"), GENERAL ELECTRIC CAPITAL CORPORATION ("GE Capital"), as a
"Lender" (as defined in the Loan Agreement) and GE Capital, as agent for the
Lenders (in such capacity, the "Agent"), (ii) reaffirms all of its obligations
under that certain Guaranty and Security Agreement dated as of February 13,
1992 ("Guaranty and Security Agreement"), made by the undersigned in favor of
the Lenders, and (iii) acknowledges and agrees that such Guaranty and Security
Agreement remains in full force and effect notwithstanding the Amendment, and
that such Guaranty and Security Agreement is hereby ratified and confirmed.
Date: September 30, 1994
[Names of Guarantor]
By: __________________________
Title:
AMENDNO6.FNL (2/22/95 4:50pm)
-6-
<PAGE> 1
Exhibit 10(r)
EXECUTION COPY
AMENDMENT NO. 7
Dated as of January 31, 1995
to
LOAN AGREEMENT
Dated as of February 13, 1992
THIS AMENDMENT NO. 7 TO LOAN AGREEMENT ("Amendment") is entered into as of
January 31, 1995 by and among THE LAMSON & SESSIONS CO., an Ohio corporation
(the "Borrower"), GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation
("GE Capital"), as the sole "Lender" (as defined in the Loan Agreement referred
to below) and GE Capital as agent for the Lenders (in such capacity, the
"Agent").
PRELIMINARY STATEMENT
A. The Borrower, the Lender and the Agent are parties to that certain Loan
Agreement dated as of February 13, 1992 (as amended by that certain Amendment
No. 1 and Waiver dated as of February 11, 1993, that certain Amendment No. 2
and Consent dated as of March 1, 1994, that certain Amendment No. 3 dated as of
March 31, 1994, that certain Amendment No. 4 and Consent dated as of May 27,
1994, that certain Amendment No. 5 dated as of June 10, 1994 and that certain
Amendment No. 6 dated as of September 30, 1994, the "Loan Agreement").
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to them in the Loan Agreement.
B. The Borrower, the Lender and the Agent have agreed to amend the Loan
Agreement on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises set forth above, and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Borrower, the Lenders and the Agent hereby agree as
follows:
SECTION 1. AMENDMENTS TO THE LOAN AGREEMENT. Effective as of the date
first above written, subject to the satisfaction of the conditions precedent
set forth in SECTION 2 below, the Loan Agreement is hereby amended as follows:
1.1 SECTION 1.1 of the Credit Agreement by adding the following
definitions, to be inserted in SECTION 1.1 in the appropriate alphabetical
order:
"IRB LETTER OF CREDIT" shall mean any Letter of Credit issued in respect
of Borrower's obligations under and in connection with the IRBs.
<PAGE> 2
"MAXIMUM IRB LETTER OF CREDIT AMOUNT" shall mean, at any time, the lesser
of (i) $12,000,000 or (2) the minimum aggregate undrawn face amount of the
letters of credit required to be maintained by Borrower at such time in
respect of its obligations under the IRBs in accordance with the terms of
such IRBs.
"MAXIMUM NON-IRB LETTER OF CREDIT AMOUNT" shall mean $3,000,000.
"NON-IRB LETTER OF CREDIT" shall mean any stand-by or documentary Letter
of Credit, other than an IRB Letter of Credit.
1.2 SECTION 1.1 of the Credit Agreement is further amended by amending and
restating the definition of "MAXIMUM LETTER OF CREDIT AMOUNT" as follows:
"MAXIMUM LETTER OF CREDIT AMOUNT" shall mean the sum of the Maximum IRB
Letter of Credit Amount and the Maximum Non-IRB Letter of Credit Amount.
1.3 SECTION 3.1 of the Credit Agreement is amended and restated as follows:
3.1 AGREEMENT TO ISSUE; PURPOSE OF LETTERS OF CREDIT. Upon and subject
to the terms and conditions hereof, GE Capital agrees to issue or cause to
be issued, on the Closing Date or from time to time thereafter as may be
required of or requested by Borrower, Letters of Credit for the account of
Borrower in an aggregate undrawn face amount of up to the Maximum Letter of
Credit Amount. The aggregate undrawn face amount of IRB Letters of Credit
shall not exceed the Maximum IRB Letter of Credit Amount and the aggregate
undrawn face amount of Non-IRB Letters of Credit shall not exceed the
Maximum Non-IRB Letter of Credit Amount. Notwithstanding anything contained
herein to the contrary, the Letters of Credit and the Reimbursement
Obligations shall constitute financial accommodations under the Revolving
Credit Loan Facility.
1.4 SECTION 3.2 of the Credit Agreement is amended by adding the following
at the beginning of subsection (b) thereof:
"in the case of an IRB Letter of Credit,"
1.5 SECTION 3.3 of the Credit Agreement is amended by amending and
restating SECTIONS 3.3(a)(iii) and (iv) as follows:
-2-
<PAGE> 3
(iii) if, after giving effect to the issuance of such Letter of Credit,
the aggregate undrawn face amount of all Letters of Credit would exceed the
Maximum Letter of Credit Amount, the aggregate undrawn face amount of all
IRB Letters of Credit would exceed the Maximum IRB Letter of Credit Amount,
or the aggregate undrawn face amount of all Non-IRB Letters of Credit would
exceed the Maximum Non-IRB Letter of Credit Amount; or
(iv) which has an expiration date (excluding any extensions thereof) (a)
in the case of an IRB Letter of Credit, later than that required pursuant to
the documents governing the relevant IRB with respect to which such Letter
of Credit is to be issued, or (b) in the case of any Letter of Credit, after
the Business Day next preceding the Commitment Termination Date.
SECTION 2. CONDITIONS PRECEDENT. This Amendment shall become effective and
be deemed effective as of the date first above written upon receipt by the
Agent of the following:
(i) four (4) copies of this Amendment duly executed by the Borrower, the
Lender and the Agent;
(ii) a Certificate of Secretary of the Borrower certifying (A) the names
and signatures of the officers of the Borrower authorized to execute the
Amendment, and (B) that attached thereto is a true and complete copy of the
resolutions of the Borrower's Board of Directors approving and authorizing
the execution, delivery and performance of the Amendment documents referred
to in CLAUSE (A) above; and
(iii) Reaffirmations of Guaranty and Security Agreement in substantially
the form of EXHIBIT A attached hereto, duly executed by each of Carlon Chimes
and Youngstown Steel Door.
SECTION 3. COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
---------------------------------------------------------
3.1 Upon the effectiveness of this Amendment, the Borrower hereby
reaffirms all covenants, representations and warranties made by it in the Loan
Agreement to the extent the same are not amended hereby and agrees that all
such covenants, representations and warranties shall be deemed to have been
re-made as of the effective date of this Amendment.
3.2 The Borrower hereby represents and warrants that this Amendment
constitutes the legal, valid and binding
-3-
<PAGE> 4
obligation of the Borrower enforceable against the Borrower in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and general principles of equity which may limit
the availability of equitable remedies.
SECTION 4. REFERENCE TO AND EFFECT ON THE LOAN AGREEMENT.
---------------------------------------------
4.1 Upon the effectiveness of this Amendment, each reference in the Loan
Agreement to "this Agreement," "hereunder," "hereof," "herein," "hereby" or
words of like import shall mean and be a reference to the Loan Agreement as
amended hereby, and each reference to the Loan Agreement in any other document,
instrument or agreement executed and/or delivered in connection with the Loan
Agreement shall mean and be a reference to the Loan Agreement as amended
hereby.
4.2 Except as specifically amended hereby, the Loan Agreement and other
documents, instruments and agreements executed and/or delivered in connection
therewith shall remain in full force and effect and are hereby ratified and
confirmed.
4.3 The execution, delivery and effectiveness of this Amendment shall not
operate as a waiver of any right, power or remedy of any Lender or the Agent
under the Loan Agreement or any of the other Loan Documents, nor constitute a
waiver of any provision contained therein, except as specifically set forth
herein.
SECTION 5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF
LAW PROVISIONS) AND DECISIONS OF THE STATE OF ILLINOIS.
SECTION 6. EXECUTION IN COUNTERPARTS. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which taken together shall constitute but one and the
same instrument.
-4-
<PAGE> 5
SECTION 7. HEADINGS. Section headings in this Amendment are included
herein for convenience or reference only and shall not constitute a part of
this Amendment for any other purpose.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereto duly authorized as of the date
first written above.
THE LAMSON AND SESSIONS CO.
By:
---------------------------
Name:
Title:
GENERAL ELECTRIC CAPITAL
CORPORATION, as the Agent
and as the sole Lender
By:
---------------------------
Name:
Title:
-5-
<PAGE> 6
EXHIBIT A
to
Amendment
FORM OF REAFFIRMATION OF GUARANTY AND SECURITY AGREEMENT
--------------------------------------------------------
(Attached.)
-6-
<PAGE> 7
REAFFIRMATION OF GUARANTY AND SECURITY AGREEMENT
The undersigned hereby (i) acknowledges receipt of that certain Amendment
No. 7 to Loan Agreement of even date herewith (the "Amendment") to the Loan
Agreement dated as of February 13, 1992 (as amended from time to time prior to
the date hereof, the "Loan Agreement") among THE LAMSON & SESSIONS CO. (the
"Borrower"), GENERAL ELECTRIC CAPITAL CORPORATION ("GE Capital"), as a "Lender"
(as defined in the Loan Agreement) and GE Capital, as agent for the Lenders (in
such capacity, the "Agent"), (ii) reaffirms all of its obligations under that
certain Guaranty and Security Agreement dated as of February 13, 1992
("Guaranty and Security Agreement"), made by the undersigned in favor of the
Lenders, and (iii) acknowledges and agrees that such Guaranty and Security
Agreement remains in full force and effect notwithstanding the Amendment, and
that such Guaranty and Security Agreement is hereby ratified and confirmed.
Date: January , 1995
--
[Names of Guarantor]
By:
--------------------------
Title:
AMENDNO6.FNL (2/22/95 9:03pm)
-7-
<PAGE> 1
<TABLE>
The Lamson & Sessions Co. and Subsidiaries
EXHIBIT (11) - COMPUTATION OF EARNINGS PER COMMON SHARE
<CAPTION>
FISCAL YEARS ENDED
------------------------------------------------------------
1994 1993 1992
--------------- --------------- ---------------
<S> <C> <C> <C>
PRIMARY:
Average common shares outstanding $ 13,239,255 $ 13,210,042 $ 13,197,005
Average common share equivalents:
Stock options and warrants - based on
treasury stock method using average
market price 143,376 46,997 54,777
--------------- --------------- ---------------
TOTALS: $ 13,382,631 $ 13,257,039 $ 13,251,782
FULLY DILUTED:
Average common shares outstanding $ 13,239,255 $ 13,210,042 $ 13,197,005
Average common share equivalents:
Stock options and warrants - based on
treasury stock method 153,203 46,997 63,555
--------------- --------------- ---------------
TOTALS: $ 13,392,458 $ 13,257,039 $ 13,260,560
Net Earnings (Loss) from continuing operations $ 4,256,000 $ (3,117,000) $ (8,500,000)
Discontinued Operations (9,930,000) (2,674,000) (10,956,000)
Accounting Change (26,860,000)
--------------- --------------- ---------------
Net Earnings (Loss) $ (5,674,000) $ (5,791,000) $ (46,316,000)
=============== =============== ===============
Earnings (Loss) per common share and
common share equivalent
Primary
Earnings (Loss) from continuing operations $ .32 $ (.24) $ (.64)
Discontinued Operation (.74) (.20) (.83)
Accounting Change (2.03)
--------------- --------------- ---------------
Net Earnings (Loss) $ (.42) $ (.44) $ (3.50)
=============== =============== ===============
Fully Diluted
Earnings (Loss) from continuing operations $ .32 $ (.24) $ (.64)
Discontinued operations (.74) (.20) (.83)
Accounting Change (2.03)
--------------- --------------- ---------------
Net Earnings (Loss) $ (.42) $ (.44) $ (3.50)
=============== =============== ===============
</TABLE>
- 44 -
<PAGE> 1
EXHIBIT (21) - SUBSIDIARIES
At December 31, 1994, the Company owned the following subsidiaries, all of
which are included in the consolidated financial statements filed as part of
the Form 10-K:
<TABLE>
<CAPTION>
- - - - -----------------------------------------------------------------------------------------------------
PERCENTAGE
STATE OF OF
SUBSIDIARIES INCORPORATION OWNERSHIP
- - - - -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Carlon Chimes Co. Delaware 100
Carlon Canada Ltd. Ontario, Canada 100
Carlon Hong Kong Hong Kong 100
</TABLE>
- 45 -
L1773 (02/23/95)
<PAGE> 1
EXHIBIT (23) -- CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements
(Form S-8 and S-3 No. 33-54732 and Form S-8 No. 2-67874) pertaining to the 1988
Incentive Equity Performance Plan and the 1978 Nonqualified Incentive Stock
Option Plan of our report dated January 20, 1995, with respect to the
consolidated financial statements and schedules of The Lamson & Sessions Co.
included in the Annual Report (Form 10-K) for the year ended December 31, 1994.
ERNST & YOUNG LLP
Cleveland, Ohio
February 24, 1995
- 46 -
L1773 (02/23/95)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000057497
<NAME> LAMSON & SESSIONS CO.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 1,885
<SECURITIES> 0
<RECEIVABLES> 35,448
<ALLOWANCES> 0
<INVENTORY> 46,205
<CURRENT-ASSETS> 87,526
<PP&E> 115,914
<DEPRECIATION> 61,935
<TOTAL-ASSETS> 147,146
<CURRENT-LIABILITIES> 52,032
<BONDS> 0
<COMMON> 1,328
0
0
<OTHER-SE> 11,552
<TOTAL-LIABILITY-AND-EQUITY> 147,146
<SALES> 287,645
<TOTAL-REVENUES> 287,645
<CGS> 235,876
<TOTAL-COSTS> 276,716
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,673
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,256
<DISCONTINUED> (9,930)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,674)
<EPS-PRIMARY> (.43)
<EPS-DILUTED> (.43)
</TABLE>
