<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 30, 1995
[ ] 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 offices) (Zip Code)
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, 1996 by
non-affiliates of the registrant: $109,596,068.
As of February 1, 1996 the Registrant had outstanding 13,291,751 common shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the 1996 Annual Meeting of Shareholders are
incorporated by reference into Part III.
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<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,
telecommunications and fluid drainage products for major domestic markets. The
markets for thermoplastic conduit, related fittings and accessories, wiring
devices and sewer pipe include: the construction, utility and
telecommunications industries; municipalities, other government agencies, and
contractors; and do-it-yourself home remodelers.
In November 1995, the Company completed the sale of its Valley-Todeco division
which was engaged in the manufacture and sale of fasteners serving the
aerospace industry. (Refer to Note J to the Consolidated Financial Statements.)
Proceeds from the sale were utilized to reduce debt.
PRINCIPAL PRODUCTS AND MARKETS
The Company is engaged in the manufacture and distribution of a broad line of
thermoplastic electrical, telecommunication and engineered sewer products. In
addition, the Company distributes a wide variety of consumer electrical wiring
devices.
All of the Company's thermoplastic 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, asbestos cement 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 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 and 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
systems.
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<PAGE> 3
A breakdown of revenues as a percent of net sales related to significant
classes of product by major market segment for 1995, 1994 and 1993,
respectively is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------------------------------ ------------------------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
(In thousands)
Industrial, Residential,
Commercial & Utility
Construction $ 151,701 51% $ 149,863 52% $ 141,210 55%
Telecommunications 55,456 19% 44,603 16% 39,123 15%
Consumer 51,213 17% 49,463 17% 40,754 16%
Engineered Sewer
Products 21,846 7% 24,878 9% 21,744 8%
Aerospace Fastener 18,950 6% 18,838 6% 16,741 6%
------------- ------------ ------------- ------------ -------------- -----------
$ 299,166 100% $ 287,645 100% $ 259,572 100%
============= ============ ============= ============ ============== ===========
</TABLE>
The following summarizes the principal products used in each of the four
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.
TELECOMMUNICATIONS. The products included in this market are traditional smooth
wall communication duct and spacers used by telecommunication and CATV
industries to house telecommunications cable, multi-cell duct systems designed
to protect underground fiber optic cables and allow future cabling expansion,
and flexible conduit used inside buildings to protect communications cable.
CONSUMER. The products included in this market are products such as light
dimmers, fan speed controls, touch controls, door chimes, motion sensors and
home security systems. In addition, the Company supplies this market with
products such as outlet boxes, electrical conduit, liquidtight conduit and
electrical fittings.
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.
-3-
<PAGE> 4
COMPETITION
Each of the four markets in which the Company is presently operating is 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 the Company's 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. The company believes that its products will continue to compete
favorably. However, certain of the Company's competitors have greater financial
resources than the Company, which could adversely affect the Company through
price competition strategies.
DISTRIBUTION
The Company distributes its products through a nationwide network of more than
175 manufacturers' representatives. Currently, 10 of these manufacturers'
representatives inventory the Company's products. The Company has reduced the
number of these inventory locations and has developed its own strategically
located distribution centers.
RAW MATERIALS
The Company is a large purchaser of pipe grade polyvinyl chloride resin and has
historically been able to obtain adequate quantities.
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 business units experience seasonality caused principally by
a decrease in construction activity during the winter months. They are subject
also to the economic cycles affecting the construction industry.
MAJOR CUSTOMERS
Sales to Affiliated Distributors, a buying group not otherwise affiliated with
the Company, totalled approximately 12% of net sales in 1995 and 1994. No
customer exceeded 10% of net sales in 1993.
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<PAGE> 5
BACKLOG
Due to the nature of the Company's business, orders are generally filled within
several weeks of order date. Therefore, statistics relative to order backlog
are not indicative of the status of the Company's business at any point in
time.
RESEARCH AND DEVELOPMENT
The Company is engaged in an aggressive new product development program in an
effort to introduce innovative applications for thermoplastic and consumer
electrical products. The Company maintains a separate research and development
center in Cleveland, Ohio to facilitate the introduction of value-added
products and improved manufacturing processes. The Company sponsored research
and development activity totalled $3.7 million, $3.4 million and $3.2 million
in 1995, 1994 and 1993, 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 (Refer to Note C to the Consolidated
Financial Statements). 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.
EMPLOYEES
At fiscal years ended, the Company had the following employees:
1995 1994 1993
---- ---- ----
1,048 1,325 1,425
FOREIGN OPERATIONS
The net sales, operating earnings and assets employed outside the United States
are not significant. Export sales were approximately 2% of consolidated net
sales in 1995 and 1% in each of the two prior fiscal years and were made
principally to countries in North America.
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<PAGE> 6
Item 2. - PROPERTIES
The Company owns or leases 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 leases 7,000 square feet of administrative offices in an
office building near the Corporate headquarters. The Company also has research
and development offices, located in Cleveland, Ohio, which occupy leased space
of 27,000 square feet. The following is a list of the Company's manufacturing
and distribution center locations:
Approximate
Square Feet
-----------
Manufacturing Facilities (Owned):
- ----------------------------------------
Woodland, California 73,000
High Springs, Florida 113,000
Clinton, Iowa 156,000
Bowling Green and Aurora, Ohio 205,000
(2 facilities)
Oklahoma City, Oklahoma 166,000
Nazareth, Pennsylvania 53,000
Pasadena, Texas 46,000
Distribution Centers (Leased):
- ----------------------------------------
Woodland, California 41,000
Montreal, Canada 20,000
Clinton, Iowa 56,000
Oklahoma City, Oklahoma 90,000
Allentown, Pennsylvania 65,000
The Company presently utilizes substantially all of its facilities and operated
in 1995 at approximately 77% of productive capacity.
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<PAGE> 7
Item 3. - LEGAL PROCEEDINGS
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.
Item 4. - SUBMISSION OF MATTERS TO SECURITY HOLDERS
None.
-7-
<PAGE> 8
EXECUTIVE OFFICERS OF THE
REGISTRANT
JOHN B. SCHULZE
Chairman, President and Chief Executive
Officer
Chairman, President and Chief Executive
Officer since January 1990. Age 58.
JAMES J. ABEL
Executive Vice President, Secretary,
Treasurer and Chief Financial Officer
Executive Vice President, Secretary,
Treasurer and Chief Financial Officer since
September 1994. Previously was
Executive Vice President, Treasurer and
Chief Financial Officer February 1993 -
September 1994. Previously was Senior
Vice President, Treasurer and Chief Finan-
cial Officer December 1990 - February
1993. Age 50.
CHARLES E. ALLEN
Senior Vice President
Senior Vice President since September
1989. Age 55.
MELVIN W. JOHNSON
Vice President
Vice President since February 1991. Pre-
viously was Vice President -- Engineering
January 1985 - January 1991. Age 59.
MARK R. BUCK
Vice President - Carlon Electrical Products
Vice President - Carlon Electrical Products
since October 1983. Age 42.
A. CORYDON MEYER
Vice President - Lamson Home Products
Vice President - Lamson Home Products
since March 1990. Age 41.
NORMAN P. SUTTERER
Vice President - Carlon Telecom Systems
Vice-President - Carlon Telecom Systems
since February 1989. Age 46.
-8-
<PAGE> 9
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 K to the Consolidated Financial Statements. No dividends were paid in
1995, 1994 or 1993. The approximate number of shareholders of record of the
Company's Common Stock at February 1, 1996 was 2,128.
-9-
<PAGE> 10
Item 6. - SELECTED FINANCIAL DATA
FIVE-YEAR FINANCIAL SUMMARY
<TABLE>
<CAPTION>
Fiscal Years Ended
--------------------------------------------------------------------------
(Dollars In thousands except per share data, 1995 1994 1993 1992 1991
shareholders and employees)
- -----------------------------------------------------------------------------------------------------------------------------
Operations:
<S> <C> <C> <C> <C> <C>
Net Sales $ 299,166 $ 287,645 $ 259,572 $ 255,422 $ 284,241
Cost of Products Sold 242,608 235,876 221,405 220,901 251,010
GROSS MARGIN 56,558 51,769 38,167 34,521 33,231
Selling, General and Administrative Expenses 42,520 40,840 35,500 33,404 36,224
Non-Recurring Charges 4,602 6,696
OPERATING EARNINGS (LOSS) 14,038 10,929 2,667 (3,485) (9,689)
Net Interest Expense 5,864 6,673 5,784 5,815 4,864
Gain on Sale of Business 4,362
EARNINGS (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES
AND EFFECT OF ACCOUNTING CHANGE 8,174 4,256 (3,117) (9,300) (10,191)
Income Tax Benefit 3,900 800 1,742
EARNINGS (LOSS) FROM CONTINUING
OPERATIONS BEFORE EFFECT OF
ACCOUNTING CHANGE 12,074 4,256 (3,117) (8,500) (8,449)
Earnings (Loss) on Discontinued Operations (9,930) (2,674) (10,956) (5,448)
Cumulative Effect of Accounting Change (26,860)
NET EARNINGS (LOSS) 12,074 (5,674) (5,791) (46,316) (13,897)
- -----------------------------------------------------------------------------------------------------------------------------
Year-End Financial Position:
Current Assets $ 81,044 $ 87,526 $ 83,842 $ 86,737 $ 86,290
Other Assets 2,680 2,899 9,148 13,131 11,090
Assets Held for Sale 3,742 17,555 16,349 17,783
Property, Plant and Equipment 51,747 53,979 57,841 61,028 64,360
Total Assets 135,471 148,146 168,386 177,245 179,523
Current Liabilities 50,384 52,032 48,268 50,336 42,829
Long-Term Debt 24,842 46,958 62,730 58,579 53,031
Other Long-Term Liabilities 29,326 36,276 41,562 41,886 9,245
Shareholders' Equity 30,919 12,880 15,826 26,444 74,418
Working Capital 30,660 35,494 35,574 36,401 43,461
- -----------------------------------------------------------------------------------------------------------------------------
Statistical Information:
Average Number of Common Shares and
Common Share Equivalents 13,404 13,239 13,210 13,197 13,184
Number of Shareholders of Record 2,162 2,370 2,553 2,531 2,662
Number of Associates 1,048 1,325 1,425 1,510 1,448
Book Value Per Share $ 2.33 $ 0.97 $ 1.20 $ 2.00 $ 5.64
Market Price Per Share $ 7-3/4 $ 6 $ 4-3/4 $ 5-5/8 $ 4-1/8
Market Capitalization $ 103,011 $ 79,673 $ 62,795 $ 74,277 $ 54,394
Long-Term Debt as a % of Market Capitalization 24.1% 58.9% 99.9% 78.9% 97.5%
Total Debt as a % of Market Capitalization 27.8% 64.6% 103.8% 87.6% 100.5%
Operating Cashflow as a % of Total Debt 66.6% 7.3% 5.7% -7.9% 4.4%
Long-Term Debt as a % of Equity 80.3% 364.6% 396.4% 221.5% 71.3%
Return on Average Equity from Continuing Operations 55.1% 29.7% -14.7% -16.9% -10.2%
- -----------------------------------------------------------------------------------------------------------------------------
Earnings (Loss) Per Common Share
Continuing Operations $ 0.90 $ 0.32 $ (0.24) $ (0.64) $ (0.64)
Discontinued Operations (0.75) (0.20) (0.83) (0.41)
Accounting Change (2.04)
Net Earnings (Loss) $ 0.90 $ (0.43) $ (0.44) $ (3.51) $ (1.05)
</TABLE>
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<PAGE> 11
Item 7. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Management's Discussion and Analysis
- ------------------------------------
DISCUSSION OF THE CONSOLIDATED STATEMENT OF OPERATIONS
THE CONSOLIDATED STATEMENT OF OPERATIONS summarizes Lamson & Sessions'
operating performance over the last three years. In 1995, the Company reported
the highest net sales, excluding discontinued operations, since 1989. Carlon
Telecom Systems experienced strong demand for products in 1995 leading the
areas of growth experienced by the Company. In late 1995, the Company sold
Valley Todeco, its aerospace fastener business (see Note J - to the
Consolidated Financial Statements). This divestiture allowed the Company to
retire subordinated debt and will enable the Company to focus on growth through
acquisitions and new product development in the electrical products markets
which it serves.
NET SALES of $299 million for 1995 were 4% higher than net sales of $288
million in 1994. 1995 sales, excluding the aerospace fastener business sold
during 1995, were $280 million compared to $269 million in adjusted 1994 sales.
The 1995 adjusted sales increase consisted of a 24% increase for Carlon Telecom
Systems, a 4% increase for Lamson Home Products, a 1% increase for Carlon
Electrical Products, and a 12% decrease for Lamson Vylon Pipe. The sales
increase consisted of overall price increases of nearly 10%, a 15% new product
volume increase for Carlon Telecom Systems, offset by sales volume decreases in
engineered sewer products and electrical fittings. Increased marketing efforts
in engineered sewer products and electrical products are expected to reverse
this negative trend. Net sales for 1994 were 11% higher than net sales of $260
million in 1993. Product mix improvements, resulting in higher average selling
prices, were coupled with strong demand to generate the sales gains. Carlon
Electrical Products and Carlon Telecom Systems emphasis on new products
improved their product mix and achieved higher sales on lower volume in 1994
compared to 1993.
GROSS MARGIN percentage increased 5% to nearly 19% of net sales in 1995,
compared to 18% of net sales in 1994. This improvement reflects the Company's
continuing progress in implementing operating efficiencies and improved product
mix as evidenced by new product introductions in Carlon Telecom Systems and
reduced rigid pipe sales. The Company experienced continued improvement in the
aerospace fastener business prior to its sale in the fourth quarter. Also in
the fourth quarter, gross margin was adversely affected by declining
polyvinylchloride (PVC) resin costs. However, the Company's continued emphasis
on non-commodity products is working to minimize the effect of highly variable
PVC pricing. Gross margin percentage improved by 20% from 15% of net sales
comparing 1994 and 1993. Increased manufacturing efficiencies in the aerospace
fastener business (which was sold during 1995) and reduced rigid pipe sales
improved 1994 margins.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES held constant at 14% of sales in
1995 and 1994. However, excluding the aerospace fastener business, the Company
experienced an increase in these expenses of nearly 6%, reflecting marketing
efforts and higher sales commissions, as well as staffing costs associated with
new product programs and related support functions. Selling, general and
administrative expenses increased nominally from 1993 to 1994. The 1994
increase related to increased commission rates on higher margin products,
promotional expenses, salary expenses and employee health care.
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<PAGE> 12
INTEREST EXPENSE decreased 12% from 1994 to 1995. The decrease resulted from a
rate reduction due to the restructuring of the Company's secured credit
agreement, refinancing of Industrial Revenue Bonds and debt reduction using
cash generated from operating cash flow and the sale of assets. Interest
expenses increased 15% from 1993 to 1994. During that period, rising interest
rates on the secured credit facility were partially offset by average lower
borrowings resulting from the proceeds from the sale of the Company's truck
frame unit.
INCOME TAX BENEFIT of nearly $4 million was generated from a reduction in the
valuation allowance placed on the Company's deferred tax assets due to
continuing improvement in operating results and the outlook for sustained
profitability. The company has no current income tax provision as it continues
to be in a net operating loss carryforward position. No income tax provision
was recorded in 1994.
Discussion of the Consolidated Statement of Financial Position
THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION shows Lamson & Sessions'
financial position at year end, compared to the previous year end. The
statement provides information to assist in assessing such factors as the
Company's liquidity and financial resources. The 1995 current ratio decreased
4%, mainly due to the sale of the Company's aerospace business. The 1995 debt
to equity ratio decreased significantly, to less than 1 down from 4 in 1994.
Total debt decreased 44%, from $51 million to below $29 million, while equity
increased 140% to nearly $31 million.
ACCOUNTS RECEIVABLE are primarily due from trade customers. Accounts Receivable
declined nominally overall in 1995 from 1994. Excluding the sold aerospace
fastener unit business from 1994, Accounts Receivable increased nearly $2
million due to higher fourth quarter sales, with corresponding 1995 days sales
outstanding dropping nearly 1 day to 45 days compared to December 31, 1994.
INVENTORIES decreased $11 million in 1995 from 1994. These results reflect the
sale of the aerospace fastener business and reduced pricing in the fourth
quarter as raw material costs fell.
PREPAID EXPENSES AND OTHER increased nearly $6 million in 1995 from 1994.
Nearly $4 million of the increase relates to the reduction of the valuation
allowance on the Company's deferred tax asset. The remaining increase in other
current assets relates to the amount receivable on the sale of the aerospace
fastener business, pending resolution of certain contractual conditions, and
increases in other non-trade receivables.
LONG-TERM DEBT decreased $22 million during 1995. The outstanding revolving
line of credit was significantly reduced and the final $11 million in 14%
subordinated debt was retired two years prior to its maturity. Stronger cash
flow from operations, augmented by the sale of the aerospace business and
certain assets remaining from the 1994 sale of the truck frame business,
facilitated the debt reduction.
POST-RETIREMENT BENEFITS AND OTHER LONG-TERM LIABILITIES decreased 19% from $36
million in 1994 to $29 million in 1995. The Company took several steps during
the year to eliminate underfunding relating to several defined benefit pension
plans. As a result, nearly $6 million of additional minimum liability was
eliminated, with a corresponding increase in equity. The Company retained the
pension plan liability, health care benefits for existing retirees and
approximately $1.2 million of other liabilities of its aerospace fastener
business which will be paid out over an extended period of time.
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<PAGE> 13
DISCUSSION OF THE CONSOLIDATED STATEMENT OF CASH FLOWS
THE CONSOLIDATED STATEMENT OF CASH FLOWS shows cash inflows and outflows from
the Company's operating, investing and financing activities. Cash and cash
equivalents remained comparable at year end 1995 compared to 1994. Significantly
improved operating cash flow was generated in 1995 compared to 1994.
CASH FLOWS FROM OPERATING ACTIVITIES - The Company generated over $19 million
in cash from operations in 1995, an increase of 405% over the prior year. The
primary sources of the operating cash increase were the 92% improvement, before
tax benefit, in earnings from continuing operations and nearly $5 million in
cash flow from inventory reductions. The Company generated nearly $4 million in
cash from operations in 1994. 1994 cash flow from operations was approximately
equal to 1993 cash flow from operations as improved continuing operations cash
flow was offset by the loss in the discontinued truck frame business.
CASH FLOWS FROM INVESTING ACTIVITIES - The Company generated $3 million in cash
flow from 1995 investing activities. Cash receipts from the sale of a business
unit exceeded the $11 million capital expenditures made by the Company. 1995
purchases of plant, property and equipment increased over the prior year as the
Company continues to invest in projects which will reduce costs, provide
efficiency in product development and more effectively utilize support
functions. The Company generated over $10 million in cash flow from 1994
investing activities.
CASH FLOWS FROM FINANCING ACTIVITIES - The Company used over $22 million of
cash flow for 1995 financing activities. The Company retired $11 million in 14%
subordinated debt in 1995. In addition, borrowings under the secured credit
agreement were reduced nearly $11 million in 1995. The Company used $13 million
of cash flow for 1994 financing activities. The company reduced borrowings on
the secured credit agreement by $12 million in 1994.
Based upon the Company's past performance and current expectations, management
believes that internally generated cash flows and existing capacity under the
secured credit agreement are adequate to fund the Company's 1996 cash needs for
capital expenditures and general operating requirements.
Outlook
- -------
The Company's strong improvement in 1995 reflects efforts to pursue market and
product opportunities that are expected to provide sustainable revenue and
profit growth. Management believes that this positive trend will continue in
1996 based on current estimates for the year in construction spending, housing
starts, interest rates and general economic improvement. The emphasis on growth
is reflected in the continued investment in product development, improved
business systems to facilitate cost reduction, organizational efficiency,
and strong cash management.
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<PAGE> 14
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED STATEMENT OF OPERATIONS
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
(in thousands, except per share data)
<TABLE>
<CAPTION>
FISCAL YEARS
-------------------------------------------------------------------------------
1995 1994 1993
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $ 299,166 $ 287,645 $ 259,572
Cost of products sold 242,608 235,876 221,405
-------------------- ---------------------- ---------------------
GROSS MARGIN 56,558 51,769 38,167
Selling, general and
administrative expenses 42,520 40,840 35,500
-------------------- ---------------------- ---------------------
OPERATING EARNINGS 14,038 10,929 2,667
Interest (5,864) (6,673) (5,784)
-------------------- ---------------------- ---------------------
EARNINGS (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES 8,174 4,256 (3,117)
Income tax benefit 3,900
-------------------- ---------------------- ---------------------
EARNINGS (LOSS) FROM CONTINUING
OPERATIONS 12,074 4,256 (3,117)
Loss from Discontinued Operations (9,930) (2,674)
-------------------- ---------------------- ---------------------
NET EARNINGS (LOSS) $ 12,074 $ (5,674) $ (5,791)
-------------------- ---------------------- ---------------------
EARNINGS (LOSS) PER COMMON SHARE
Continuing operations $ .90 $ .32 $ (.24)
Discontinued operations (.75) (.20)
-------------------- ---------------------- ---------------------
Net earnings (loss) $ .90 $ (.43) $ (.44)
-------------------- ---------------------- ---------------------
AVERAGE COMMON SHARES 13,404 13,239 13,210
-------------------- ---------------------- ---------------------
</TABLE>
See notes to consolidated financial statements.
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<PAGE> 15
CONSOLIDATED STATEMENT OF CASH FLOWS
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
<TABLE>
<CAPTION>
(Dollars in thousands)
FISCAL YEARS
-----------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES 1995 1994 1993
-----------------------------------------------------------------
Earnings (loss) from continuing operations $ 12,074 $ 4,256 $ (3,117)
Adjustments to reconcile earnings (loss) from continuing
operations to cash provided by continuing
operations:
Depreciation and amortization 8,758 8,544 8,126
Deferred income tax-benefit (3,900)
Net change in working capital accounts:
Accounts receivable (1,620) (719) (4,298)
Inventories 4,939 (2,857) 6,644
Prepaid expenses and other (1,302) 589 580
Accounts payable, accrued expenses and other current
liabilities (26) 1,200 1,968
Net change in other long-term items 131 79 (2,290)
---------------- ---------------- -----------------
CASH PROVIDED BY CONTINUING OPERATIONS 19,054 11,092 7,613
Loss from discontinued operations (9,930) (2,674)
Adjustments to reconcile loss from discontinued operations to
cash used by discontinued operations:
Net change in assets held for sale (1,792) (1,206)
Net change in other long-term items 4,403
---------------- -----------------
CASH USED BY DISCONTINUED OPERATIONS (7,319) (3,880)
---------------- ---------------- -----------------
CASH PROVIDED BY OPERATING ACTIVITIES 19,054 3,773 3,733
INVESTING ACTIVITIES
Net proceeds from sale of businesses 14,297 16,430
Purchases of property, plant and equipment (11,019) (6,074) (6,437)
Proceeds from sale of property, plant and equipment 2,550
---------------- ---------------- -----------------
CASH PROVIDED (USED) BY INVESTING ACTIVITIES 3,278 10,356 (3,887)
FINANCING ACTIVITIES
Net borrowings under secured credit agreement (10,903) (12,221) 1,602
Payments on long-term borrowings (828) (1,484) (1,487)
Retirement of Subordinated Debt (11,120)
Exercise of stock options 65 273 70
---------------- ---------------- -----------------
CASH (USED) PROVIDED BY FINANCING ACTIVITIES (22,786) (13,432) 185
---------------- ---------------- -----------------
(DECREASE) INCREASE IN CASH (454) 697 31
Cash at beginning of year 1,885 1,188 1,157
---------------- ---------------- -----------------
CASH AT END OF YEAR $ 1,431 $ 1,885 $ 1,188
================ ================ =================
</TABLE>
See notes to consolidated financial statements.
-15-
<PAGE> 16
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
December 30, 1995 and December 31, 1994
(Dollars in thousands)
<TABLE>
<CAPTION>
1995 1994
------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 1,431 $ 1,885
Accounts receivable, less allowances:
1995--$1,329 and 1994--$1,653 34,828 35,448
Inventories:
Finished goods and work-in-process 30,491 41,157
Raw materials and supplies 4,527 5,048
------------------ -----------------
35,018 46,205
Prepaid expenses and other 9,767 3,988
------------------ -----------------
TOTAL CURRENT ASSETS 81,044 87,526
ASSETS HELD FOR SALE 3,742
OTHER ASSETS 2,680 2,899
PROPERTY, PLANT AND EQUIPMENT
Land 3,751 4,019
Buildings 23,416 24,350
Machinery and equipment 83,962 87,545
------------------ -----------------
111,129 115,914
Less allowances for depreciation
and amortization 59,382 61,935
------------------ -----------------
51,747 53,979
------------------ -----------------
TOTAL ASSETS $ 135,471 $ 148,146
================== =================
</TABLE>
-16-
<PAGE> 17
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
December 30, 1995 and December 31, 1994
(Dollars in thousands)
<TABLE>
<CAPTION>
1995 1994
---------------------------------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 17,322 $ 17,354
Accrued expenses and other liabilities 25,420 27,167
Taxes 3,875 3,009
Current maturities of long-term debt 3,767 4,502
------------------- ------------------
TOTAL CURRENT LIABILITIES 50,384 52,032
LONG-TERM DEBT 24,842 46,958
POST-RETIREMENT BENEFITS AND OTHER
LONG-TERM LIABILITIES 29,326 36,276
SHAREHOLDERS' EQUITY
Common shares, without par value, with stated value of $.10 per share,
authorized 20,000,000 shares; outstanding--13,291,751 shares in 1995
and 13,278,784 shares in 1994 1,329 1,328
Other capital 72,743 72,679
Retained earnings (deficit) (40,654) (52,728)
Pension adjustment (2,499) (8,399)
------------------- ------------------
30,919 12,880
------------------- ------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 135,471 $ 148,146
=================== ==================
</TABLE>
See notes to consolidated financial statements.
-17-
<PAGE> 18
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
(Dollars in thousands)
<TABLE>
<CAPTION>
RETAINED TOTAL
COMMON OTHER EARNINGS PENSION SHAREHOLDERS'
SHARES CAPITAL (DEFICIT) ADJUSTMENT EQUITY
------------ ----------- -------------- ---------------- --------------------
<S> <C> <C> <C> <C> <C>
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
Net earnings 12,074 12,074
Issuance of 12,967 common shares
under stock option plans 1 64 65
Pension adjustment 5,900 5,900
------------ ----------- -------------- ---------------- --------------------
Balance at December 30, 1995 $ 1,329 $ 72,743 $ (40,654) $ (2,499) $ 30,919
============= =========== ============== ================ ====================
</TABLE>
See notes to consolidated financial statements.
-18-
<PAGE> 19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
Three fiscal years ended December 30, 1995
NOTE A--ACCOUNTING POLICIES
ORGANIZATION: The Company primarily is in one business segment and is engaged
in the manufacture and distribution of a broad line of thermoplastic
electrical, telecommunication and engineered sewer products. In addition, the
Company distributes a wide variety of consumer electrical wiring devices.
Products are sold primarily to national and regional electrical distributors,
power utilities, regional Bell operating companies and other telecommunications
providers, national and regional retailers, and government and private builders
of sewer and drainage systems. Substantially all sales are made within North
America. In 1995 and 1994, sales to a single customer totalled approximately
12% in each year. No customer exceeded 10% of net sales in 1993.
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 1994 and 1993 items have been reclassified to conform
with 1995 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: The Company accounts for income taxes using the provisions of
Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes." Investment tax credits are recorded using the flow-through
method.
EARNINGS (LOSS) PER COMMON SHARE: Earnings (loss) per common share are based on
the weighted average number of common shares and dilutive common share
equivalents outstanding during the year.
RESEARCH AND DEVELOPMENT COSTS: Research and development costs consist of
company sponsored activities to develop new value-added products. Costs are
expensed as incurred. R&D expenditures were $3,700,000, $3,400,000, and
$3,200,000 in 1995, 1994 and 1993, respectively.
ADVERTISING EXPENDITURES: Advertising costs are expensed as incurred.
Advertising expenditures were $3,200,000, $2,100,000, and $1,900,000 for 1995,
1994 and 1993, respectively.
USE OF ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
-19-
<PAGE> 20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
NOTE B--LONG-TERM DEBT Long-term debt consists of the following:
(In thousands)
<TABLE>
<CAPTION>
1995 1994
-------- -------
<S> <C> <C>
Secured Credit Agreement:
Term $ 14,250 $ 9,000
Revolver 2,802 18,955
-------- -------
17,052 27,955
14% Senior Subordinated Notes 11,120
Industrial Revenue Bonds 8,970 9,600
Building mortgage 2,587 2,785
-------- -------
28,609 51,460
Less amounts classified as current 3,767 4,502
-------- -------
$ 24,842 $ 46,958
======== =======
</TABLE>
The Company's long-term $65,000,000 secured credit agreement was refinanced
effective July 14, 1995. The agreement is secured by the Company's accounts
receivable, inventory, and property, plant and equipment. The agreement
consists of both term and revolving credit facilities with interest variable on
both portions. The rate paid varies based on the Company's financial
performance and the pricing option chosen. Borrowings under this agreement
carry interest based on any of three pricing options (prime rate, LIBOR or
commercial paper) plus the applicable spread. Interest is paid in accordance
with the maturity of the pricing option selected. The term portion of this
facility carried interest at 3.0% over the commercial paper rate (8.8%) at
December 30, 1995 and requires quarterly principal payments of $750,000. The
remaining revolving credit portion permits borrowings up to $50,000,000 at any
time through December 31, 1999. The agreement provides for the payment of a
commitment fee on the revolving line of credit of .375% per annum on the
average daily unused commitment. In addition to amounts borrowed, letters of
credit related to Industrial Revenue Bond financings and other contractual
obligations total approximately $14,000,000 under the agreement.
The Company's 14% Senior Subordinated Notes were redeemed in full on December
1, 1995.
The Company's Industrial Revenue Bond financings include several issues due in
annual installments from 1996 through 2023 with interest at variable rates
ranging from 4% to 7.5%. The weighted average rate for these bonds in December
1995 was 5.4%. The Company maintains a letter of credit related to one of the
Industrial Revenue Bonds for approximately $1,900,000 with a local bank. 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 debt service, tangible net worth and certain other
financial ratios.
-20-
<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 1997
through 2000 are approximately $4,797,000, $4,041,000, $8,368,000 and
$1,148,000, respectively, with $6,488,000 due thereafter.
Interest expense includes $803,000, $850,000 and $767,000 for amortization of
deferred financing cost in 1995, 1994 and 1993, respectively. Interest paid was
$6,069,000, $6,847,000 and $8,229,000 in 1995, 1994 and 1993, respectively.
Rental expense related to operating leases was $3,470,000, $3,015,000 and
$2,647,000 in 1995, 1994 and 1993, respectively. Aggregate future minimum
payments related to operating leases with initial or remaining terms of one
year or more for the years 1996 through 2000 and thereafter are $2,671,000,
$1,790,000, $1,228,000, $686,000 and $622,000, respectively.
NOTE C--DISCONTINUED OPERATIONS
The results of discontinued operations are reflected on a restated comparative
basis as follows:
<TABLE>
<CAPTION>
(In thousands)
1994 1993
-------- --------
<S> <C> <C>
Net Sales $ 23,337 $ 41,884
======== ========
Loss from Operations $ 1,030 $ 2,674
Loss on Disposal 8,900
-------- --------
$ 9,930 $ 2,674
======== ========
</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 benefit post-retirement 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 post-retirement 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 1994 and 1993 losses 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. The sale of these
assets was completed in the second quarter of 1995.
-21-
<PAGE> 22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
NOTE D--PENSION PLANS
The Company sponsors defined benefit pension and defined contribution savings
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.
Pension expense from continuing operations is comprised of the following:
<TABLE>
<CAPTION>
(In thousands) 1995 1994 1993
---------------- ---------------- ----------------
<S> <C> <C> <C>
Benefits earned $ 1,091 $ 1,694 $ 1,599
Interest on projected
benefit obligations 5,866 5,781 6,090
Actual return on assets (7,799) (1,917) (6,813)
Net amortization and deferral 2,546 (3,310) 1,678
Curtailment gain (759)
Defined contribution and other plans 800 813 620
---------------- ---------------- ----------------
$ 1,745 $ 3,061 $ 3,174
================ ================ ================
</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:
<TABLE>
<CAPTION>
1995 1994
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 $ 38,665 $ 36,221 $ 8,849 $ 61,633
================= ================= ================= ==================
Accumulated benefit
obligations $ 39,190 $ 36,253 $ 9,313 $ 61,790
================= ================= ================= ==================
Plan assets at fair
value $ 40,977 $ 26,709 $ 13,235 $ 49,329
Projected benefit
obligations (42,285) (36,671) (12,569) (62,156)
----------------- ----------------- ----------------- ------------------
Plan assets in excess
of (less than)
projected benefit
obligations (1,308) (9,962) 666 (12,827)
Unrecognized prior service cost (55) 574 (30) 346
Unrecognized net loss 10,960 3,690 1,508 10,962
Unrecognized initial
net asset (1,566) (170) (266) (1,561)
Minimum liability (3,677) (9,381)
----------------- ----------------- ----------------- ------------------
Pension assets
(liabilities) $ 8,031 $ (9,545) $ 1,878 $ (12,461)
================= ================= ================= ==================
</TABLE>
-22-
<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 $2,100,000 and $4,487,000 in 1995 and 1994, respectively. The
discount rates used in determining pension expense were 8.0%, 7.25% and 8.5% in
1995, 1994 and 1993, respectively. The discount rates used for funded status
information were 7.4% in 1995 and 8.0% in 1994. The change in the discount rate
had the effect of increasing the accumulated benefit obligation by
approximately $4,400,000. The long-term rates of return on assets used in
determining the funded status information were 9.5% in 1995 and 1994. Plan
assets consist primarily of fixed income and equity marketable securities,
including Company securities with a fair market value at December 30, 1995 of
$913,000. The salary progression assumption used in determining the funded
status information was 5% in each year.
NOTE E--POST-RETIREMENT 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. The Company
accrues the estimated cost of retiree benefit payments, other than pensions,
during the employees' active service period. The Company funds these benefit
costs on a pay-as-you-go basis, with the retiree, in most instances, paying a
portion of the costs.
Summary information for the Company's plans is as follows:
<TABLE>
<CAPTION>
(In thousands)
1995 1994
--------- ---------
<S> <C> <C>
Accumulated Post-Retirement Benefit Obligation (APBO):
Retirees $ 14,150 $ 17,036
Active participants eligible to receive benefits 1,330 2,134
Other active plan participants 3,762 5,561
--------- ---------
19,242 24,731
Unamortized gain (loss) 3,182 (960)
--------- ---------
22,424 23,771
Current portion 1,800 2,100
--------- ---------
$ 20,624 $ 21,671
========= =========
</TABLE>
The decrease in APBO is principally due to the reduction in the assumed health
care cost trend rate. In addition, the Company remains contingently liable for
post-retirement benefits of certain businesses previously sold.
-23-
<PAGE> 24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
NOTE E--POST-RETIREMENT BENEFITS OTHER THAN PENSIONS--Continued
The components of periodic post-retirement benefit cost reflected in continuing
operations are as follows:
<TABLE>
<CAPTION>
(In thousands)
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Benefits earned $ 479 $ 698 $ 670
Interest on post-retirement benefit obligation 1,396 1,806 2,073
------------ ------------ ------------
$ 1,875 $ 2,504 $ 2,743
============ ============ ============
</TABLE>
The discount rate used in determining the APBO was 7.0% in 1995 and 7.5% in
1994. The assumed health care cost trend rate used in measuring the APBO was an
average of 11% in 1995 and 14% in 1994, 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 30, 1995 would increase by 7.5%. The effect of this change on
periodic post-retirement benefit cost for 1995 would be an increase of 10.7%,
or approximately $200,000.
-24-
<PAGE> 25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
NOTE F--LITIGATION
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 G--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 30, 1995.
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 1995 or 1994. 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-
<PAGE> 26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
NOTE H--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 $4.75 to $5.75 per share. No options are available for
future grant under the 1978 Plan.
A summary of the option transactions follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES
--------------------------------------------
1995 1994
----------------- -------------------
<S> <C> <C>
Outstanding, beginning of year 726,300 659,400
Granted at $5.81 to $6.94 per share 235,000 200,500
Exercised at $2.125 to $7.19 per share (12,967) (58,750)
Expired/cancelled at $4.375 to $15.438 per share (14,833) (74,850)
----------------- -------------------
Outstanding, end of year at $3.88 to $12.938 933,500 726,300
================= ===================
Exercisable, end of year 478,335 490,300
================= ===================
</TABLE>
At December 30, 1995, there were 210,233 options available for future grant.
-26-
<PAGE> 27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
NOTE I--INCOME TAXES
A deferred federal tax benefit of $3,900,000 was recorded in the fourth quarter
of 1995. There was no income tax expense or benefit recorded in 1994 or 1993.
The Company has available net operating loss carryforwards totalling
approximately $36,100,000 which expire in the years 2000 to 2008. The Company
also has available general business tax credit carryforwards of $1,800,000
which expire through 2010, and alternative minimum tax credit carryforwards of
approximately $900,000 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) 1995 1994
------------------ ------------------
<S> <C> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 12,600 $ 13,600
Other accruals, credits and reserves 8,900 11,300
General business and alternative minimum tax credits 2,700 2,900
Post-retirement benefits other than pensions 7,900 8,300
------------------ ------------------
32,100 36,100
Less: valuation allowance (23,500) (30,000)
------------------ ------------------
Total net deferred tax assets 8,600 6,100
Deferred tax liabilities:
Tax in excess of book depreciation 4,300 5,900
Pensions 400 200
------------------ ------------------
Total deferred tax liabilities 4,700 6,100
------------------ ------------------
$ 3,900 $ -0-
================== ==================
</TABLE>
The valuation allowance for net deferred tax assets decreased by $6,500,000.
The reduction was the result of net changes in temporary differences and the
reversal of $3,900,000 of valuation allowance based on improved operating
results for 1995 and projected operating results for 1996.
-27-
<PAGE> 28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
NOTE I -- 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)
1995 1994 1993
--------------------- ------------------ ------------------
<S> <C> <C> <C>
Tax expense (benefit) at statutory rates $ 2,849 $ (1,995) $ (2,027)
Adjustment due to:
Change in valuation allowance (6,500) 1,964 1,818
Other (249) 31 209
--------------------- ------------------ ------------------
$ (3,900) $ -0- $ -0-
===================== ================== ==================
</TABLE>
Income taxes paid in 1995 were $26,000. In 1994 and 1993, the Company received
income tax refunds of $201,000 and $1,626,000, respectively.
NOTE J--DISPOSITION OF BUSINESS
During the fourth quarter, the Company sold its aerospace fastener business for
approximately $11,700,000. Net sales for 1995 through the sale date and 1994
were $18,951,000 and $18,838,000, respectively. Operating results, corporate
costs to prepare the business for sale, and anticipated future costs related to
the business resulted in losses of approximately $3,000,000 in 1995 and
$4,000,000 in 1994, respectively.
-28-
<PAGE> 29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--Continued
THE LAMSON & SESSIONS CO. AND SUBSIDIARIES
(Dollars in thousands, except per share amounts)
NOTE K--SUMMARY OF QUARTERLY RESULTS OF OPERATIONS--(UNAUDITED)
<TABLE>
<CAPTION>
Earnings
(Loss) From LOSS FROM NET
NET Gross Continuing DISCONTINUED EARNINGS
SALES Margin Operations OPERATIONS (LOSS)
--------------- ------------- ------------------ ----------------- ---------------
<S> <C> <C> <C> <C> <C>
Fiscal 1995:
First quarter $ 68,402 $12,299 $ 825 $ 825
Second quarter 75,466 15,321 2,511 2,511
Third quarter 85,716 16,727 3,352 3,352
Fourth quarter 69,582 12,211 5,386 5,386
--------------- ------------- ------------------ ---------------
TOTALS $ 299,166 $56,558 $12,074 $ 12,074
=============== ============= ================== ===============
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)
=============== ============= ================== ================= ===============
</TABLE>
<TABLE>
<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>
Fiscal 1995:
First quarter $ .06 $ .06 $ 6-5/8 $ 5-1/4
Second quarter .19 .19 6-3/4 5-1/2
Third quarter .25 .25 7-3/8 5-3/8
Fourth quarter .40 .40 8 6
------------------ --------------------
TOTALS $ .90 $ .90
================== ====================
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)
================== ================== ====================
</TABLE>
-29-
<PAGE> 30
PART IV
The Lamson & Sessions Co. and Subsidiaries
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(In Thousands)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
BALANCE AT CHARGED TO BALANCE AT
BEGINNING OF COSTS AND DEDUCTIONS - END OF
DESCRIPTION PERIOD EXPENSES DESCRIBE PERIOD
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 30, 1995
Allowances deducted from assets:
Trade receivable allowances $ 1,653 $ 728 $ 1,052 (B) $ 1,329
Inventory obsolescence reserve 1,030 360 457 (C) 933
Other current and long-term assets 6,866 612 4,721 (E) 2,757
Accounts and loss reserves included in
current and long-term liabilities 7,909 1,486 (F) 6,423
- -------------------------------------------------------------------------------------------------------------------------------
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
- -------------------------------------------------------------------------------------------------------------------------------
<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.
Note E - Adjustment of note receivable reserve for previously sold business.
Note F - Principally payments on contractual obligations for previously sold
businesses.
</TABLE>
-30-
<PAGE> 31
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
The Lamson & Sessions Co.
We have audited the accompanying consolidated statement of financial position
of The Lamson & Sessions Co. and Subsidiaries as of December 30, 1995 and
December 31, 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 30, 1995. 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 30, 1995 and December 31,
1994, and the consolidated results of their operations and their cash flows for
each of the three fiscal years in the period ended December 30, 1995, 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, presents fairly in all material
respects the information set forth therein.
Ernst & Young LLP
Cleveland, Ohio
January 18, 1996
-31-
<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-
<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 26, 1996 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 26, 1996 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 26, 1996 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 26, 1996 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-
<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 1995, 1994
and 1993.
Consolidated Statement of Cash Flows for Fiscal Years Ended 1995, 1994
and 1993.
Consolidated Statement of Financial Position at December 30, 1995 and
December 31, 1994.
Consolidated Statement of Shareholders' Equity for Fiscal Years Ended
1995, 1994 and 1993.
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.
-34-
<PAGE> 35
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 (incorporated by
reference to Exhibit 3 (b) to the Company's Annual Report on Form
10-K for the year ended December 31, 1994).
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(e) Form of Rights 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(g) Rights Agreement, amended and restated as of February 14, 1990, by
and between the Company and National City Bank filed herewith.
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 (incorporated by reference to Exhibit
10(c) to the Company's Annual Report on Form 10-K for the year ended
December 31, 1994).
* 10(d) Corporate Officers Incentive Compensation Plan (incorporated by
reference to Exhibit 10(d) to the Company's Annual Report on Form
10-K for the year ended December 31, 1994).
* 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 filed herewith.
* 10(f) The Company's Deferred Compensation Plan for Nonemployee Directors
filed herewith.
* 10(g) Form of Indemnification Agreement between the Company and the
Directors and certain officers (incorporated by reference to Exhibit
10(g) to the Company's Annual Report on Form 10-K for the year ended
December 31, 1994).
-35-
<PAGE> 36
* 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(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(s) Amended and Restated Loan Agreement dated as of July 14, 1995 by and
between the Company and General Electric Capital Corporation
(incorporated by reference to Exhibit 10(g) to the Company's
Quarterly Report on Form 10-Q for the period ended July 1, 1995, the
"GECC Loan Agreement").
10(t) Amendment No. 1 dated as of October 30, 1995, to the GECC Loan
Agreement, filed herewith.
10(u) Amendment No. 2 and Consent dated as of November 8, 1995, to the
GECC Loan Agreement, filed herewith.
11 Computation of Earnings Per Common Share filed herewith.
21 Subsidiaries of the Registrant filed herewith.
23 Consent of Independent Accountants filed herewith.
24 Powers of Attorney filed herewith.
27 Financial Data Schedule (Submitted for the SEC's Information) filed
herewith.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the three months ended
December 30, 1995.
(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.
-36-
<PAGE> 37
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 11th day of March
1996.
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 March 11, 1996.
Signature Title
--------- -----
/s/ John B. Schulze Chairman of the Board, President
- ----------------------------- and Chief Executive Officer (Principal
John B. Schulze Executive Officer)
/s/ James J. Abel Executive Vice President, Secretary, James
- ----------------------------- Treasurer and Chief Financial Officer
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
-37-
<PAGE> 38
/s/ Martin J. Cleary* Director
- -----------------------------
Martin J. Cleary
/s/ John C. Dannemiller* Director
- -----------------------------
John C. Dannemiller
/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
* 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.
March 11, 1996
By /s/ James J. Abel
-------------------------------------
James J. Abel, Attorney-in-fact
-38-
<PAGE> 39
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. PAGE
- ----------- -----
<S> <S>
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 (incorporated by
reference to Exhibit 3(b) to the Company's Annual Report on Form
10-K for the year December 31, 1994).
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(e) Form of Rights 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(g) Rights Agreement, amended and restated as of February 14, 1990, by
and between the Company and National City Bank filed herewith.
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 (incorporated by reference to Exhibit
10(c) to the Company's Annual Report on Form 10-K for the year
ended December 31, 1994).
* 10(d) Corporate Officers Incentive Compensation Plan (incorporated by
reference to Exhibit 10(d) to the Company's Annual Report on Form
10-K for the year ended December 31, 1994).
* 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 filed herewith.
</TABLE>
-39-
<PAGE> 40
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. PAGE
- ----------- ----
<S> <C>
* 10(f) The Company's Deferred Compensation Plan for Nonemployee Directors filed
herewith.
* 10(g) Form of Indemnification Agreement between the Company and the Directors
and certain officers (incorporated by reference to Exhibit 10(g) to the
Company's Annual Report on Form 10-K for the year ended December 31,
1994).
* 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(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(s) Amended and Restated Loan Agreement dated as of July 14, 1995 by and
between the Company and General Electric Capital Corporation
(incorporated by reference to Exhibit 10(g) to the Company's Quarterly
Report on Form 10-Q for the period ended July 1, 1995, the "GECC
Loan Agreement").
10(t) Amendment No. 1 dated as of October 30, 1995, to the GECC Loan
Agreement, filed herewith.
10(u) Amendment No. 2 and Consent dated as of November 8, 1995 to the GECC
Loan Agreement, filed herewith.
11 Computation of Earnings Per Common Share filed herewith.
21 Subsidiaries of the Registrant filed herewith.
23 Consent of Independent Accountants filed herewith.
24 Powers of Attorney filed herewith.
27 Financial Data Schedule (Submitted for the SEC's Information) filed herewith.
</TABLE>
-40-
<PAGE> 1
Exhibit 4(g)
Amended 2/14/90
RIGHTS AGREEMENT
----------------
This RIGHTS AGREEMENT, dated as of August 22, 1988 (this Agreement"),
is made and entered into by and between The Lamson & Sessions Co., an Ohio
corporation (the Company"), and National City Bank, a national bank (the
"Rights Agent").
RECITALS
--------
WHEREAS, on August 22, 1988, the Board of Directors of the Company
authorized and declared a dividend distribution of one right ("Right") for each
share of Common Stock, without par value, of the Company (a "Common Share")
outstanding as of the close of business on September 7, 1988 (the "Record
Date"), each Right initially representing the right to purchase one
one-hundredth of a Preferred Share (as hereinafter defined), upon the terms and
subject to the conditions herein set forth, and further authorized and directed
the issuance of one Right with respect to each Common Share issued or delivered
by the Company (whether originally issued or delivered from the Company's
treasury) after the Record Date but prior to the Distribution Date (as
hereinafter defined); and
WHEREAS, on February 14, 1990, the Board of Directors approved and the
Company and the Rights Agent executed, Amendment No. 1 to Rights Agreement,
pursuant to which this Agreement has been amended and restated as of February
14, 1990;
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this
Agreement, the following terms shall have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (other than the Company
or any Related Person) who or which, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner of 15% or more of the
Common Shares then outstanding; provided, however, that a Person shall not be
deemed to have become an Acquiring Person solely as a result of a reduction in
the number of Common Shares outstanding, unless subsequent to such reduction
(i) such Person or any Affiliate or Associate of such Person shall become the
Beneficial Owner of any additional Common Shares other than as a result of a
stock dividend, stock split or similar transaction effected by the Company in
which all holders of Common Shares are treated equally, or (2) any other Person
who is the Beneficial Owner of any Common Shares shall thereafter become an
Affiliate or Associate of such Person.
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act, as in effect on the date of this Agreement.
(c) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such
right is exercisable immediately or only after
<PAGE> 2
the passage of time) pursuant to any agreement, arrangement or understanding
(whether or not in writing), or upon the exercise of conversion rights,
exchange rights, rights (other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to beneficially own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange; or
(ii)which such Person or any of such Person's Affiliates or Associates,
directly or indirectly, has the right to vote or dispose of,
including pursuant to any agreement, arrangement or understanding
(whether or not in writing); or
(iii) of which any other Person is the Beneficial Owner if such Person
or any of such Person's Affiliates or Associates has any agreement, arrangement
or understanding (whether or not in writing) with such other Person (or any of
such other Person's Affiliates or Associates) with respect to acquiring,
holding, voting or disposing of any securities of the Company;
PROVIDED, HOWEVER, that a Person shall not be deemed the Beneficial Owner of,
or to beneficially own, any security (A) if such Person has the right to vote
such security pursuant to an agreement, arrangement or understanding (whether
or not in writing) which (1) arises solely from a revocable proxy given to such
Person in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations of the Exchange
Act and (2) is not also then reportable on Schedule 13D under the Exchange Act
(or any comparable or successor report), or (B) if such beneficial ownership
arises solely as a result of such Person's status as a "clearing agency," as
defined in Section 3(a)(23) of the Exchange Act; and PROVIDED, FURTHER, that
nothing in this paragraph shall cause a Person engaged in business as an
underwriter of securities to be the Beneficial Owner of any securities acquired
through such Person's participation in good faith in an underwriting syndicate
pursuant to an agreement to which the Company is a party until the expiration
of 40 calendar days after the date of such acquisition.
(d) "Business Day" shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in the States of Ohio or New York (or such
other state in which the principal office of the Rights Agent is located) are
authorized or obligated by law or executive order to close.
e) "Close of Business" on any given date shall mean 5:00 P.M.,
Cleveland time, on such date; PROVIDED, HOWEVER, that if such date is not a
Business Day it shall mean 5:00 P.M., Cleveland time, on the next succeeding
Business Day.
(f) "Common Shares" when used with reference to the Company shall mean
the Common Stock, without par value, of the Company; provided, however, that,
if the Company is the continuing or surviving corporation in a transaction
described in Section 11.(a)(ii) or Section 13(a)(ii) hereof, "Common Shares"
when used with reference to the Company shall mean the capital stock or equity
security with the greatest aggregate voting power of the Company. "Common
Shares" when used with reference to any corporation or other legal entity,
other than the Company, including an Issuer (as defined in Section 13(b)
hereof), shall mean the capital stock or equity security with the greatest
aggregate voting power of such corporation or other legal entity.
(g) "Company" shall mean The Lamson & Sessions Co., an Ohio
corporation.
<PAGE> 3
(h) "Distribution Date" shall mean the earliest of (i) the Close of
Business on the tenth calendar day (or, unless the Distribution Date shall have
previously occurred, such later date as may be specified by a majority of the
Directors of the Company) after the Share Acquisition Date, (ii) the Close of
Business on the tenth calendar day (or, unless the Distribution Date shall have
previously occurred, such later date as may be specified by a majority of the
Directors of the Company) after the date of the commencement of a tender or
exchange offer by any Person (other than the Company or any Related Party), if
upon the consummation thereof such Person would be the Beneficial Owner of 15%
or more of the outstanding Common Shares, and (iii) the Close of Business on
the tenth calendar day after the first date of public announcement by the
Company or an Acquiring Person (by press release, filing made with the
Securities and Exchange Commission or otherwise) of the first occurrence of a
Triggering Event.
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(j) "Expiration Date" shall mean the earlier of (i) the Close of
Business on the Final Expiration Date, (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof, and (iii) the time at which all
exercisable Rights are exchanged as provided in Section 11.(o) hereof.
(k) "Final Expiration Date" shall mean the tenth anniversary of the
Record Date.
(l) "Flip-in Event" shall mean any event described in clauses (A), (B)
or (C) of Section 11.(a) (ii) hereof.
(m) "Flip-over Event" shall mean any event described in subsections
(i), (ii) or (iii) of Section 13(a) hereof.
(n) "Issuer" shall have the meaning set forth in Section 13(b) of this
Agreement.
(o) "NASDAQ" shall mean the National Association of Securities
Dealers, Inc. Automated Quotation System.
(p) "Person" shall mean any individual, firm, corporation, partnership
or other legal entity, and shall include any successor (by merger or otherwise)
of such entity.
(q) "Preferred Shares" shall mean shares of Cumulative Redeemable
Serial Preference Stock, Series II, without par value, of the Company having
the rights and preferences set forth in the Form of Amendment to Amended
Articles of Incorporation attached to this Agreement as Exhibit A.
(r) "Purchase Price" shall mean initially $47 per one one-hundredth of
a Preferred Share and shall be subject to adjustment from time to time as
provided in this Agreement.
(s) "Redemption Price" shall mean $.01 per Right, subject to
adjustment by resolution of the Board of Directors of the Company to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof.
(t) "Related Person" shall mean (i) any Subsidiary of the Company or
(ii) any employee benefit or stock ownership plan of the Company or any entity
holding Common Shares for or pursuant to the terms of any such plan.
<PAGE> 4
(u) "Right" shall have the meaning set forth in the Recitals to this
Agreement.
(v) "Right Certificates" shall mean certificates evidencing the
Rights, in substantially the form of Exhibit B attached hereto.
(w) "Rights Agent" shall mean National City Bank, and its successors
and assigns.
(x) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(y) "Share Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person (by press release, filing
made with the Securities and Exchange Commission or otherwise) that an
Acquiring Person has become such.
(z) "Subsidiary" of any Person shall mean any corporation or other
legal entity of which a majority of the voting power of the voting equity
securities or equity interests is owned, directly or indirectly, by such
Person.
(aa) "Trading Day" shall mean any day on which the principal national
securities exchange on which the Common Shares are listed or admitted to
trading is open for the transaction of business or, if the Common Shares are
not listed or admitted to trading on any national securities exchange, a
Business Day.
(bb) "Triggering Event" shall mean any Flip-in Event or Flip-over
Event.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company and the holders of the Rights
(who, in accordance with Section 3 hereof, shall also be, prior to the
Distribution Date, the holders of the Common Shares) in accordance with the
terms and conditions hereof, and the Rights Agent hereby accepts such
appointment and hereby certifies that it complies with the requirements of the
New York Stock Exchange governing transfer agents and registrars. The Company
may from time to time act as Co- Rights Agent or appoint such Co-Rights Agents
as it may deem necessary or desirable. Any actions which may be taken by the
Rights Agent pursuant to the terms of this Agreement may be taken by any such
Co-Rights Agent.
Section 3. ISSUE OF RIGHT CERTIFICATES. (a) Until the Distribution
Date, (i) the Rights will be evidenced by the certificates representing Common
Shares registered in the names of the record holders thereof (which
certificates representing Common Shares shall also be deemed to be Right
Certificates) and not by separate Right Certificates, (ii) the Rights will be
transferable only in connection with the transfer of the underlying Common
Shares, and (iii) the transfer of any certificates evidencing Common Shares in
respect of which Rights have been issued shall also constitute the transfer of
the Rights associated with the Common Shares evidenced by such certificates.
(b) Rights will be issued by the Company in respect of all Common
Shares issued or delivered by the Company (whether originally issued or
delivered from the Company's treasury) after the Record Date but prior to the
Distribution Date. Certificates evidencing such Common Shares shall bear the
following legend or such similar legend as the Company may deem appropriate and
as is not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange or
transaction reporting system on which the Rights may from time to time be
listed or quoted, or to conform to usage:
<PAGE> 5
This Certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between The Lamson &
Sessions Co. and National City Bank, dated as of August 22, 1988 (the
"Rights Agreement"), the terms of which are incorporated herein by
this reference and a copy of which is on file at the principal
executive offices of The Lamson & Sessions Co. Under certain
circumstances, as set forth in the Rights Agreement, such Rights may
be redeemed, may expire, may be amended or may be evidenced by
separate certificates and no longer be evidenced by this Certificate.
The Lamson & Sessions Co. will mail to the holder of this Certificate
a copy of the Rights Agreement without charge within five business
days after receipt of a written request therefor. Under certain
circumstances as set forth in the Rights Agreement, Rights
beneficially owned by an Acquiring Person or any Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement)
and any subsequent holder of such Rights may become null and void.
(c) As soon as practicable after the Distribution Date, the Rights
Agent shall Rend, by first-class, insured, postage prepaid mail, to each record
holder of Common Shares as of the Close of Business on the Distribution Date,
at the Address of such holder shown on the records of the Company, a Right
Certificate, evidencing one Right for each Common Share so held, subject to
adjustment. As of and after the Distribution Date, the Rights will be evidenced
solely by such Right Certificates.
(d) As soon as practicable after the Record Date, the Company will
send, by first-class, postage prepaid mail, to each record holder of Common
Shares as of the Close of Business on the Record Date, at the address of such
holder shown on the records of the Company as of such date, a copy of a Summary
of Rights to Purchase Preferred Stock in substantially the form attached hereto
as Exhibit C.
Section 4. FORM OF RIGHT CERTIFICATES. (a) The Right Certificates
(and the forms of election to purchase and of assignment to be printed on the
reverse thereof) shall be substantially in the form set forth as Exhibit B
hereto with such changes, marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange or transaction reporting system on which the Common Shares or Rights
may from time to time be listed or quoted, or to conform to usage. Subject to
Sections 11.(i) and 22 hereof, the Right Certificates, whenever issued, shall
be dated as of the Distribution Date, and on their face shall entitle the
holders thereof to purchase such number of one one-hundredths of a Preferred
Share as shall be set forth therein at the Purchase Price set forth therein,
but the number and type of securities purchasable upon exercise of each Right
at the Purchase Price shall be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Sections 3, 6, 7(c),
11.(i) or 22 hereof that represents Rights the Beneficial Owner of which is any
Acquiring Person or any Associate or Affiliate of an Acquiring Person, and any
Right Certificate issued at any time upon the transfer of any Rights to an
Acquiring Person or any Associate or Affiliate thereof or to any nominee of
such Acquiring Person, Associate or Affiliate, shall be subject to and bear the
following legend or such similar legend as the Company may deem appropriate and
as is not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock
<PAGE> 6
exchange or any transaction reporting system on which the Common Shares or the
Rights may from time to time be listed or quoted, or to conform to usage:
The Rights represented by this Right Certificate were issued to, or
beneficially owned by, a Person who was an Acquiring Person or an
Affiliate or an Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). This Right Certificate and the
Rights represented hereby may become null and void in the
circumstances Specified in the Rights Agreement.
Section 5. COUNTERSIGNATURE AND REGISTRATION. (a) The Right
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, President or any Vice President, either manually or by facsimile
signature, and shall have affixed thereto the Company's seal or a facsimile
thereof which shall be attested by the Secretary or an Assistant Secretary of
the Company, either manually or by facsimile signature. The Right Certificates
shall be manually countersigned by the Rights Agent and shall not be valid for
any purpose unless so countersigned. In case any officer of the Company who
shall have signed any of the Right Certificates shall cease to be such officer
of the Company before countersignature by the Rights Agent and issuance and
delivery by the Company, such Right Certificates, nevertheless, may be
countersigned by the Rights Agent, and issued and delivered by the Company with
the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right Certificate, although at the date of
the execution of this Rights Agreement any such person was not such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at the principal office of the Rights Agent designated for
such purpose and at such other offices as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange or any transaction reporting system on
which the Common Shares or the Rights may from time to time be listed or
quoted, books for registration and transfer of the Right Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Right Certificates, the number of Rights evidenced on the face
of each of the Right Certificates and the date of each of the Right
Certificates.
Section 6. TRANSFER. SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES: MUTILATED. DESTROYED. LOST OR STOLEN RIGHT CERTIFICATES. (a)
Subject to Sections 14 and 7(d) hereof, at any time after the Close of Business
on the Distribution Date and prior to the Expiration Date, any Right
Certificate or Right Certificates may be transferred, split up, combined or
exchanged for another Right Certificate or Right Certificates, entitling the
registered holder to purchase a like number of Preferred Shares (or other
securities, as the case may be) as the Right Certificate or Right Certificates
surrendered then entitled such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate shall make such request in writing
delivered to the Rights Agent, and shall surrender the Right Certificate or
Right Certificates to be transferred, split up, combined or exchanged at the
principal office of the Rights Agent designated for such purpose. The Company
may require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer, split up, combination or
exchange of Right Certificates.
<PAGE> 7
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Right Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and reimbursement to the
Company and the Rights Agent of all reasonable expense incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Company will execute and deliver a new Right Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE 15(B) OF: PRICE: EXPIRATION
DATE OF RIGHTS. (a) The registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein) in
whole or in part at any time after the Distribution Date upon surrender of the
Right Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at an office of the Rights Agent
designated for such purpose, together with an amount in cash, in lawful money
of the United States of America by certified check or bank draft payable to the
order of the Company, equal to the Purchase Price for each one one-hundredth of
a Preferred Share as to which such surrendered Rights are exercised, or, if
applicable, the exercise price per Right specified in Sections 11.(a)(ii) or
13(a) hereof, as the case may be, together with an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof at or prior to the close of
business on the Expiration Date; provided, however, that after the later of the
first occurrence of a Triggering Event and the Distribution Date, in lieu of
the cash payment payable to the Company referred to in this sentence, the
registered holder of a Right Certificate evidencing exercisable Rights (which
shall not include Rights that have become void pursuant to Section 11.(a)ii)
hereof) may, at its option, exercise the Rights evidenced thereby in whole or
in part in accordance with this Section 7(a) upon surrender of the Right
Certificate as described above together with an election to exercise such
Rights without payment of cash on the reverse side thereof duly completed. With
respect to any Rights as to which such an election to exercise without payment
of cash is made, the holder shall receive, upon exercise, a number of Common
Shares or other securities, as the case may be, having a current market value
equal to the difference between (i) the current market value of the Common
Shares or other securities, as the case may be, that would have been issuable
upon payment of the cash amount as described above, and (ii) the amount of cash
that would have been payable to the Company upon exercise absent such election.
For purposes of this Section 7(a), the current market value of any security
shall be current market price thereof (determined pursuant to the applicable
provisions of Section 11.(d) hereof in the case of Common Shares, and
determined in a similar manner in the case of any other security) on the
Trading Day immediately preceding the date of the first occurrence of any
Triggering Event.
(b) Subject to Sections 7(d) and 11.(a)(ii) hereof, upon receipt of a
Right Certificate representing exercisable Rights with the form of election to
purchase duly executed, accompanied by either payment as described above or a
duly completed election to exercise without payment of cash, the Rights Agent
shall promptly (i) requisition from any transfer agent of the Preferred Shares
(or make available, if the Rights Agent is the transfer agent) certificates
representing the number of Preferred Shares to be purchased and the Company
hereby irrevocably authorizes its transfer agent to comply with all such
requests, or, if the Company shall have elected to deposit the total number of
Preferred Shares issuable upon exercise of the Rights hereunder with a
depository agent, requisition from the depository agent depository receipts
representing such number of one one-hundredths of a Preferred Share as are to
be purchased (in which case certificates for the Preferred Shares represented
by such receipts shall be deposited by the transfer agent with the depository
agent) and the Company
<PAGE> 8
will direct the depository agent to comply with such request, (ii) promptly
after receipt of such certificates (or depository receipts, as the case may
be), cause the same to be delivered to or upon the order of the registered
holder of such Right Certificate, registered in such name or names as may be
designated by such holder, (iii) when appropriate, requisition from any
transfer agent of the Common Shares (or make available, if the Rights Agent is
the transfer agent) certificates representing the number of Common Shares to be
issued in lieu of Preferred Shares and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, (iv) after
receipt of such certificates, cause the same to be delivered to or upon the
order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder, (v) if appropriate,
requisition from the Company the amount of cash to be paid in lieu of the
issuance of fractional shares in accordance with Section 14 hereof or in lieu
of the issuance of Common Shares in accordance with Section 11.(al(iii) hereof,
(vi) if appropriate, after receipt, promptly deliver such cash to or upon the
order of the registered holder of such Right Certificate, and (vii) deliver any
due bill or other instrument provided to the Rights Agent by the Company for
delivery to the registered holder of such Right Certificate as provided by
Section 11(1) hereof.
(c) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent to the registered holder of such Right Certificate
or to his duly authorized assigns, subject to Section 14 hereof.
(d) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to any purported transfer of any Rights Certificate
pursuant to Section 6 hereof or exercise of a Right Certificate as set forth in
this Section 7 unless the registered holder of such Right Certificate shall
have (i) completed and signed the certificate following the form of assignment
or election to purchase set forth on the reverse side of the Right Certificate
surrendered for such transfer or exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Company shall reasonably request.
(e) Notwithstanding anything in this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction if the requisite
qualification or registration in such jurisdiction shall not have been effected
or the exercise of the Rights shall not be permitted under applicable law.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
stock transfer agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Right Certificates shall be issued in lieu thereof except as expressly
permitted by this Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and retire,
any other Right Certificate purchased or acquired by the Company otherwise than
upon the exercise thereof. The Rights Agent shall deliver all canceled Right
Certificates to the Company, or shall, at the written request of the Company,
destroy such canceled Right Certificates and deliver a certificate of
destruction thereof to the Company.
Section 9. COMPANY COVENANTS CONCERNING SNARES AND RIGHTS. The Company
covenants and agrees that:
<PAGE> 9
(a) It will cause to be reserved and kept available out of its
authorized and unissued Preferred Shares or any Preferred Shares held in its
treasury, the number of Preferred Shares that will be sufficient to permit the
exercise pursuant to Section 7 hereof of all outstanding Rights.
(b) So long as the Preferred Shares (and, following the occurrence of
a Triggering Event, Common Shares and/or other securities) issuable and
deliverable upon the exercise of the Rights may be listed on a national
securities exchange, it will endeavor to cause, from and after such time as the
Rights become exercisable, all shares reserved for such issuance to be listed
on such exchange upon official notice of issuance.
(c) It will take all such action as may be necessary to ensure that
all Preferred Shares (and, following the occurrence of a Triggering Event,
Common Shares and/or other securities) delivered upon exercise of Rights, at
the time of delivery of the certificates for such shares, shall be (subject to
payment of the Purchase Price) duly and validly authorized and issued, fully
paid and nonassessable shares, free and clear of any liens, encumbrances or
other adverse claims and not subject to any rights of call or first refusal.
(d) It will pay when due and payable any and all federal and state
transfer taxes and charges that may be payable in respect of the issuance or
delivery of the Right Certificates or of any Preferred Shares (or Common Shares
and/or other securities, as the case may be) upon the exercise of Rights;
Provided, however, it will not be required to pay any transfer tax or charge
which may be payable in respect of any transfer or delivery of Right
Certificates to a person other than, or the issuance or delivery of
certificates or depository receipts representing Preferred Shares (or Common
Shares and/or other securities, as the case may be) in a name other than that
of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise, or to issue or deliver any certificates for Preferred
Shares (or Common Shares and/or other securities, as the case may be) upon the
exercise of any Rights until any such tax or charge shall have been paid (any
such tax or charge being payable by the holder of such Right Certificate at the
time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
(e) It will use its best efforts to (i) file on an appropriate form,
as soon as practicable following the later to occur of a Triggering Event or
the Distribution Date, a registration statement under the Securities Act with
respect to the securities purchasable upon exercise of the Rights, (ii) cause
such registration statement to become effective as soon as practicable after
such filing, and (iii) cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the Act) until the
earlier of (A) the date as of which the Rights are no longer exercisable for
such securities, and (B) the Expiration Date. The Company will also take such
action as may be appropriate under, or to ensure compliance with, the
securities or "blue sky" laws of the various states in connection with the
exercisability of the Rights; Provided, however, that the Company may
temporarily suspend the exercisability of the Rights in order to prepare and
file such registration statement and permit it to become effective and upon any
such suspension, the Company will issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in effect.
(f) Notwithstanding anything in this Agreement to the contrary, the
Company covenants and agrees that, after the Distribution Date, it will not,
except as permitted by Section 23 or Section 26 hereof, take (or permit any
Subsidiary to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will diminish or otherwise eliminate
the benefits intended to be afforded by the Riqhts.
<PAGE> 10
(g) In the event that the Company is obligated to issue other
securities of the Company, pay cash and/or distribute other property pursuant
to Sections 11, 13 and 14 hereof, it will make all arrangements necessary so
that such other securities, cash and/or property are available for distribution
by the Rights Agent, if and when appropriate.
Section 10. RECORD DATE. Each Person in whose name any certificate
representing Preferred Shares (or Common Shares and/or other securities, as the
case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the Preferred Shares (or Common
Shares and/or other securities, as the case may be) represented thereby on, and
such certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable transfer taxes) was made; PROVIDED, HOWEVER, that if the
date of such surrender and payment is a date upon which the Preferred Shares
(or Common Shares and/or other securities, as the case may be) transfer books
of the Company are closed, such Person shall be deemed to have become the
record holder of such securities on, and such certificate shall be dated, the
next succeeding Business Day on which the Preferred Shares (or Common Shares
and/or other securities, as the case may be) transfer books of the Company are
open. Prior to the exercise of the Rights evidenced thereby, the holder of a
Right Certificate shall not be entitled to any rights of a shareholder of the
Company with respect to securities for which the Rights shall be exercisable,
including without limitation the right to vote, receive dividends or other
distributions or exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided
herein.
Section 11. ADJUSTMENT OF PURCHASE PRICE. NUMBER AND TYPE OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provide in this Section 11.
(a)(i) In the event that the Company shall at any time after the date
of this Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of shares or (D) issue
any shares of its capital stock in a reclassification of the Preferred Shares
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), the
Purchase Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification, and/or
the number and/or kind of shares of capital stock issuable on such date upon
exercise of a Right, shall be proportionately adjusted 80 that the holder of
any Right exercised after such time shall be entitled to receive upon payment
of the Purchase Price then in effect the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Shares transfer books of the Company were
open, he or she would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment under
both this Section 11.(a)(i) and Section 11.(a)(ii) hereof or Section 13 hereof,
the adjustment provided for in this Section 11.(a)(i) shall be in addition to,
and shall be made prior to, any adjustment required pursuant to Section 11.(a)
(ii) or Section 13 hereof.
(ii) Subject to the provisions of Section 11.(o) hereof, in the event
that (A) any Acquiring Person or any Associate or Affiliate of any Acquiring
Person, at any time after the date of this Agreement, directly or indirectly
shall (1) merge into the Company or otherwise combine with the Company and the
Company shall be the continuing or surviving corporation of such merger
<PAGE> 11
or combination, other than in a transaction subject to Section 13 hereof, (2)
merge or otherwise combine with any Subsidiary of the Company, (3) in one or
more transactions (other than in connection with the exercise or exchange of
Rights or the exercise or conversion of securities exercisable for or
convertible into shares of any class of capital stock of the Company or any of
its Subsidiaries) transfer any assets to the Company or any Subsidiary of the
Company in exchange (in whole or in part) for shares of any class of capital
stock of the Company or any Subsidiary of the Company or for securities
exercisable for or convertible into shares of any class of capital stock of the
Company or any Subsidiary of the Company, or otherwise obtain from the Company
or any Subsidiary of the Company, with or without consideration, any additional
shares of any class of capital stock of the Company or any Subsidiary of the
Company or securities exercisable for or convertible into shares of any class
of capital stock of the Company or of any Subsidiary of the Company (other than
as part of a pro rata distribution to all holders of such shares of any class
of capital stock of the Company or any Subsidiary of the Company), (4) sell,
purchase, lease, exchange, mortgage, pledge, transfer or otherwise dispose (in
one or more transactions) of any assets (including securities) to, from, with
or of, as the case may be, the Company or any Subsidiary of the Company, other
than in a transaction subject to Section 13 hereof, (5) receive any
compensation from the Company or any Subsidiary of the Company other than
compensation for full-time employment as a regular employee at rates in
accordance with the Company's (or its Subsidiaries') past practices, or (6)
receive the benefit, directly or indirectly (except proportionately as a
shareholder), of any loans, advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantage provided by the Company or
any Subsidiary of the Company;
(B) during such time as there is an Acquiring Person, there shall be
any reclassification of securities (including any reverse stock split), or
recapitalization of the Company, or any merger or consolidation of the Company
with any Subsidiary of the Company, or any other transaction or series of
transactions involving the Company or any Subsidiary of the Company (whether or
not with or into or otherwise involving an Acquiring Person) other than a
transaction subject to Section 13 hereof, which has the effect, directly or
indirectly, of increasing by more than 1% the proportionate share of the
outstanding shares of any class of equity securities or of securities
exercisable for or convertible into equity securities of the Company or any
Subsidiary of the Company which is directly or indirectly beneficially owned by
any Acquiring Person or any Associate or Affiliate of any Acquiring Person; or
(C) any Person (other than the Company or any Related Person) who or
which, together with all Affiliates and Associates of such Person,
shall at any time after the date of this Agreement become an Acquiring
Person (other than pursuant to any transaction set forth in Section
13(a) hereof);
then, and in each such case, the Company shall make adjustments in the terms of
the Rights so that each holder of a Right, except as provided below, shall
thereafter have a right to receive, upon exercise thereof in accordance with
the terms of this Agreement, at an exercise price per Right equal to the
product of the then-current Purchase Price multiplied by the number of one
one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the first occurrence of a Triggering Event, in lieu of
Preferred Shares, such number of Common Shares as shall equal the result
obtained by (x) multiplying the then-current Purchase Price by the then number
of one one-hundredths of a Preferred Share for which a Right was exercisable
immediately prior to the first occurrence of a Triggering Event and dividing
that product by (y) 50% of the current per share market price of the Common
Shares (determined pursuant to Section 11.(d) hereof) on the date of the first
occurrence of a Triggering Event. Notwithstanding anything in this Agreement to
the contrary, from and after the later of the Distribution Date and the first
occurrence of a Flip-in Event, (1) any Rights that
<PAGE> 12
are or were acquired or beneficially owned by any Acquiring Person (or any
Affiliate or Associate of such Acquiring Person) shall be void and any holder
of such Rights shall thereafter have no right to exercise such Rights under any
provision of this Agreement, (2) no Right Certificate shall be issued pursuant
to this Agreement that represents Rights beneficially owned by an Acquiring
Person or any Affiliate or Associate thereof, (3) no Right Certificate shall be
issued at any time upon the transfer of any Rights to an Acquiring Person or
any Affiliate or Associate thereof or to any nominee of such Acquiring Person
or Affiliate or Associate thereof, and (4) any Right Certificate delivered to
the Rights Agent for transfer to an Acquiring Person or any Affiliate or
Associate thereof shall be canceled.
(iii) Upon the occurrence of a Flip-in Event, if there shall not be
sufficient authorized but unissued Common Shares or issued Common Shares held
in Treasury to permit the exercise in full of the Rights in accordance with the
foregoing subsection (ii), the Board of Directors of the Company shall use its
best efforts promptly to authorize and, subject to the provisions of Section
9(d) hereof make available for issuance additional Common Shares;; Provided,
however, that if at any time after 90 calendar days after the first occurrence
of a Flip-in Event, there shall not be sufficient Common Shares available for
issuance upon the exercise of a Right, then the Company shall deliver, upon the
surrender of such Right and without requiring payment of the Purchase Price,
Common Shares (to the extent available), and then cash (to the extent permitted
by applicable law and any agreements or instruments to which the Company is a
party in effect immediately prior to the first occurrence of any Flip-in
Event), which Common Shares and cash shall have an aggregate value equal to the
excess of (1) the aggregate current per share market value of all the Common
Shares issuable in accordance with subsection (ii) of this Section 11.(a) upon
the exercise of a Right (the "Exercise Value") over (2) the product of the
then-current Purchase Price multiplied by the number of one one-hundredths of a
Preferred Share for which a Right was exercisable immediately prior to the
first occurrence of a Triggering Event. To the extent that any legal or
contractual restrictions prevent the Company from paying the full amount of
cash payable in accordance with the foregoing sentence, the Company shall pay
to holders of the Rights as to which such payments are being made all amounts
which are not then restricted on a pro rata basis. The Company shall continue
to make payments on a pro rata basis as funds become available until such
payments have been paid in full.
(b) In the event that the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Preferred Shares (or securities having
equivalent rights, privileges and preferences as the Preferred Shares
("equivalent preferred shares")) or securities convertible into Preferred
Shares or equivalent preferred shares at a price per Preferred Share or
equivalent preferred share (or having a conversion price per share, if a
security convertible into Preferred Shares or equivalent preferred shares) less
than the current per share market price of the Preferred Shares (as determined
pursuant to Section 11.(d) hereof) on such record date, the Purchase Price to
be in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of Preferred Shares outstanding on
such record date plus the number of Preferred Shares which the aggregate
offering price of the total number of Preferred Shares and/or equivalent
preferred shares so to be offered (and/or the aggregate initial conversion
price of the convertible securities 80 to be offered) would purchase at such
current per share market price and the denominator of which shall be the number
of Preferred Shares outstanding on such record date plus the number of
additional Preferred Shares and/or equivalent preferred shares to be offered
for subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription price may be paid
in a consideration
<PAGE> 13
part or all of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed with
the Rights Agent and shall be conclusive for all purposes. Preferred Shares
owned by or held for the account of the Company shall not be deemed outstanding
for the purpose of any such computation. Such adjustment shall be made
successively whenever such a record date is fixed; and in the event that such
rights, options or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.
(c) In the event that the Company shall fix a record date for the
making of a distribution to all holders of Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular periodic cash dividend at an annual
rate not in excess of $2.00 per one- hundredth of a Preferred Share), assets,
stock (other than a dividend payable in Preferred Shares) or subscription
rights, options or warrants (excluding those referred to in Section 11.(b)
hereof), the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to
such record date by a fraction, the numerator of which shall be the current per
share market price of the Preferred Shares (as determined pursuant to Section
11.(d) hereof) on such record date or, if earlier, the date on which Preferred
Shares begin to trade on an ex-dividend or when-issued basis with respect to
such distribution, less the fair market value (as determined in good faith by
the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be conclusive for all
purposes) of the portion of the cash, assets, stock or evidences of
indebtedness 80 to be distributed (in the case of periodic cash dividends, only
that portion in excess of an annualized dividend rate of $2.00 per
one-hundredth of a Preferred Share) or of such subscription rights, options or
warrants applicable to one Preferred Share, and the denominator of which shall
be such current per share market price of the Preferred Shares. Such
adjustments shall be made successively whenever such a record date is fixed;
and in the event that such distribution is not so made, the Purchase Price
shall again be adjusted to be the Purchase Price which would then be in effect
if such record date had not been fixed.
(d)(i) For the purpose of any computation hereunder, the "current per
share market price" of Common Shares on any date shall be deemed to be the
average of the daily closing prices per share of such Common Shares for the 30
consecutive Trading Days immediately prior to such date; Provided, however,
that in the event that the current per share market price of the Common Shares
is determined during a period following the announcement by the issuer of such
Common Shares of (A) a dividend or distribution on such Common Shares payable
in such Common Shares or securities convertible into such Common Shares (other
than the Rights) or (B) any subdivision, combination or reclassification of
such Common Shares, and prior to the expiration of 30 Trading Days after the
ex-dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such case, the
current per share market price shall be appropriately adjusted to take into
account ex-dividend trading or to reflect the current per share market price
per Common Share equivalent. The closing price for each day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Common Shares are not listed or admitted to
<PAGE> 14
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Common Shares are
listed or admitted to trading or, if the Common Shares are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in
use, or, if on any such date the Common Shares are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Shares selected by the
Board of Directors of the Company. If the Common Shares are not publicly held
or not so listed or traded, or not the subject of available bid and asked
quotes, "current per share market price" shall mean the fair value per share as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.
(ii) For the purpose of any computation hereunder, the "current per
share market price" of the Preferred Shares shall be determined in the
same manner as set forth above for Common Shares in Section 11.(d)(i),
other than the last sentence thereof. If the current per share market
price of the Preferred Shares cannot be determined in the manner
provided above, the current per share market price of the Preferred
Shares shall be conclusively deemed to be an amount equal to the
current per share market price of the Common Shares multiplied by one
hundred (as such number may be appropriately adjusted to reflect
events such as stock splits, stock dividends, recapitalizations or
similar transactions relating to the Common Shares occurring after the
date of this Agreement). If neither the Common Shares nor the
Preferred Shares are publicly held or so listed or traded, or the
subject of available bid and asked quotes, "current per share market
price" of the Preferred Shares shall mean the fair value per share as
determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the
Rights Agent and shall be conclusive for all purposes. For all
purposes of this Agreement, the current per share market price of one
one-hundredth of a Preferred Share shall be equal to the current per
share market price of one Preferred Share divided by 100.
(e) Except as set forth below, no adjustment in the Purchase Price
shall be required unless such adjustment would require an increase or decrease
of at least 1% in such price; provided, however, that any adjustments which by
reason of this Section 11.(e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under Section 11 shall be made to the nearest cent or to the nearest
one-thousandth of a Common Share or other share or one hundred-thousandth of a
Preferred Share, as the case may be e Notwithstanding the first sentence of
this Section 11(e)), any adjustment required by Section 11 shall be made no
later than the earlier of (i) three years from the date of the transaction
which requires such adjustment or (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11.(a)
(ii) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the Company
other than Preferred Shares, thereafter the number of such other shares so
receivable upon exercise of any Right shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Shares contained in this Section 11
and the provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the
Preferred Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase
<PAGE> 15
Price, the number of Preferred Shares purchasable from time to time hereunder
upon exercise of the Rights, all subject to further adjustment as provided
herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11.(i) hereof, upon each adjustment of the Purchase Price as a
result of the calculations made in Section 11.(b) hereof and Section 11.(c)
hereof made with respect to a distribution of subscription rights, options or
warrants applicable to Preferred Shares, each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-hundredths of
a Preferred Share (calculated to the nearest one hundred-thousandth of a
Preferred Share) obtained by (i) multiplying the number of one one-hundredths
of a Preferred Share covered by a Right immediately prior to this adjustment by
the Purchase Price in effect immediately prior to such adjustment of the
Purchase Price and (ii) dividing the product so obtained by the Purchase Price
in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect, on or after the date of any adjustment of
the Purchase Price, to adjust the number of Rights in substitution for any
adjustment in the number of Preferred Shares purchasable upon the exercise of a
Right. Each Of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one one-hundredths of a Preferred
Share for which a Right was exercisable immediately prior to such adjustment.
Each Right held of record prior to such adjustment of the number of Rights
shall become that number of Rights (calculated to the nearest one-thousandth)
obtained by dividing the Purchase Price in effect immediately prior to
adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. The Company shall make a public
announcement of its election to adjust the number of Rights t indicating the
record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Purchase
Price is adjusted or any day thereafter, but, if the Right Certificates have
been issued, shall be at least 10 calendar days later than the date of the
public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11.(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Right Certificates on such record date Right Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein (and may bear, at
the option of the Company, the adjusted Purchase Price) and shall be registered
in the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number or kind of shares issuable upon the exercise of the Rights, the
Right Certificates theretofore and thereafter issued may continue to express
the Purchase Price and the number of shares which were expressed in the initial
Right Certificate issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below one one-hundredth of the then par value, if any, of
the Preferred Shares issuable upon exercise of the Rights, the Company shall
take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue
<PAGE> 16
fully paid and nonassessable Preferred Shares (or fractions thereof) at such
adjusted Purchase Price.
(1) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the number of Preferred Shares or other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the number of
Preferred Shares or other capital stock or securities of the Company, if any,
issuable upon such exercise on the basis of the Purchase Price in effect prior
to such adjustment; provided, however, that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder's
right to receive such additional shares (fractional or otherwise), capital
stock or securities upon the occurrence of the event requiring such adjustment.
(m) Notwithstanding anything in this Agreement to the contrary, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment the Board of Directors of the
Company shall determine to be advisable in order that any (i) consolidation or
subdivision of the Preferred Shares, (ii) issuance wholly for cash of Preferred
Shares at less than the current per share market price therefor, (iii) issuance
wholly for cash of Preferred Shares or securities which by their terms are
convertible into or exchangeable for Preferred Shares, (iv) stock dividends, or
(v) issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Company to holders of its Preferred Shares shall not be
taxable to such shareholders.
(n) Notwithstanding anything in this Agreement to the contrary, in the
event that the Company shall at any time after the date of this Agreement and
prior to the Distribution Date (i) declare a dividend on the outstanding Common
Shares payable in Common Shares, (ii) subdivide the outstanding Common Shares,
(iii) combine the outstanding Common Shares into a smaller number of shares, or
(iv) issue any shares of its capital stock in a reclassification of the
outstanding Common Shares, the number of Rights associated with each Common
Share then outstanding, or issued or delivered thereafter but prior to the
Distribution Date, shall be proportionately adjusted so that the number of
Rights thereafter associated with each Common Share following any such event
shall equal the result obtained by multiplying the number of Rights associated
with each Common Share immediately prior to such event by a fraction the
numerator of which shall be the total number of Common Shares outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of Common Shares outstanding immediately following
the occurrence of such event.
(o) The Board of Directors of the Company may, at its option,
at any time after the later of the Distribution Date and the first
occurrence of a Triggering Event, exchange all or part of the
then-outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to the provisions of Section
11.(a) (ii) hereof) for Common Shares at an exchange ratio of one
Common Share per Right, appropriately adjusted to reflect any stock
split, stock dividend or similar transaction occurring after the date
hereof (such exchange ratio being hereinafter referred to as the
"Exchange Ratio"). Notwithstanding the-foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time
after any Person (other than the Company or any Related Party),
together with all Affiliates and Associates of such Person, becomes
the Beneficial Owner of 50% or more of the Common Shares then
<PAGE> 17
outstanding. Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to this
Section 11.(o), and without any further action and without any
notice, the right to exercise such Rights shall terminate and the only
right with respect to such Rights thereafter of the holder of such
Rights shall be to receive that number of Common Shares equal to the
number of such Rights held by such holder multiplied by the Exchange
Ratio. Promptly after the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to this Section
11.(o), the Company shall publicly announce such action, and within 10
calendar days thereafter shall give notice of any such exchange to all
of the holders of such Rights at their last addresses as they appear
upon the registry books of the Rights Agent; provided, however, that
the failure to give, or any defect in, such notice shall not affect
the validity of such exchange. Any notice which i5 mailed in the
manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of exchange shall state
the method by which the exchange of the Common Shares for Rights will
be effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be effected
pro rata based on the number of Rights (other than Rights which have
become void pursuant to the provisions of Section 11.(a) ii) hereof)
held by each holder of Rights. In any exchange pursuant to this
Section 11.(o), the Company, at its option, may substitute for any
Common Share exchangeable for a Right, (i) cash, (ii) debt securities
of the Company, (iii) other assets, or (iv) any combination of the
foregoing, in any event having an aggregate value which the Board of
Directors of the Company shall have determined in good faith to be
equal to the current market value of one Common Share (determined
pursuant to Section 11.(d) hereof) on the Trading Day immediately
preceding the date of exchange pursuant to this Section 11.(o). The
Company shall not be required to issue fractions of Common Shares or
to distribute certificates which evidence fractional Common Shares
upon the exchange of a Right. In lieu of such fractional Common
Shares, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional Common Shares would
otherwise be issuable an amount in cash equal to the same fraction of
the current market value of a whole Common Share (determined pursuant
to Section 11.(d) hereof) on the Trading Day immediately preceding the
date of exchange pursuant to this Section 11.(o).
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares. Whenever an adjustment is made as provided in Section 11 or Section
13(a) hereof, the Company shall (a) promptly prepare a certificate setting
forth such adjustment and a brief statement of the facts accounting for such
adjustment, (b) promptly file with the Rights Agent and with each transfer
agent for the Common Shares and the Preferred Shares, a copy of such
certificate, and (c) if such adjustment is made after the Distribution Date,
mail a brief summary of such adjustment to each holder of a Right Certificate
in accordance with Section 25 hereof.
Section 13. Consolidation. Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, following the Share Acquisition Date, directly or
indirectly:
(i) the Company shall consolidate with, or merge with or into,
any other Person and the Company shall not be the continuing or
surviving corporation of such consolidation or merger; or
(ii) any Person shall consolidate with the Company, or merge with or
into the Company and the Company shall be the continuing or surviving
corporation of such merger or consolidation and, in connection with such merger
or consolidation. all or Dart of the Common
<PAGE> 18
Shares shall be changed into or exchanged for stock or other securities of any
other Person or cash or any other property; or
(iii) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power (including, without limitation,
securities creating any obligation on the part of the Company and/or
any of its Subsidiaries) representing in the aggregate more than 50%
of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any Person or Persons, then, and in each such
case, proper provision shall be made so that (A) each holder of a
Right (except as otherwise provided herein) shall thereafter have the
right to receive, upon the exercise thereof in accordance with the
terms of this Agreement at an exercise price per Right equal to the
product of the then-current Purchase Price multiplied by the number of
one one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to the first occurrence of a Triggering
Event, in lieu of Preferred Shares, such number of validly authorized
and issued, fully paid, nonassessable and freely tradeable Common
Shares of the Issuer (as such term is hereinafter defined), free and
clear of any liens, encumbrances and other adverse claims And not
subject to any rights of call or first refusal, as shall be equal to
the result obtained by (x) multiplying the then-current Purchase Price
by the number of one one-hundredths of a Preferred Share for which a
Right is exercisable immediately prior to the first occurrence of a
Triggering Event and dividing that product by (y) 50% of the current
per share market price of the Common Shares of the Issuer (determined
pursuant to Section 11.(d) hereof), on the date of consummation of
such Flip-over Event; (B) the Issuer shall thereafter be liable for,
and shall assume, by virtue of the consummation of such Flip-over
Event, all the obligations and duties of the Company pursuant to this
Agreement; (C) the term "Company" shall thereafter be deemed to refer
to the Issuer; and (D) the Issuer shall take such steps (including,
without limitation, the reservation of a sufficient number of its
Common Shares to permit the exercise of all outstanding Rights) in
connection with such consummation as may be necessary to assure that
the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be possible, in relation to its Common Shares
thereafter deliverable upon the exercise of the Rights.
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) The Company
shall not be required to issue fractions of Rights or to distribute Right
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, the Company shall pay as promptly as practicable to the registered
holders of the Right Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the same fraction of
the current market value of a whole Right.
For the purposes of this Section 14(a), the current market value of a whole
Right shall be the closing price of the Rights for the Trading Day immediately
prior to the date on which such fractional Rights would have been otherwise
issuable. The closing price for any day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Rights
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or
<PAGE> 19
such other system then in use or, if on any such date the Rights are not quoted
by any such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Rights selected
by the Board of Directors of the Company. If on any such date no such market
maker is making a market in the Rights the fair value of the Rights on such
date as determined in good faith by the Board of Directors of the Company shall
be used and shall be conclusive for all purposes.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-hundredth
of a Preferred Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-hundredth of a Preferred
Share may, at the election of the Company, be evidenced by depository receipts
pursuant to an appropriate agreement between the Company and a depository
selected by it, provided that such agreement shall provide that the holders of
such depository receipts shall have all the rights, privileges and preferences
to which they are entitled as beneficial owners of the Preferred Shares
represented by such depository receipts. In lieu of fractional Preferred Shares
that are not integral multiples of one one-hundredth of a Preferred Share, the
Company may pay to the registered holders of Right Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one one-hundredth of a Preferred
Share. For purposes of this Section 14(b), the current market value of one
one-hundredth of a Preferred Share shall be the closing price of one
one-hundredth of a Preferred Share (determined pursuant to Section 11.(d)(ii)
hereof) for the Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of a Triggering Event, the Company shall
not be required to issue fractions of Common Shares upon exercise of the Rights
or to distribute certificates which evidence fractional Common Shares. In lieu
of fractional Common Shares, the Company may pay to the registered holders of
Right Certificates at the time such Rights are exercised as herein provided an
amount in cash equal to the same fraction of the current market value of one
Common Share. For purposes of this Section 14(c), the current market value of
one Common Share shall be the closing price of a Common Share (determined
pursuant to the second sentence of Section 11.(d)(i) hereof) for the Trading
Day immediately prior to the date of such exercise.
Section 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Shares); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Shares), without the consent of
the Rights Agent or of the holder of any other Rights Certificate (or, prior to
the Distribution Date, of the Common Shares), may in his own behalf and for his
own benefit enforce, and may institute and maintain Any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate or Common
Share certificate in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under this
Agreement, and injunctive relief against actual or threatened violations of the
obligations of any Person subject to this Agreement.
<PAGE> 20
Section 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the principal office of the Rights Agent designated for
such purpose, duly endorsed or accompanied by a proper instrument of
transfer;
(c) subject to Sections 7(d) and 11.(a) (ii) hereof, the
Company and the Rights Agent may deem and treat the person in whose
name the Right Certificate (or, prior to the Distribution Date, the
associated Common Share certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificate or the
associated Common Share certificate made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent shall be affected by any notice to
the contrary;
(d) the holder expressly waives any right to receive any
fractional rights or any fractional shares upon exercise of a Right,
except as otherwise provided in Section 14 hereof;
(e) notwithstanding anything in this Agreement to the
contrary, neither the Company nor the Rights Agent shall have any
liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by
reason of any preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, or
any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise
restraining performance of such obligation; provided, however, the
Company shall use its best efforts to have any such order, decree or
ruling lifted or otherwise overturned as soon as possible.
Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No
holder of any Right Certificate, as such, shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or
any other securities of the Company which may at any time be issuable upon the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 24 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof or exchanged pursuant to the provisions of Section 11.(o)
hereof.
Section 18. CONCERNING THE RIGHTS AGENT. (a) The Company agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it hereunder
and, from time to time, on demand of the Rights Agent, its reasonable expenses
and counsel fees and other
<PAGE> 21
disbursements incurred in the administration and execution of this Agreement
and the exercise and performance of its duties hereunder. The Company also
agrees to indemnify the Rights Agent for, and to hold it harmless against, any
loss, liability, suit, action, proceeding or expense, incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent,
for anything done or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability arising therefrom,
directly or indirectly.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Right
Certificate or certificate evidencing Preferred Shares or other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
person or persons.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for
appointment as a E successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates 80 countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such
cases such Right Certificates shall have the full force provided in the Right
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned
but not delivered, the Rights Agent may adopt the countersignature under its
prior name and deliver Right Certificates so countersigned; and in case at that
time any of the Right Certificates shall not have been countersigned, the
Rights Agent may countersign such Right Certificates either in its prior name
or in its changed name; and in all such cases such Right Certificates shall
have the full force provided in the Right Certificates and in this Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
<PAGE> 22
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board,
the President or any Vice President of the Company and delivered to the Rights
Agent; and such certificate shall be full authorization to the Rights Agent for
any action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution and delivery hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Agreement or in any Right Certificate;
nor shall it be responsible for any adjustment required under the provisions of
Section 11 or Section 13 hereof (including any adjustment which results in
Rights becoming void) or responsible for the manner, method or amount of any
such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such adjustment or
voidance); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of stock or other securities to be issued pursuant to this Agreement or any
Right Certificate or as to whether any shares of stock or other securities
will, when issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the President or any Vice President of the
Company, and to apply to such officers for advice or instructions in connection
with its duties, and it shall not be liable for any action taken or suffered to
be taken by it in good faith in accordance with instructions of any such
officer.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other legal
entity.
<PAGE> 23
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable
or accountable for any act, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Company resulting from any such act,
default, neglect or misconduct, provided reasonable care was exercised in the
selection and continued employment thereof. The Rights Agent shall not be under
any duty or responsibility to insure compliance with any applicable federal or
state securities laws in connection with the issuance, transfer or exchange of
Right Certificates.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 or 2 thereof,
the Rights Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the Company.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer
agent of the Common Shares and Preferred Shares by registered or certified
mail, and to the holders of the Right Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent upon 30 days'
notice in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Shares and Preferred
Shares by registered or certified mail, and to the holders of the Right
Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection by
the Company), then the registered holder of any Right Certificate may apply to
any court of competent jurisdiction for the appointment of a new Rights Agent.
Any successor Rights Agent, whether appointed by the Company or by such a
court, shall be a corporation organized And doing business under the laws of
the United States or of the States of Ohio or New York (or of any other state
Of the United States so long as such corporation is authorized to do business
as a banking institution in the States of Ohio or New York), in good standing,
having a principal office in the States of Ohio or New York, which is
authorized under such laws to exercise corporate trust powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50 million and which shall otherwise meet any requirements imposed by
the New York Stock Exchange on transfer agents and registrars. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Rights Agent without further act or deed; but the predecessor Rights Agent
shall deliver and transfer to the successor Rights Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Shares
and Preferred
<PAGE> 24
Shares, and mail a notice thereof in writing to the registered holders of the
Right Certificates. Failure to give any notice provided for in this Section 21,
however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding
any-of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price per share and the number or kind or
class of shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement.
Section 23. REDEMPTION. (a) Prior to the Expiration Date, the Board
of Directors of the Company may, at its option, redeem all but not less than
all of the then-outstanding Rights at the Redemption Price at any time prior to
the Close of Business on the later of (i) the Distribution Date and (ii) the
Share Acquisition Date.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, and without any further action
and without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price. Promptly after the action of the Board of Directors ordering
the redemption of the Rights, the Company shall publicly announce such action,
and within 10 calendar days thereafter, the Company shall give notice of such
redemption to the holders of the then-outstanding Rights by mailing such notice
to all such holders at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the registry
books of the transfer agent for the Common Shares. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made. The Company may, at its
option, pay the Redemption Price in cash, Common Shares (based upon the current
per share market price of the Common Shares (determined pursuant to Section
11.(d) hereof), at the time of redemption) or any other form of consideration
deemed appropriate by the Board of Directors.
(c) At any time following the Share Acquisition Date, a majority of
the members of the Board of Directors may relinquish any or all of the rights
to redeem the Rights under Section 23(a) hereof by duly adopting a resolution
to that effect. Promptly after adoption of such a resolution, the Company shall
publicly announce such action. Immediately upon adoption of such resolution,
the rights of the Board of Directors under the portions of this Section 23
specified in such resolution shall terminate without further action and without
any notice.
Section 24. NOTICE OF CERTAIN EVENTS. (a) In case, after the
Distribution Date, the Company shall propose (i) to pay any dividend payable in
stock of any class to the holders of Preferred Shares or to make any other
distribution to the holders of Preferred Shares (other than a regular periodic
cash dividend at an annual rate not in excess of $2.00 per one-hundredth of a
Preferred Share), (ii) to offer to the holders of Preferred Shares rights,
options or warrants to subscribe for or to purchase any additional Preferred
Shares or shares of stock of any class or any other securities, rights or
options, (iii) to effect any reclassification of its Preferred Shares (other
than a reclassification involving only the subdivision of outstanding Preferred
Shares) or (iv) to effect any consolidation or merger into or with, or to
effect any sale or other transfer (or to permit one or more of its Subsidiaries
to effect any sale or other transfer), in one or more transactions, of assets
or earning power (including without limitation securities creating any
obligation on the part of the Company and/or any of its Subsidiaries)
<PAGE> 25
representing more than 50% of the assets and earning power of the Company and
its Subsidiaries, taken as a whole, to any other Person or Persons, then, in
each such case, the Company shall give to each holder of a Right Certificate,
in accordance with Section 25 hereof, notice of such proposed action, which
shall specify the record date for the purposes of such stock dividend,
distribution or offering of rights, options or warrants, or the date on which
such reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Preferred Shares, if any such date is to be
fixed, and such notice shall be so given, in the case of any action covered by
clause (i) or (ii) above, at least 20 calendar days prior to the record date
for determining holders of the Preferred Shares for purposes of such action,
and, in the case of any such other action, at least 20 calendar days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of the Preferred Shares, whichever shall be the earlier.
(b) In case any Triggering Event shall occur, then, in each such case,
the Company shall as soon as practicable thereafter give to the Rights Agent
and each holder of a Right Certificate, in accordance with Section 25 hereof,
notice of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights.
Section 25. NOTICES. (a) Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
The Lamson & Sessions Co.
25701 Science Park Drive
Cleveland, Ohio 44122
Attention: Secretary
(b) Subject to the provisions of Section 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the Company or by
the holder of any Right Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
National City Bank
1900 East Ninth Street
5th Floor
National City Center
Cleveland, Ohio 44114
Attention: Corporate Trust Department
(c) Notices or demands authorized by this Agreement to be given or
made by the Company or the Rights Agent to or on the holder of any Right
Certificate shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as
shown on the registry books of the Rights Agent.
Section 26. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution
Date, if the Company so directs, the Company and the Rights Agent shall
supplement or amend any provision of this Agreement in any manner which the
Company may deem desirable without the approval of any holders of Rights or
certificates representing Common Shares. From and after the Distribution Date,
if the Company, upon approval by a majority of the members of the Board of
Directors, so directs, the Company and the Rights Agent shall supplement or
amend
<PAGE> 26
this Agreement without the approval of any holders of Rights or Certificates
representing Common Shares in order (i) to cure any ambiguity, (ii) to correct
or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten or lengthen any
time period hereunder, or (iv) to change or supplement the provisions hereunder
in any manner which the Company, upon such approval, may deem desirable,
including without limitation the addition of other events requiring adjustment
to the Rights under Sections 11 or 13 or procedures relating to the redemption
of the Rights, which change, amendment or supplement shall not adversely affect
the interests of the holders of Rights Certificates (other than an Acquiring
Person or an Affiliate or Associate of any such Person); provided, however,
that this Agreement may not be supplemented or amended pursuant to this
sentence to lengthen, pursuant to clause (iii) of this sentence, any time
period unless such lengthening is specifically contemplated hereby or is for
the purpose of protecting, enhancing or clarifying the rights of, or the
benefits to, the holders of Rights. Upon the delivery of a certificate from an
officer of the Company which states that the proposed supplement or amendment
is in compliance with the terms of this Section 26, the Rights Agent shall
execute such supplement or amendment; provided, however, that the failure or
refusal of the Rights Agent to execute such supplement or amendment shall not
affect the validity or effective date of any supplement or amendment adopted by
the Company. Notwithstanding anything in this Agreement to the contrary, no
supplement or amendment shall be made which decreases the stated Redemption
Price or the period of time remaining until the Final Expiration Date.
Section 27. SUCCESSORS: CERTAIN COVENANTS. All the covenants and
provisions of this Agreement by or for the benefit of the Company or the Rights
Agent shall bind and inure to the benefit of their respective successors and
assigns hereunder.
Section 28. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Rights
Agent and the registered holders of the Right Certificates (and, prior to the
Distribution Date, the Common Shares) any legal or equitable right, remedy or
claim under this Agreement; this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders of the
Right Certificates (or prior to the Distribution Date, the Common Shares).
Section 29. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 30. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the internal
substantive laws of the State of Ohio and for all purposes shall be governed by
and construed in accordance with the internal substantive laws of such State
applicable to contracts to be made and performed entirely within such State.
Section 31. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 32. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
<PAGE> 27
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
THE LAMSON & SESSIONS CO.
[SEAL]
Attest:
By: /s/ Alan L. Miller By: /s/ John B. Schulze
--------------------------- -----------------------------
Alan L. Miller, Secretary John B. Schulze, President
[SEAL]
Attest: NATIONAL CITY BANK
By: /s/ Joseph A. Hirka By: /s/ Lisa B. Brady
--------------------------- -----------------------------
Joseph A. Hirka, Lisa B. Brady,
Vice President Assistant Vice President
<PAGE> 28
Exhibit A
SUBDIVISION B-2
EXPRESS TERMS OF THE CUMULATIVE REDEEMABLE
SERIAL PREFERENCE STOCK, SERIES I:
Section 1 DESIGNATION OF SERIES. Here is established hereby a series
of Serial Preference Stock that shall be designated "Cumulative Redeemable
Serial Preference Stock, Series II" (hereinafter sometimes called this "Series"
or the "Series I: Preference Shares") and that shall have the terms set Forth
in this Subdivision B-2
Section 2 NUMBER OF SHARES. The number of shares of this Series shall
be 200,000
Section 3 DIVIDEND RATE AND PAVEMENT. (a) The holders of record of Series II
Preference Shares shall be entitled to receive, when and as declared by the
Board of Directors in accordance with the terms hereto, subject to the prior
preference with respect to dividends upon the corporation's Serial Preferred
Stock set forth in Section 2 of Subdivision A, out of funds legally available
for the purpose, cumulative quarterly dividends payable in cash on the first
day of January, April, July and October in each year (each such date being
referred to herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a Series I:
Preference Share or fraction Of a Series I: Preference Share in an amount per
share (rounded to the nearest cent) equal to, subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate per share amount of
all cash dividends, and 100 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions, other than a dividend
payable in Common Shares, or a subdivision of the outstanding Common Shares (by
reclassification or otherwise), declared on the Common Shares since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any Series
II Preference Share or fraction of a Series $: Preference Share In the event
the corporation shall at any time declare or pay any dividend on the Common
Shares payable in Common Shares, or effect a subdivision or combination or
consolidation of the outstanding Common Shares (by reclassification or
otherwise than by payment of a dividend in Common Shares) into a greater or
lesser number of Common Shares, then in each such case the amount of the
quarterly dividend which holders of Series II Preference Shares were entitled
immediately prior to such event pursuant to the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of Common Shares outstanding immediately after such event and the
denominator of which is the number of Common Shares that were outstanding
immediately Prior to such event
(b) Dividends shall begin to accrue and be cumulative on outstanding
Series I: Preference Shares from the Quarterly Dividend Payment Date next ~
receding the data of issue of such Series II Preference Shares unless the date
of issue of such shares (i) is on or prior to the record date for the first
Quarterly Dividend Payment Date in which case dividends on such shares shall
begin to accrue from the date of issue of such shares or (ii) is a Quarterly
Dividend Payment Date or a date after the record date for the determination of
holders of Series II Preference Shares entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date in either of which events such
dividends shall begin to accrues and be cumulative from such Quarterly Dividend
Payment Date Accrued but unpaid dividends shall rot bear interest No dividends
shall be paid upon or declared and set apart for any series II Preference
Shares for any dividend period unless at the same time a dividend for the same
dividend period, ratably in proportion to the respective annual dividend rates
fixed therefor
<PAGE> 29
shall be paid upon or declared and set apart for all Serial Preference Stock of
all series then outstanding and entitled to receive such dividend The Board of
Directors may fix a record date for the determination of holders of Series II
Preference Shares entitled to receive payment of a dividend or distribution
declared thereon which record date shall not be more than 40 days prior to the
date fixed for the payment thereof.
Section 4 OPTIONAL REDEMPTION. (a) Subject to the express terms-s of each
series c: Serial Preference Stock and to the provisions of Section 5(c)(3) of
Subdivision B and in accordance Section 3 of Subdivision B the Series I:
Preference Shares shall be redeemable from time to time at the option of the
Board of Directors of the corporation as a whole or in part at any time at a
redemption price per share equal to ore hundred times the then applicable
Purchase Price as defined that certain Rights Agreement dated as of August 22
1988 between the corporation and National City Bank (the "Rights Agreement"),
as the same may be from time to time amended in accordance with its terms which
Purchase Price la 547 00 as of August 22 1988, subject to adjustment from time
to time as provided in the Rights Agreement Copies of the Rights Agreement are
available from the corporation upon request in the event that fewer than all of
the outstanding series II Preference Shares are to be redeemed, the number of
shares to be redeemed shall be as determined by the Board of Directors and
the shares to be redeemed shall be selected pro rata or by lot in such manner
as shall be determined by the Board of Directors
(b) Any Series II Preference Shares purchased or otherwise acquired by
the corporation in any manner whatsoever, including, without limitation, by a
redemption pursuant to Section 4 (a) hereof, shall be retired and canceled
promptly after the acquisition thereof All such shares shall upon their
cancellation become authorized but unissued shares of Serial Preference Stock
and may be reissued as part of a new series of Serial Preference Stock subject
to the conditions and restrictions set forth herein, in the Amended Articles of
Incorporation, or in any other Certificate of Adoption of Amendment creating a
series Of Serial Preferred or Preference Stock or as required by law
Section 5. LIQUIDATION. (a) In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
corporation (hereinafter referred to as a "Liquidation"), and subject to the
prior preference with respect to distributions to holders of Serial Preferred
Stock, no distribution shall be made to the holders of shares of stock ranking
junior (either as to dividends or upon Liquidation) to the Series II Preference
Shares, unless, prior thereto, the holders of Series II Preference Shares shall
have received at least an amount per share (rounded to the nearest cent) equal
to, subject to tie provision for adjustment hereinafter set forth, one hundred
times the aggregate amount to be distributed per share to holders of Common
Shares (the "Series II Liquidation Preference" ), plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not earned
or declared, to the date of such payment
(b) In the event, however, that the net assets of the corporation are
not sufficient to pay in full the amount of the Series II Liquidation
Preference and the liquidation preferences of all other series of Serial
Preference Stock, if any, which rank on a parity with the Series II Preference
Shares as to distribution of assets in Liquidation, all shares of this Series
and of such other series of Serial Preference Stock shall share ratably in the
distribution of assets (or proceeds thereof) in Liquidation in proportion to
the full amounts to which they Are respectively entitled (c) In the event the
corporation shall at any time declare or pay any dividend on the Common Shares
payable in Common Shares, or effect a subdivision or combination or
consolidation of the outstanding Common Shares (by reclassification or
otherwise than by payment of a dividend in Common Shares) into a greater or
lesser number of Common
<PAGE> 30
Shares, then in each such case the amounts to which holders of Series II
Preference Shares were entitled to receive upon a Liquidation immediately prior
to such event pursuant to paragraph (a) above, shall be adjusted by multiplying
such amount by a fraction the numerator of which is the number of Common Shares
outstanding immediately after such event and the denominator of which is the
number of Common Shares that were outstanding immediately prior to such event
(d) The merger or consolidation of the corporation into or with any
other corporation, or the merger of any other corporation into it,
or the sale, lease or conveyance of all or substantially all the
property or business of the corporation, shall not be deemed to be
a Liquidation for the purposes of this Section 5
Section 6 VOTING. The holders of Series II Preference Shares will
have no voting rights except as otherwise provided in Section 5 of Subdivislon
B and as required by law
Section 7 CONVERSION RIGHTS. The Series II Preference Shares shall
not be convertible into common Shares.
Section 8 FRACTIONAL SHARES. The corporation may issue fractions and
certificates representing fractions of a Series II Preference Share in integral
multiples of one one-hundredth of a Series II Preference Share, or in lieu
thereof, at the election of the Board of Directors of the corporation, evidence
such fractions by depository receipts, pursuant to an appropriate agreement
between the corporation and a depository selected by it, provided that such
agreement shall provide that the holders of such depository receipts shall have
all the rights, privileges and preferences of the holders of Series II
Preference Shares In the event that fractional Series II Preference Shares are
issued, the holders thereof shall have all the rights provided herein
Shareholders of full shares of Series II Preference Shares in the proportion
which such fractional share bears to a full share.
<PAGE> 31
Exhibit B
Form of Right Certificate
Certificate No. R-
_____________ Rights
NOT EXERCISABLE AFTER AUGUST 22, 1998 OR EARLIER IF REDEEMED.
THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT 50. O1 PER RIGHT ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SPECIFIED IN THE
RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING
PERSON OR AN AFFILIATE OR AN ASSOCIATE OF AN ACQUIRING PERSON
(AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) MAY BECOME
NULL AND VOID.
Right Certificate
THE LAMSON & SESSIONS CO.
This certifies that , ____________________________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of August 22, 1988, as amended and
restated as of February 14, 1990 (the "Rights Agreement"), between The Lamson &
Sessions Co., an Ohio corporation (the "Company"), and National City Bank (the
"Rights Agent"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior
to 5:00 P.M. (Cleveland, Ohio time) on August 22, 1998 at the principal office
or offices of the Rights Agent designated for such purpose, one one-hundredth
of a fully paid nonassessable share of Cumulative Redeemable Serial Preference
Stock, Series II, without par value (the "Preferred Shares"), of the Company,
at a purchase price of $47 per one one-hundredth of a Preferred Share (the
"Purchase Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase and related Certificate duly executed. If
this Right Certificate shall be exercised in part, the holder shall be entitled
to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised. The number of Rights
evidenced by this Right Certificate (and the number of one one-hundredths of a
Preferred Share which may be purchased upon exercise thereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as of
August 22, 1988, based on the Preferred Shares as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the number
and kind of securities issuable upon the exercise of the Rights evidenced by
this Right Certificate are subject to adjustment upon the happening of certain
events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities of the Rights Agent,
the Company and the holders of the Right Certificates, which limitations of
rights include the temporary suspension of the exercisability of the Rights
under the circumstances
<PAGE> 32
specified in the Rights Agreement. Copies of the Rights Agreement are on file
at the above-mentioned office of the Rights Agent.
Pursuant to the Rights Agreement, from and after the later of the
Distribution Date and the first occurrence of a Flip-in Event (as such term is
defined in the Rights Agreement), (i) any Rights that are or were acquired or
beneficially owned by any Acquiring Person (or any Affiliate or Associate of
such Acquiring Person) shall be void and any holder of such Rights shall
thereafter have no right to exercise such Rights under any provision of the
Rights Agreement, (ii) no Right Certificate shall be issued pursuant to the
Rights Agreement that represents Rights beneficially owned by an Acquiring
Person or any Affiliate or Associate thereof, (iii) no Right Certificate shall
be issued at any time upon the transfer of any Rights to an Acquiring Person or
any Affiliate or Associate thereof or to any nominee of such Acquiring Person
or Affiliate or Associate thereof, and (iv) any Right Certificate delivered to
the Rights Agent for transfer to an Acquiring Person or any Affiliate or
Associate thereof shall be canceled.
This Right Certificate, with or without other Right Certificates, may
be transferred, split up, combined or exchanged for another Right Certificate
or Right Certificates, entitling the holder to purchase a like number of one
one-hundredths of a Preferred Share (or other securities, as the case may be)
as the Right Certificate or Right Certificates surrendered shall have entitled
such holder (or former holder in the case of a transfer) to purchase, upon
presentation and surrender hereof at the principal office of the Rights Agent
designated for such purpose, with the Form of Assignment (if appropriate) and
the related Certificate duly executed.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at a
redemption price of $0.01 per Right. The Rights Agreement may be supplemented
and amended by the Company, as provided therein.
The Company is not required to issue fractions of Preferred Shares
(other than fractions which are integral multiples of one one- hundredth of a
Preferred Share, which may, at the option of the Company, be evidenced by
depository receipts) or other securities issuable upon the exercise of any
Right or Rights evidenced hereby. In lieu of issuing such fractional Preferred
Shares or other securities, the Company may make a cash payment, as provided in
the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of the
Preferred Shares or of any other securities of the Company which may at any
time be issuable upon the exercise of the Right or Rights represented hereby,
nor shall anything contained herein or in the Rights Agreement be construed to
confer upon the holder hereof, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this Right Certificate shall have been exercised in
accordance with the provisions of the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
<PAGE> 33
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _____________________________ 19_
ATTEST: THE LAMSON & SESSIONS CO.
By:
- --------------------------------- ----------------------------------
Secretary Title:
[SEAL]
Countersigned:
NATIONAL CITY BANK
By:
-------------------------------------------------
Authorized Signature
<PAGE> 34
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such holder desires to
transfer the Right Certificate)
FOR VALUE RECEIVED,_____________________________ hereby sells, assigns and
transfers unto_____________________________________________________________
___________________________________________________________________________
(Please Print name and address of transferee)
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint __________________ Attorney,
to transfer the within Right Certificate on the books of the within-named
Company, with full power of substitution.
Dated: __________________, 19___
___________________________
Signature
Signature Guaranteed:
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate
boxes that:
the Rights evidenced by this Right Certificate [ ] are [ ] are not
being sold, assigned, transferred, split up, combined or exchanged by or on
behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate of any such Person (as such terms are defined in the Rights
Agreement);
after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Right Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: __________________, 19___
____________________________
Signature
<PAGE> 35
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to
exercise the Right Certificate)
TO THE LAMSON & SESSIONS CO.:
The undersigned hereby irrevocably elects to exercise Rights
represented by this Right Certificate to purchase the one one-hundredths of a
Preferred Share or other securities issuable upon the exercise of such Rights
and requests that certificates for such securities be issued in the name of:
Please insert social security
or other identifying number:___________________________________________________
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number:___________________________________________________
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
Optional Election to Exercise without Payment of Cash:
With respect to the exercise of ________________ of the Rights
specified above, the undersigned hereby elects to exercise such Rights without
payment of cash and to receive a number of Common Shares or other securities
having a value (as determined pursuant to the Rights Agreement) equal to the
difference between (i) the value of the Common Shares or other securities that
would have been issuable upon the exercise thereof upon payment of the cash
amount as provided in the Rights Agreement, and (ii) the amount of such cash
payment.
Dated: __________________, 19___
_____________________________
Signature
Signature Guaranteed:
<PAGE> 36
CERTIFICATE
-----------
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are t ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person
or an Affiliate or Associate of any such Person (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.
Dated: __________________, 19___
______________________________
Signature
NOTICE
------
Signatures on the foregoing Form of Assignment and Form of Election to
Purchase and in the related Certificates must correspond to the name as written
upon the face of this Right Certificate in every particular, without alteration
or enlargement or any change whatsoever.
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States.
<PAGE> 37
Exhibit C
---------
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
The Board of Directors of The Lamson & Sessions Co. (the "Company") on
August 22, 1988 declared a dividend distribution of one right (a "Right") for
each outstanding Common Share, without par value (the "Common Shares"), of the
Company. The distribution was paid on September 7, 1988 (the "Record Date") to
the shareholders of record as of the close of business on the Record Date. Each
Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Cumulative Redeemable Serial Preference Stock,
Series II, without par value (the "Preferred Shares"), of the Company at a
price of $47 per one one-hundredth of a Preferred Share (the "Purchase Price"),
subject to adjustment. The description and terms of the Rights are set forth in
a Rights Agreement, dated as of August 22, 1988, as amended and restated as of
February 14, 1990 (the "Rights Agreement"), between the Company and National
City Bank, as Rights Agent (the "Rights Agent").
Until the earliest to occur of (i) the close of business on the tenth
calendar day (or such later date as may be specified by the Board of Directors)
following a public announcement that a person or group of affiliated or
associated persons has acquired, or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding Common Shares (an "Acquiring
Person"), (ii) the close of business on the tenth calendar day following the
commencement of a tender offer or exchange offer by a person or group of
affiliated or associated persons, the consummation of which would result in
beneficial ownership by such person or group of 15% or more of the outstanding
Common Shares, or (iii) the close of business on the tenth calendar day
following the first date of public announcement of the first occurrence of a
Flip-in Event or a Flip-over Event (as such terms are hereinafter defined) (the
earliest of such dates being hereinafter called the "Distribution Date"), the
Rights will be evidenced, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share certificates.
The Rights Agreement provides that, until the Distribution Date, the
Rights will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued after the Record Date upon transfer or new
issuance of Common Shares will contain a notation incorporating the Rights
Agreement by reference. Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender for transfer of any certificates for
Common Shares in respect of which Rights have been issued will also constitute
the transfer of the Rights associated with the Common Shares represented by
such certificates. As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights (the "Right Certificates") will be
mailed to holders of record of the Common Shares as of the close of business on
the Distribution Date and such separate Right Certificates alone will evidence
the Rights.
No Right is exercisable at any time prior to the Distribution Date.
The Rights will expire on August 22, 1998 (the "Final Expiration Date") unless
earlier redeemed or exchanged by the Company as described below. Until a Right
is exercised, the holder thereof, as such, will have no rights as a stockholder
of the Company, including without limitation the right to vote or to receive
dividends.
<PAGE> 38
The Purchase Price payable, and the number of Preferred Shares or
other securities issuable upon exercise of the Rights are subject to adjustment
from time to time to prevent dilution (i) in the event of a stock dividend on,
or a subdivision, combination or reclassification of, the Preferred Shares,
(ii) upon the grant to holders of the Preferred Shares of certain rights or
warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then current market price of the Preferred Shares, or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
cash (excluding regular periodic cash dividends), assets, stock (excluding
dividends payable in Preferred Shares) or of subscription rights or warrants
(other than those referred to above).
The number of outstanding Rights and the number of one one-hundredths
of a Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock dividend on the Common Shares payable in
Common Shares or subdivision, combination or reclassification of the Common
Shares occurring, in any such case, prior to the Distribution Date.
In the event (a "Flip-in Event") that (i) any person or group of
affiliated or associated persons becomes the beneficial owner of 15% or more of
the outstanding Common Shares, (ii) any Acquiring Person merges into or
combines with the Company and the Company is the surviving corporation or any
Acquiring Person effects certain other transactions with the Company, as
described in the Rights Agreement, or (iii) during such time as there is an
Acquiring Person, there shall be any reclassification of securities or
recapitalization or reorganization of the Company which has the effect of
increasing by more than 1% the proportionate share of the outstanding shares of
any class of equity securities of the Company or any of its subsidiaries
beneficially owned by the Acquiring Person, proper provision shall be made so
that each holder of a Right, other than Rights that are or were owned
beneficially by the Acquiring Person (which, from and after the later of the
Distribution Date and the date of the earliest of any such events, will be
void), will thereafter have the right to receive, upon exercise thereof at the
then current exercise price of the Right, that number of Common Shares (or,
under certain circumstances, an economically equivalent security or securities
of the Company) having a market value of two times the exercise price of the
Right.
In the event (a "Flip-over Event") that, following the first date of
public announcement that a person has become an Acquiring Person, (i) the
Company merges with or into any person and the Company is not the surviving
corporation, (ii) any person merges with or into the Company and the Company is
the surviving corporation, but its Common Shares are changed or exchanged, or
(iii) 50% or more of the Company's assets or earning power, including without
limitation securities creating obligations of the Company, are sold, proper
provision shall be made so that each holder of a Right will thereafter have the
right to receive, upon the exercise thereof at the then current exercise price
of the Right, that number of shares of common stock (or, under certain
circumstances, an economically equivalent security or securities) of such other
person which at the time of such transaction would have a market value of two
times the exercise price of the Right.
At any time after the later of the Distribution Date and the first
occurrence of a Flip-in Event or a Flip-over Event and prior to the acquisition
by any person or group of affiliated or associated persons of 50% or more of
the outstanding Common Shares, the Board of Directors of the Company may
exchange the Rights (other than any Rights which have become void), in whole or
in part, at an exchange ratio of one Common Share per Right (subject to
adjustment).
<PAGE> 39
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment in the Purchase
Price of at least 1%. The Company is not required to issue fractional Preferred
Shares (other than fractions which are integral multiples of one one-hundredth
of a Preferred Share, which may, at the option of the Company, be evidenced by
depository receipts) or fractional Common Shares or other securities issuable
upon the exercise of Rights. In lieu of issuing such securities, the Company
may make a cash payment, as provided in the Rights Agreement.
The Company may redeem the Rights in whole, but not in part, at a
price of $0.01 per Right (the "Redemption Price"), at any time prior to the
close of business on the later of (i) the Distribution Date and (ii) the first
date of public announcement that a person has become an Acquiring Person.
Immediately upon any redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
The Rights Agreement may be amended by the Company without the
approval of any holders of Right Certificates prior to the Distribution Date in
any manner which the Company may deem desirable. From and after the
Distribution Date, the Company may, upon approval of a majority of the
Directors, amend the Rights Agreement without the approval of any holders of
Right Certificates in any manner which the Company, upon such approval, may
deem desirable and which will not adversely affect the interests of the holders
of the Rights Certificates (other than an Acquiring Person). No amendment may
be made which will decrease the stated Redemption Price or the period of time
remaining until the Final Expiration Date.
A copy of the Rights Agreement has been filed with the Securities and Exchange
Commission as an Exhibit to a Registration Statement on Form 8- A, which
Registration Statement has been amended by a Form 8 amendment. A copy of the
Rights Agreement is available free of charge from the Company. This summary
description of the Rights is as of February 14, 1990, does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is incorporated herein by this reference.
<PAGE> 1
Exhibit 10(b)
EMPLOYMENT AGREEMENT
--------------------
This EMPLOYMENT AGREEMENT ("Agreement"), dated as of August 1, 1988, by and
between The Lamson & Sessions Co., an Ohio corporation (the "Company"). and
John B. Schulze (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;
(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
<PAGE> 2
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 20%
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 l(a)(iii) or l(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 20% 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.
(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, 1993 or (ii) the expiration of the
Period of Employment (as that term is hereafter defined), provided, however,
that (A) commencing on January 1, 1990 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.
<PAGE> 3
2. EMPLOYMENT; PERIOD OF EMPLOYMENT: (a) Subject to the terms
and condition, 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
third 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.
3. COMPENSATION DURING PERIOD OF EMPLOYMENT: (a) Upon the
occurrence s of a Change in 1, 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 three 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 and, provided further that if a Change in Control occurs prior to
January 1, 1989 the Executive shall receive on or before December 31, 1988 and
during the ensuing Period of Employment an annual amount of Incentive Pay equal
to the maximum amount
<PAGE> 4
payable to him pursuant to the Incentive Compensation Plan for the Corporate
Office for the year 1988 assuming a 200% achievement level of the 1988 goals.
(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
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 Chance 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
<PAGE> 5
(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 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
<PAGE> 6
the performance of, or has suffered a substantial reduction in, any of
the authorities, powers, functions, responsibilities or duties
attached to the 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):
(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
<PAGE> 7
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 5(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; provided, however, that
if the Executive's employment is terminated prior to January 1, 1989 in a
manner giving rise to a Severance Payment pursuant to this Section 5, then
the Executive shall receive (A) the Severance Payment calculated as set
forth in this Section 5(a)(i) but without regard to any required reduction
imposed to avoid causing such Severance Payment constitute an Excess
Parachute Payment and (B) such other amounts as shall be required to be
paid by the Company pursuant to Section 11 hereof if such Severance Payment
shall constitute 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 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
<PAGE> 8
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. In addition, the Company
acknowledges that its severance pay plan applicable in general to its salaried
employees does not provide for mitigation, offset or reduction of any severance
payment received thereunder. Accordingly, 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 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
<PAGE> 9
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 or 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 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 the 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.
<PAGE> 10
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 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
<PAGE> 11
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.
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 /s/ Russel B. Every
----------------------------
Russel B. Every
Chairman of the Board and
Chief Executive Officer
/s/ John B. Schulze
----------------------------
John B. Schulze
<PAGE> 1
Exhibit 10(e)
AMENDED AND RESTATED SUPPLEMENTAL RETIREMENT AGREEMENT
------------------------------------------------------
THIS AMENDED AND RESTATED SUPPLEMENTAL RETIREMENT AGREEMENT (this
"Agreement"), is entered into as of the 20th day of March, 1990, by and between
THE LAMSON & SESSIONS CO., an Ohio corporation with its principal offices at
Cleveland, Ohio (the "Company"), and John B. Schulze ("Executive");
WITNESSETH:
-----------
WHEREAS, Executive is presently employed by the Company in a key
executive position and possesses substantial talent, ability and unique
business experience which has been and will continue to be of great value to
the Company; and
WHEREAS, the Company desires to supplement Executive's retirement and
disability benefits commensurate with his experience and value to the Company;
and
WHEREAS, the Company and Executive are parties to a Supplemental
Retirement Agreement dated April 29, 1988 between them (the "Original
Agreement"), and the Company and Executive wish to amend and restate the
Original Agreement;
NOW, THEREFORE, the Company and the Executive hereby agree that the
Original Agreement shall be amended and restated so that, as so amended and
restated, it reads in its entirety as follows (and that the Original Agreement
as in effect prior to this amendment and restatement shall have no further
force or effect);
1. DEFINITIONS. For purposes of this Agreement, the following
terms shall have the following meanings:
1.1 A "Change of Control" shall be deemed to have occurred if
any of the following events shall occur:
(a) 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 hereinafter defined) of the
Company immediately prior to such transaction;
(b) 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;
(c) 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
<PAGE> 2
the Exchange Act) has become the beneficial owner (as the term
"beneficial owner" is defined under Rule 13D-3 of 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");
(d) 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
(e) 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 at
the beginning of any such period.
Notwithstanding the foregoing provisions of Section 1.10(c) or 1.10(d) hereof,
a "Change of 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-E 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.
1.2 "Code" shall mean the Internal Revenue Code of 1986,
as amended, and any successor thereto.
1.3 "Company" shall mean the Company and any of its
divisions and subsidiaries.
1.4 "Eligible" shall mean that Executive shall have
attained age fifty-five (55) and shall have completed five (5) years of
continuous employment with the Company; provided, however, that if a Change of
Control shall have occurred, Executive shall be deemed to be "Eligible" for all
purposes of this Agreement regardless of his age or length of employment with
the Company.
1.5 Termination "For Cause" shall mean a termination, by
the Company, of Executive's employment with the Company because of:
(a) his confession or conviction of theft, embezzlement or any
misdemeanor (except traffic offenses) or felony; or
(b) his dishonesty in connection with his employment by the
Company as determined by the Board of Directors of the
Company; or
<PAGE> 3
(c) his unauthorized disclosure of trade secrets, business secrets
or other confidential information or data of the Company; or
(d) his voluntary failure to devote substantially all of his
working time and attention to the conduct of his employment
with the Company; or
(e) his excessive absenteeism without reasonable cause; or
(f) his alcoholism or addiction to drugs; or
(g) his gross misfeasance or malfeasance in connection with his
employment by the Company; or
(h) his behavior contrary to the best interests of the Company
which causes or may reasonably be expected to cause
significant damage to the reputation and/or business of the
Company; or
(i) any other violation by Executive of his employment
relationship with the Company which shall, as determined by
the Board of Directors of the Company, constitute just cause
for termination of Executive's employment.
1.6 "Normal Retirement Date" shall mean the first day of
the month coincident with or next following Executive's attainment of age
sixty-five (65).
1.7 "Other Plan Benefit" shall mean a benefit payable to
Executive under any defined benefit plan, other than the Retirement Plan,
sponsored by the Company, any of its divisions or subsidiaries, or a prior
employer of Executive ("Other Plan"), calculated as if payable to Executive on
a life annuity basis commencing on the date supplemental benefits commence to
Executive under this Agreement (irrespective of any deferral of the
commencement of payment of such benefits thereunder).
1.8 "Permanent Disability" shall have the meaning
accorded the term "total and permanent disability" by the Retirement Plan.
1.9 "Retirement Plan" shall mean The Lamson & Sessions Co.
Salaried Employees' Retirement Plan, as amended from time to time.
1.10 "Retirement Plan Benefit" shall mean the amount actually
payable to Executive under the Retirement Plan pursuant to the terms thereof,
on a life annuity basis, Commencing on the date supplemental benefits commence
to Executive under this Agreement, or, if the payments to Executive under the
Retirement Plan shall not commence until his Normal Retirement Date and the
supplemental benefits under this Agreement commence prior to his Normal
Retirement Date, "Retirement Plan Benefit" shall mean the amount which would
have been payable under the Retirement Plan had Executive not elected to defer
said commencement date.
2. SUPPLEMENTAL RETIREMENT AND DISABILITY BENEFITS
-----------------------------------------------
2.1 RETIREMENT AT NORMAL RETIREMENT DATE. Upon
Executive's retirement on or after his Normal Retirement Date, and provided he
is Eligible on the date of such retirement, the Company shall pay Executive,
commencing on the date of his retirement, a supplemental
<PAGE> 4
retirement benefit. Such supplemental retirement benefit shall be paid, on
a life annuity basis, in an amount determined pursuant to the following
formula:
(a) The retirement benefit which would have been payable to
Executive, on a life annuity basis, under the Retirement Plan,
without regard, however, to
(i) the limitations on the annual amount of benefits set
forth in Article XV of the Retirement Plan or
(ii) any limitation imposed by Section 401(a) (17) of the
Code on the amount of compensation taken into account
under the Retirement Plan or any Other Plan
if he had completed thirty (30) years of continuous employment
with the Company on or as of the date of his retirement, MINUS
(b) Executive's Retirement Plan Benefit plus any Other Plan
Benefits.
2.2 TERMINATION OF EMPLOYMENT OTHER THAN FOR CAUSE OR AS
A RESULT OF DEATH OR DISABILITY. In the event that Executive's employment with
the Company shall be terminated prior to his Normal Retirement Date other than
For Cause or by reason of his death or Permanent Disability, and provided he is
Eligible on pay Executive, following such the date of such termination, the
Company shall commencing on the first day of the month next termination, a
supplemental retirement benefit. Such supplemental retirement benefit shall be
paid, on a life annuity basis, in an amount determined pursuant to the
following formula:
(a) (i) The retirement benefit which would have been payable
to Executive, on a life annuity basis, under the
Retirement Plan, without regard, however, to
(x) the limitations on the annual amount of
benefits set forth in Article XV of the
Retirement Plan or
(y) any limitation imposed by Section 401(a) (17)
of the Code on the amount of compensation
taken into account under the Retirement Plan
or any Other Plan, if he had completed thirty
(30) years of continuous employment with the
Company on or as of the date of his
termination and his retirement benefits had
commenced as of his termination of
employment, MULTIPLIED BY
(ii) A fraction, the numerator of which shall be the
number of years of the Executive's continuous
employment with the Company until his termination and
the denominator of which shall be the number of years
of continuous employment Executive would have had if
he had remained employed by the Company until his
Normal Retirement Date (provided, however, that if
Executive shall have attained age sixty-two (62) and
is entitled to an unreduced benefit under the
Retirement Plan, the fraction referred to in this
Section 2.2(a) (ii) shall be equal to one (1)); MINUS
(b) Executive's Retirement Plan Benefit plus any Other Plan
Benefits.
2.3 TERMINATION DUE TO DISABILITY.
<PAGE> 5
(a) Pre-Retirement Disability Benefit. In the event that
Executive's employment with the Company shall be terminated by
reason of his Permanent Disability and he shall become
eligible for payments under the Company's Long-Term Disability
Income Plan (the "LTD Plan") by reason of such Permanent
Disability, and provided he is Eligible on the date of
termination, the Company shall pay Executive, commencing on
the date payments under the LTD Plan commence, a supplemental
disability benefit, on a monthly basis, in an amount
determined pursuant to the following formula:
(i) Sixty percent (60%) of the Executive's basic monthly
earnings (as defined in the LTD Plan), MINUS
(ii) other income benefits (as defined in the LTD Plan),
except family Social Security benefits and the
benefits payable to Executive under this Agreement.
Such supplemental disability payments shall continue until the cessation of
disability benefits under the LTD Plan. However, Executive may elect to have
such supplemental disability payments terminate at such earlier time as he may
choose.
(b) POST-RETIREMENT DISABILITY BENEFIT. (i) In the event that
Executive's employment with the Company shall be terminated by
reason of his Permanent Disability and he shall thereafter
become eligible for a disability retirement benefit pursuant
to Section 6.5 of the Retirement Plan, and provided he is
Eligible on the date of termination, the Company shall pay
Executive, commencing upon the later of his Normal Retirement
Date and the date upon which pre-retirement disability
benefits payable under Section 2.3(a) cease, a supplemental
retirement benefit, on a life annuity basis, in an amount
determined pursuant to the formula set forth in Section 2.1 of
this Agreement.
(ii) In the event that Executive's employment with the
Company shall be terminated by reason of his
Permanent Disability, his disability benefit under
the LTD Plan shall cease after he has attained age 55
but before his Normal Retirement Date and he shall
thereupon become eligible for a disability retirement
benefit and elects an early disability retirement
benefit pursuant to Section 6.5 of the Retirement
Plan, and provided he is Eligible on the date of
termination, the Company shall pay Executive,
commencing on the date such retirement benefits
commence, a supplemental retirement benefit, on a
life annuity basis, in an amount determined pursuant
to the formula set forth in Section 2.2.
3. METHODS OF PAYMENT. If on the date benefits under Section 2
commence Executive is not married, such benefits shall be paid in the Life
Annuity Form described in Article VII of the Retirement Plan. If on the date
such benefits commence Executive is married, such benefits shall be paid in the
Spouse's Annuity Form described in Article VII of the Retirement Plan. This
Section 3 shall not be applicable to pre-retirement disability benefits payable
under Section 2.3(a).
4. POST-DEATH BENEFITS.
<PAGE> 6
4.1 DEATH OF EXECUTIVE AFTER COMMENCEMENT OF SUPPLEMENTAL
RETIREMENT BENEFITS. In the event of the death of Executive on or after the
date benefits under Section 2 (not including pre-retirement disability benefits
payable under Section 2.3(a)) commence, the Company shall pay to Executive's
beneficiary or beneficiaries the death benefit (including Spouse's Annuity), if
any, provided under the form of payment pursuant to which Executive was
receiving benefits pursuant to Section 3, commencing on the first day of the
month following the month in which Executive dies.
4.2 DEATH OF MARRIED EXECUTIVE PRIOR TO RETIREMENT. In
the event of the death of Executive while he is in the employment of the
Company or a division or subsidiary thereof, after attainment of age 55, while
he is married, and prior to his retirement, the Company shall pay to
Executive's surviving spouse, commencing on the first day of the month
following the month in which Executive dies, a supplemental spouse's benefit,
on a life annuity basis, in an amount determined and calculated as follows:
(a) (i) The death benefit (including Spouse's Annuity) which
would have been payable under Section 9.2 of the
Retirement Plan, without regard, however, to
(i) the limitations on the annual amount of
benefits set forth in Article XV of the
Retirement Plan or
(ii) any limitation imposed by Section 401(a) (17)
of the Code on the amount of compensation
taken into account under the Retirement Plan
or any Other Plan
if he had completed thirty (30) years of continuous
employment with the Company and had retired on or as
of the date of his death, multiplied by
(ii) A fraction, the numerator of which shall be the
number of years of the Executive's continuous
employment with the Company until his date of death
and the denominator of which shall be the number of
years of continuous employment Executive would have
had if he had remained employed by the Company until
his Normal Retirement Date (provided, however, that
if Executive shall have attained age sixty-two (62)
And would be entitled to an unreduced benefit under
the Retirement Plan, the fraction referred to in this
Section 4.2(a) (ii) shall be equal to one (1)); MINUS
(b) The death benefit actually payable under Section 9.2 of the
Retirement Plan plus any Other Plan Benefits payable to the
surviving spouse.
5. FORFEITURE OF BENEFITS.
5.1 TERMINATION FOR CAUSE. In the event that the Company
shall at any time terminate Executive's employment For Cause, it is hereby
agreed that the Company shall have no obligation under this Agreement of any
nature whatsoever and that Executive's rights and the rights of his beneficiary
or beneficiaries hereunder shall be completely and totally forfeited.
5.2 TERMINATION OF EMPLOYMENT PRIOR TO EXECUTIVE BECOMING
ELIGIBLE. In the event that Executive's employment with the Company shall be
terminated for any reason prior
<PAGE> 7
to Executive's becoming Eligible, it is hereby agreed that the Company shall
have no obligation under this Agreement of any nature whatsoever and that
Executive's rights and the rights of his beneficiary or beneficiaries hereunder
shall be completely and totally forfeited.
5.3 VIOLATION OF NONCOMPETITION CLAUSE. In the event
that Executive shall engage in conduct which constitutes a violation of Section
6 of this Agreement, the Company shall be free from any obligation to make any
payments provided for under this Agreement to Executive or to Executive's
beneficiaries, and any and all such payments shall cease.
6. LIMITATIONS AND RESTRICTIONS ON COMPETITION. During a period
ending on the date of the first to occur of either the attainment by Executive
of age 65 or one (1) year following termination of Executive's employment with
the Company for any reason, Executive shall not, without the prior written
consent of the Company, engage in any Competitive Activity. For purposes of
this Agreement, "Competitive Activity" shall mean 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 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.
7. MISCELLANEOUS PROVISIONS.
7.1 ASSIGNMENT This Agreement shall be binding upon and
shall inure to the benefit of the Company and its successors and assigns. No
right or interest under this Agreement of Executive (or any person claiming
through or under Executive) other than the surviving spouse of Executive after
he is deceased shall be assignable or transferable in any manner or be subject
to alienation, anticipation, sale, pledge, encumbrance or other legal process
or in any manner be liable for or subject to the debts or liabilities of
Executive. If Executive or any such person (other than the surviving spouse of
Executive after he is deceased) shall attempt to or shall transfer, assign,
alienate, anticipate, sell, pledge or otherwise encumber his benefits hereunder
or any part thereof, or if by reason of his bankruptcy or other event happening
at any time such benefits would devolve upon anyone else or would not be
enjoyed by him, then the Company, in its discretion, may terminate his interest
in any such benefit to the extent the Company considers necessary or advisable
to prevent or limit the effects of such occurrence. Termination shall be
effected by filing a written "termination declaration" with the Company's
records and making reasonable efforts to deliver a copy to Executive or his
legal representative.
As long as Executive is alive, any benefits affected by the
termination shall be retained by the Company and, in the Company's sole and
absolute judgment, may be paid to or expended for the benefit of Executive, his
spouse, his children or any other person or persons in fact dependent upon him
in such a manner as the Company shall deem proper. Upon the death of Executive,
all benefits withheld from him and not paid to others in accordance with the
preceding sentence shall be disposed of according to the provisions of this
Agreement and the Retirement Plan that would apply if he died prior to the time
that all benefits to which he was entitled were paid to him; provided, however,
that if such provisions provide for distribution to Executive's estate or to
his creditors and if Executive shall have descendants, including
<PAGE> 8
adopted children, then living, distribution shall be made to Executive's then
living descendants, including adopted children, PER STIRPES.
7.2 INTERPRETATION. All questions of interpretation,
construction or application arising under this Agreement shall be decided by
the Board of Directors of the Company, whose decision shall be final and
conclusive upon all persons.
7.3 DETERMINATION OF OTHER PLAN BENEFITS. To facilitate
the determination of Executive's Other Plan Benefits, Executive shall, upon
request by the Company, authorize all prior employers to release to the Company
a record of his plan benefits and provide the Company by April 15 of each year
with a copy of his W-2, W-2P and 1099 forms for the preceding year. If
Executive revokes the authorization to prior employers or fails to submit the
required information to the Company by April 15 of each year, the Company may
suspend payments under this Agreement until such time as the authorization to
prior employers has been reinstated and the required information has been
provided. Any information received from a prior employer regarding benefits
payable to Executive from said employer may be relied upon by the Company and
shall be conclusively presumed to be accurate.
7.4 SAVINGS CLAUSE. In the event that any provision or
term of this Agreement is finally determined by any judicial, quasijudicial or
administrative body to be void or not enforceable for any reason, it is the
intent of the parties hereto that all other provisions and terms of this
Agreement shall remain in full force and effect and that this Agreement shall
be enforceable as if such void or non-enforceable provision or term had never
been a part hereof.
7.5 GOVERNING LAW. This Agreement is executed in and
shall be construed in accordance with and governed by the laws of the State of
Ohio without giving effect to any provision of such laws regarding choice of
laws or conflict of laws.
7.6 NO RIGHTS IN ANY PROPERTY OF COMPANY. The
undertakings of the Company herein constitute merely the unsecured promise of
the Company to make the payments as provided for herein; no property of the
Company is or shall, by reason of this Agreement, be held in trust for
Executive, any beneficiary or any other person; and neither Executive nor any
beneficiary nor any other person shall have by reason of this Agreement any
right, title or interest of any kind in or to any property of the Company;
provided, however, that the Company may transfer assets to the trustee under
the Trust Agreement dated as of March 20, 1990 and between the Company and
National City Bank, as Trustee, and the Trust Agreement for Attorneys' Fees
dated as of March 20, 1990 by and between the Company and National City Bank,
as Trustee, to satisfy its obligations hereunder. It is intended that (i) this
Agreement shall be "unfunded" for purposes of Title I of the Employee
Retirement Income Security Act of 1974, as amended, (ii) nothing in this
Agreement shall currently constitute a transfer of property for purposes of
Section 83 of the Code, or any successor provision thereto, or shall cause a
currently taxable benefit to be realized by Executive or his beneficiaries
pursuant to the "economic benefit" doctrine and (iii) pursuant to Section 451
of the Code, or any successor provision thereto, amounts payable pursuant to
this Agreement will be includable in the gross income of Executive or his
beneficiaries in the taxable year or years in which such amounts are actually
distributable or made available to Executive or his beneficiaries.
7.7 EMPLOYMENT OF EXECUTIVE BY COMPANY. Nothing herein
shall be construed as an offer or commitment by the Company to continue
Executive's employment with the Company for any period of time.
<PAGE> 9
7.8 TERMINATION BY COMPANY. The Company may terminate
this Agreement at any time; provided, however, that no such termination shall
adversely affect the rights or benefits accrued by Executive (whether or not
vested) under this Agreement prior to his receipt of notice of such
termination.
7.9 TAX PAYMENT. Notwithstanding any other provision of
this Agreement, unless such action would be expressly prohibited by applicable
law, if any amount paid or payable pursuant to this Agreement is subject to the
excise tax imposed by Section 4999 of the Code. the Company will pay to
Executive an additional amount in cash equal to the amount necessary to cause
the aggregate payments received by Executive and his beneficiaries under this
Agreement, 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 payments
Executive and his beneficiaries would have received under this Agreement,
excluding such additional payment (net of all federal, state and local income
taxes), as if Sections 280G ad 4999 of the Code (and any successor provisions
thereto) had not been enacted into law.
7.10 NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when received. All such communications shall be addressed as
follows:
If to the Company, to:
The Lamson & Sessions Co.
25701 Science Park Drive
Cleveland, Ohio 44122
Attention: Secretary
If to Executive, to:
John B. Schulze
2335 Delamere Drive
Cleveland Heights, Ohio 44106
provided, however, that if any party or his or its successors shall have
designated a different address by written notice to the other party, then to
the last address so designated.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
as of the day and year first above written.
THE LAMSON & SESSIONS CO.
By /s/ Allen Zambie
----------------------------
Vice President-Secretary
& General Counsel
/s/ John B. Schulze
----------------------------
John B. Schulze
<PAGE> 1
Exhibit 10(f)
THE LAMSON & SESSION CO.
DEFERRED COMPENSATION PLAN
FOR NONEMPLOYER DIRECTORS
(effective January 1, 1991 )
ARTICLE I
Purpose of the Plan
The purpose of The Lamson & Sessions Co. Deferred Compensation Plan
for Nonemployee Directors is to provide any Director of the Company with the
option to defer receipt of the compensation payable to him or her for services
as a Director and to help build loyalty to the Company through increased
investment in Company stock.
ARTICLE II
Definitions
As used herein, the following words shall have the meanings stated
after them unless otherwise specifically provided:
2.1. "Committee" shall mean the Administration Committee described in
Section 7.1 hereof.
2.2. "Company" shall mean The Lamson & Sessions Co.
2.3. "Director" shall mean any nonemployee director of the Company.
2.4. "Trust Agreement" shall mean the Trust Agreement dated as of
February 28, 1991 entered into between the Company and the Trustee in
connection with the Plan.
2.5. "Trustee" shall mean National City Bank, any corporate successor
to a majority of its trust business, or any successor Trustee hereunder.
ARTICLE III
Elections By Directors
3.1. Election to Defer. No later than June 30 of any year, a Director
may elect to defer payment of the compensation payable to him or her for future
services as a Director commencing January 1 of the following year. If a
Director becomes a Director after the beginning of any calendar year, the
Director may elect to defer payment of the compensation payable to him or her
for future services as a Director. Such election must be made within thirty
days after he or she becomes a Director and shall be made on an election form
specified by the Committee ("Election Forms'). Once an election becomes
effective pursuant to this Article, the election shall be irrevocable and
remain in effect until the electing Director is no longer a director of the
Company.
<PAGE> 2
3.2. EFFECTIVENESS OF ELECTIONS. Elections shall be effective six
months after the delivery of an Election Form to the Committee except for
elections made prior to the effective date of this Plan, which SHALL BE
EFFECTIVE as of January 1, 1991. Subject to the provisions of Article V,
amounts deferred pursuant to such elections shall be distributed at the time
and in the manner set forth in such election.
3.3. AMENDMENT AND TERMINATION OF ELECTIONS. A Director may terminate
or amend his or her election to defer payments of compensation in a written
notice delivered to the Committee. Either a termination or amendment shall be
permitted only one time after the initial election becomes effective and shall
apply to all compensation payable for services as a Director after the end of
the year that such amendment or termination was made. Amendments which serve
only to change the beneficiary designation shall be permitted at any time and
as often as necessary. Amounts credited to a Director s account pursuant to
Section 4.2 hereof prior to the effective date of any termination or amendment
shall not be affected thereby and shall be paid at the time and in the manner
specified in the election form in effect when the deferral occurred
ARTICLE IV
Accounts and Investments
4.1. CONTRIBUTIONS. The Company shall transfer an amount equal to one
hundred percent ( 100% ) of the compensation deferred pursuant to this Plan to
the Trustee if the Director elects to have such compensation invested in a
money market fund. In the event that a Director elects to have his or her
compensation invested in Company stock then the Company shall transfer an
amount equal to one hundred twenty five percent ( 125%) of such compensation to
the Trustee. Such transfer shall be made within thirty days after such deferred
amounts would otherwise have been paid to the Director.
4.2. ESTABLISHMENT OF ACCOUNTS The Trustee shall establish a separate
"Deferred Compensation Account" for any Director who defers compensation
pursuant to the Plan. Amounts deferred by each Director shall be paid in cash
to the Trustee by the Company and credited to such Director s Deferred
Compensation Account.
4.3. ADJUSTMENT OF ACCOUNTS. As of December 31 of each year and on
such other dates as the Committee directs, the fair market value of the assets
of the Trust allocated to all Deferred Compensation Accounts (the "Trust Fund")
shall be determined by the Trustee.
4.4. INVESTMENT OF ASSETS. The assets of the Trust Fund shall be held
by the Trustee in the name of the Trust. As amounts are received by the
Trustee, it shall invest the funds pursuant to the Trust Agreement.
4.5. ASSETS HELD IN CASH. The Trustee may, in its sole discretion,
maintain in cash such amounts as it deems necessary. Amounts maintained in cash
by the Trustee shall be kept to a minimum consistent with the duties and
obligations of the Trustee as set forth in the Trust Agreement and shall not be
required to be invested at interest.
<PAGE> 3
ARTICLE V
Payment I It Accounts
5.1. TIME OF PAYMENT. Distribution of a Director's account shall
commence upon the earlier of: (i) within thirty days after the date the
Director attains either age fifty-five, age sixty, age sixty-five, or age
seventy, as specified by the Director on the Election Form, or (ii) within
thirty days after the Director's termination as a Director due to resignation,
retirement, death or otherwise.
5.2. METHOD OF DISTRIBUTION. Each deferred Compensation Account shall
be distributed to the Director either in a lump sum or in equal annual
installments over a period of not more than ten years as specified in each
Director's Election Form. Deferred Compensation Accounts shall be distributed
in kind
5.3. HARDSHIP DISTRIBUTIONS. Prior to the time a Director's account
becomes payable, the Committee, in its sole discretion, may elect to distribute
all or a portion of a Director's account in the event such Director requests a
distribution on account of severe financial hardship. For purposes of this
Plan, severe financial hardship shall be deemed to exist in the event the
committee determines that a Director needs a distribution to meet immediate and
heavy financial needs resulting from a sudden or unexpected illness or accident
of the Director or a member of his or her family, loss of the Director's
property due to casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the Director.
A distribution based on financial hardship shall not exceed the amount required
to meet the immediate financial need created by the hardship.
5.4. DESIGNATION OF BENEFICIARY. Upon the death of a Director, his or
her account shall be paid to the beneficiary or beneficiaries designated by him
or her. If there is no designated beneficiary, or no designated beneficiary
surviving at a Director's death, payment of a Director's account shall be made
to his or her estate. Beneficiary designations shall be made in writing. A
Director may designate a new beneficiary or beneficiaries at any time by
notifying the Committee.
5.5. TAXES. In the event any taxes are required by law to be withheld
or paid from any payments made pursuant to the Plan, the Trustee shall deduct
such amounts from such payments and shall transmit the withheld amounts to the
appropriate taxing authority.
ARTICLE VI
Creditors and Insolvency
6.1. CLAIMS OF THE COMPANY'S CREDITORS. All assets held in trust
pursuant to the provisions of this Plan, and any payment to be made by the
Trustee pursuant to the terms and conditions of the Trust, shall be subject to
the claims of general creditors of the Company, including judgment creditors
and bankruptcy creditors. The rights of a Director or his or her beneficiaries
to any assets of the Trust Fund shall be no greater than the rights of an
unsecured creditor of the Company.
<PAGE> 4
6.2. NOTIFICATION OF INSOLVENCY. In the event the Company becomes
insolvent, the Board of Directors of the Company and the chief executive
officer of the Company shall immediately notify the Trustee of that fact. The
Trustee shall not make any payments from the Trust Fund to any Director or any
beneficiary under the Plan after such notification is received or at any time
after the Trustee has knowledge of such insolvency. Under any such
circumstance, the Trustee shall deliver any property held in the Trust Fund
only as a court of competent jurisdiction may direct to satisfy the claims of
the Company's creditors. For purposes of this Plan, the Company shall be deemed
to be insolvent if the Company is subject to a pending voluntary or involuntary
proceeding as a debtor under the United States Bankruptcy Code, as amended, or
is unable to pay its debts as they mature.
ARTICLE VII
Administration
7.1. APPOINTMENT OF COMMITTEE. The Board of Directors of the Company
shall appoint an Administrative Committee consisting of not less than three
persons to administer the Plan. Members of the Committee shall hold office at
the pleasure of the Board of Directors and may be dismissed at any time with or
without cause. Such persons serving on the Committee need not be members of the
Board of Directors of the Company.
7.2. POWERS OF THE COMMITTEE. The Committee shall administer the Plan
and resolve all questions of interpretation arising under the Plan with the
help of legal counsel, if necessary. Whenever directions, designations,
applications, requests or other notices are to be given by a Director under the
Plan, they shall be filed with the Committee. The Committee shall have no
discretion with respect to Plan contributions or distributions but shall act in
an administrative capacity only.
ARTICLE VIII
Miscellaneous
8.1. TERM OF PLAN. The Company reserves the right to amend or
terminate the Plan at any time; provided, however, that no amendment or
termination shall affect the rights of Directors to amounts previously credited
to their accounts pursuant to Section 4.2. The Trust shall remain in effect
until such time as the entire corpus of the Trust Fund has been distributed
pursuant to the terms of the Plan.
8.2. ASSIGNMENT. No right or interest of any Director (or any person
claiming through or under such Director) other than the surviving spouse of
such Director after he or she is deceased in any benefit or payment herefrom
shall be assignable or transferable in any manner or be subject to alienation,
anticipation, sale, pledge, encumbrance or other legal process or in any manner
be liable for or subject to the debts or liabilities of such Director. If any
Director or any such person (other than the surviving spouse of such Director
after he or she is deceased) shall attempt to or shall transfer, assign,
alienate, anticipate, sell, pledge or otherwise encumber his or her benefits
hereunder or any part thereof, or if by reason of his or her bankruptcy or
other event happening at any time such benefits would devolve upon anyone else
or would not be enjoyed by him or her, then the Committee, in its discretion,
may terminate his or her interest in any such benefit to the extent the
Committee considers necessary or advisable to prevent or limit the effects of
such occurrence. Termination shall be effected by filing a written "termination
declaration" with the Committee records and making reasonable efforts to
deliver a copy to such Director or his or her legal representative.
<PAGE> 5
As long as any Director is alive, any benefits affected by the
termination shall be retained by the Trust and, in the Committee's sole and
absolute judgment, may be paid to or expended for the benefit of such Director,
his or her spouse, his or her children or any other person or persons in fact
dependent upon him or her in such a manner as the Committee shall deem proper.
Upon the death of any Director, all benefits withheld from him or her and not
paid to others in accordance with the preceding sentence shall be distributed
to such Director's estate or to his or her creditors and if such Director shall
have descendants, including adopted children, then living, distribution shall
be made to such Director's then living descendants, including adopted children,
per stirpes.
In addition, a Director or beneficiary shall have no rights against or
security interest in the assets of the Trust Fund and shall have only the
Company's unsecured promise to pay benefits. All assets of the Trust Fund shall
remain subject to the claims of the Company's general creditors.
8.3. TAXES. This Plan is intended to be treated as an unfunded
deferred compensation plan under the Internal Revenue Code. It is the intention
of the Company that the amounts deferred pursuant to this Plan shall not be
included in the gross income of the Directors or their beneficiaries until such
time as the deferred amounts are distributed from the Plan. If, at any time, it
is determined that amounts deferred pursuant to the Plan are currently taxable
to the Directors or their beneficiaries, the Trust shall terminate and any
amounts held in the Trust Fund shall be distributed immediately to the
Directors or their beneficiaries.
8.4. EFFECTIVE DATE OF PLAN. The Plan shall be effective as of January
1, 1991 subject to approval by the shareholders of the Company. Any
contributions made prior to such shareholder approval shall be contingent on
such approval.
<PAGE> 1
Exhibit 10(t)
AMENDMENT NO. 1
Dated as of October 30, 1995
THIS AMENDMENT NO. 1 ( "Amendment ) is entered into as of October 30 ,
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 and restated
as of July 14, 1995 (as amended 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 as amended by this Amendment.
B. The Borrower has determined that it would be advantageous to
transfer the Valley-Todeco assets to a newly created, wholly-owned subsidiary
of the Borrower.
C. The Lender and the Agent have agreed to such transfer, subject
to the terms hereof, and the Borrower, the Lender and the Agent accordingly
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. AMENDMENT TO THE LOAN AGREEMENT. Subject to the
satisfaction of the conditions precedent set forth in Section 7 below, the Loan
Agreement is hereby amended as follows;
1.01. SECTION 1.1 of the Loan Agreement is amended by amending and
restating the definition of ''Valley-Todeco" as follows:
"VALLEY-TODECO" shall mean Valley-Todeco, Inc., a Delaware corporation
and a wholly-owned subsidiary of the Borrower.
1.02. SECTION 1.1 of the Loan Agreement is further amended by adding
the following definitions, to be inserted in SECTION 1.1 in alphabetical order:
"Valley-Todeco Guaranty" shall mean that certain Guaranty and Security
Agreement dated October 30, 1995 executed by Valley-Todeco in favor of the
Agent, guarantying the Obligations and granting to the Agent a security
interest in all of Valley-Todeco's personal property.
"Valley-Todeco Loan Agreement shall mean that certain Loan Agreement
dated as of October 30, 1995 between Borrower, as lender, and
Valley-Todeco, as borrower, establishing a loan facility in an amount not
to exceed $4,000,000.
<PAGE> 2
"Valley-Todeco Loan Agreement Assignment" shall mean that certain
Assignment dated as of October 30, 1955, executed by Borrower and
acknowledged by Valley Todeco, assigning to the Agent, for the benefit of
the Lenders, all of Borrower's rights under the Valley-Todeco Loan
Agreement.
"Valley-Todeco Mortgage" shall mean that certain deed of trust
executed by Valley-Todeco in favor of the Agent, covering the real estate
owned by Valley-Todeco.
"Valley-Todeco Pledge Agreement" shall mean that certain Pledge
Agreement dated October 30, 1995 executed by Borrower in favor of the
Agent, pledging to the Agent all of the stock of Valley-Todeco.
1.03. SECTION 1.1 of the Loan Agreement is further amended by adding
the following after "the Letter of Credit Agreement," in the definition of
"Loan Documents":
"the Valley-Todeco Loan Agreement, the Valley-Todeco Loan Agreement
Assignment, the Valley-Todeco Guaranty and Security Agreement, the
Valley-Todeco Mortgage, the Valley-Todeco Pledge Agreement,"
1.04. SECTION 8.1 of the Loan Agreement is amended by adding "(other
than Valley-Todeco)" after the words "FORM ANY SUBSIDIARY" APPEARING IN SUCH
SECTION.
1.05. SECTION 8.2(h) of the Loan Agreement is amended by striking
"and "l prior to clause (iii) thereof, and adding the following immediately
preceding the period at the end of Section 8.2:
"; and (iv) loans to Valley-Todeco pursuant to the Valley-Todeco Loan
Agreement, in an amount not to exceed $4,000,000 at any time
outstanding, provided that any such loans are assigned to the Agent
pursuant to the Valley-Todeco Loan Agreement Assignment"
1.06. SECTION 8.03(A) of the Loan Agreement is amended by striking
"and "prior to clause (viii) thereof and adding the following immediately
preceding the period at the end of SECTION 8.3:
"; and (ix) Indebtedness of Valley-Todeco to the Borrower under the
Valley-Todeco Loan Agreement"
1.07. SECTION 8.10 of the Loan Agreement is amended by deleting the
second paragraph thereof and substituting the following therefor:
"Notwithstanding the foregoing, and without being subject to the
limitations on the dispositions of assets set forth in the preceding paragraph,
Borrower shall be permitted to contribute the assets of its Valley-Todeco
division to valley-Todeco, and to sell all of the stock of Valley-Todeco for a
commercially reasonable price, as determined by the Board of Directors of
Borrower, provided that a portion of such price in an amount not less than
$900,000 less than the book value of Valley-Todeco be in cash, 90% of such cash
purchase price to be paid at the closing of such sale. The proceeds of any such
sale shall be used by Borrower as prescribed in SECTION 2.3C."
<PAGE> 3
SECTION 2. CONDITIONS PRECEDENT. This Amendment shall become
effective upon the first Business Day upon which all of the following
conditions shall be satisfied:
(i) the Agent shall have received four (4) copies of this Amendment
duly executed by the Borrower, the Lender and the Agent;
(ii) the Agent shall have received 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) the Borrower and Valley-Todeco shall have executed and delivered
the Valley-Todeco Loan Agreement and the Valley-Todeco loan Agreement
Assignment and delivered executed copies thereof to the Agent;
(iv) Valley-Todeco shall have executed and delivered to the Agent, in
form and substance satisfactory to the Agent, the valley-Todeco Guaranty and
Security Agreement
(v) Valley-Todeco shall have executed and delivered to the Agent such
UCC-1 financing statements as the Agent may request in order to perfect the
security Interests granted by the security agreement described in clause (iv)
above;
(vi) Valley-Todeco shall have executed and delivered to the Agent, in
form and substance satisfactory to the Agent, the Valley-Todeco Mortgage; and
(vii) The Borrower shall have executed and delivered to the Agent, in
form and substance satisfactory to the Agent, the valley-Todeco Pledge
Agreement, together with stock certificates representing all issued and
outstanding stock of Valley-Todeco and signed but undated stock powers endorsed
in blank covering such certificates.
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
remade 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.
<PAGE> 4
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 DECISION 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 a11 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 hare 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/ John B. Schulze
---------------------------
Name: John B. Schulze
Title: President
GENERAL ELECTRIC CAPITAL CORPORATION,
as the Agent and as the sole Lender
By: /s/s Shaun Pettit
---------------------------
Name: Shaun Pettit
Title: Sr. Vice President
<PAGE> 1
Exhibit 10(u)
AMENDMENT NO. 2 AND CONSENT
Dated as of November 8, 1995
THIS AMENDMENT NO. 2 AND CONSENT ("Amendment") is entered into as of
November 8, 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 and restated
as of July 14, 1995 (as the same has been and 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 all of the issued and
outstanding capital stock of Valley-Todeco (the "Valley-Todeco Sale") to
McKechnie Investments, Inc., a Delaware corporation ("Buyer") pursuant to the
terms of that certain Agreement of Purchase and Sale of Stock dated November 7,
1995 between the Borrower and the Buyer (the "Purchase Agreement").
C. The Borrower has requested that the Agent and the Lender
consent to the Valley-Todeco Sale, 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:
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 Valley-Todeco
Sale pursuant to the terms of the Purchase Agreement. The Agent and the Lender
waive any noncompliance with Sections 7.1 of the Loan Agreement which would
exist as a result of the Valley-Todeco Sale or the execution of the Purchase
Agreement.
SECTION 2. AMENDMENTS TO THE LOAN AGREEMENT;
APPLICATION OF PROCEEDS FROM PURCHASE AGREEMENT.
(a) Effective as of the "Closing" under and as defined in the
Purchase Agreement, subject to the satisfaction of the conditions precedent set
forth in SECTION 3 below, the Loan Agreement is amended as follows:
(1) SECTION 1.1 of the Loan Agreement is amended by deleting the
definitions of "Valley-Todeco", Valley-Todeco Guaranty", "Valley-Todeco
Loan Agreement", Valley-
<PAGE> 2
Todeco Loan Agreement Assignment", Valley-Todeco Mortgage", and
Valley-Todeco Pledge Agreement" in their entirety.
(2) SECTION 1.1 of the Loan Agreement is further amended by
deleting the following from the definition of "Loan Agreement":
"the Valley-Todeco Loan Agreement, the Valley-Todeco Loan
Agreement Assignment, the Valley-Todeco Guaranty and Security
Agreement, the Valley Todeco, Mortgage, the Valley-Todeco Pledge
Agreement"
(3) Section 7.3(a) of the Loan Agreement is deleted in its entirety,
and the following is substituted therefor:
"This Section intentionally left blank."
(4) Section 8.1 of the Loan Agreement is amended by deleting
"(other than Valley-Todeco)".
(5) Section 8.2(h) of the Loan Agreement is amended by adding
"and" immediately prior to clause (iii) thereof, deleting "; and" at the
end of the clause (iii) and substituting a period therefor, and by deleting
clause (iv) in its entirety.
(6) Section 8.3(a) of the Loan Agreement is amended by adding
"and" immediately prior to clause (viii) thereof, deleting "; and" at the
end of clause (viii) and substituting a period therefor, and by deleting
clause (ix) in its entirety.
(7) Section 8.10 of the Loan Agreement is amended by deleting the
second paragraph thereof in its entirety.
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
Purchase Agreement, executed by the Borrower and acknowledged by the Buyer;
(b) All mortgage releases and UCC financing statement terminations
partial releases which the Agent or the Lender have been required to execute
pursuant to the Purchase Agreement shall be in form and substance satisfactory
to the Agent and the Lender;
(c) 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;
<PAGE> 3
(d) The Agent shall have received the amount of the Purchase Price
payable on the Closing Date for application in accordance with SECTION 2.3(C)
of the Agreement, and the Purchase Price shall satisfy the condition of the
second paragraph of SECTION 8.10 of the Loan Agreement (as in effect
immediately prior to this Amendment); and
(e) the Valley-Todeco Loan Agreement shall have been terminated;.
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 Purchase 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 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.
<PAGE> 4
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: /s/ James J. Abel
---------------------------------
Title: Executive Vice President
GENERAL ELECTRIC CAPITAL CORPORATION, as
the Agent and as the sole Lender
By:
---------------------------------
Title:
<PAGE> 5
EXHIBIT A
to
Amendment
Form of Reaffirmation of Guaranty and Security Agreement
--------------------------------------------------------
(Attached.)
<PAGE> 6
REAFFIRMATION OF GUARANTY AND SECURITY AGREEMENT
The undersigned hereby (i) acknowledges receipt of that certain
Amendment No. 2 and Consent of even date herewith (the "Amendment") to the Loan
Agreement dated as of February 13, 1992, as amended and restated as of July 14,
1995 (as such Loan Agreement has been and 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: November 8, 1995
THE CARLON CHIMES CO.
By: /s/ James J. Abel
--------------------------
Title: Treasurer
<PAGE> 1
The Lamson & Sessions Co. and Subsidiaries
EXHIBIT (11) - COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
-----------------------------------------------------------
1995 1994 1993
-------------- ------------- --------------
<S> <C> <C> <C>
PRIMARY:
Average common shares outstanding 13,288,120 13,239,255 13,210,042
Average common share equivalents:
Stock options and warrants - based on
treasury stock method using average
market price 115,794 143,376 46,997
-------------- ------------- --------------
TOTALS: 13,403,915 13,382,631 13,257,039
FULLY DILUTED
Average common shares outstanding 13,288,120 13,239,255 13,210,042
Average common share equivalents:
Stock options and warrants - based on
treasury stock method 125,721 153,203 46,997
-------------- ------------- --------------
TOTALS: 13,413,841 13,392,458 13,257,039
Net Earnings (Loss) from continuing operations $ 12,074,000 $ 4,256,000 $ (3,117,000)
Discontinued Operations (9,930,000) (2,674,000)
-------------- ------------- --------------
Net Earnings (Loss) $ 12,074,000 $ (5,674,000) $ (5,791,000)
============== ============= ==============
Earnings (Loss) per common share and
common share equivalent
Primary
Earnings (Loss) from continuing operations $ .90 $ .32 $ (.24)
Discontinued Operation (.74) (.20)
-------------- ------------- --------------
Net Earnings (Loss) $ .90 $ (.42) $ (.44)
============== ============= ==============
Fully Diluted
Earnings (Loss) from continuing operations $ .90 $ .32 $ (.24)
Discontinued operations (.74) (.20)
-------------- ------------- --------------
Net Earnings (Loss) $ .90 $ (.42) $ (.44)
============== ============= ==============
</TABLE>
<PAGE> 1
EXHIBIT (21) - SUBSIDIARIES
At December 30, 1995, 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
Lamson and Sessions Ltd. Ontario, Canada 100
LMS Asia Limited Hong Kong 100
</TABLE>
<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, Form S-8 No. 2-67874, and Form S-8 No.
33-62443) pertaining to the 1988 Incentive Equity Performance Plan, the 1978
Nonqualified Incentive Stock Option Plan, and the Non-Employee Directors Stock
Option Plan, respectively, of our report dated January 18, 1996, with respect
to the consolidated financial statements and schedule of The Lamson & Sessions
Co. included in the Annual Report (Form 10-K) for the year ended December 30,
1995.
ERNST & YOUNG LLP
Cleveland, Ohio
March 11, 1996
<PAGE> 1
Exhibit 24
THE LAMSON & SESSIONS CO.
DIRECTORS' POWER OF ATTORNEY
Each of the undersigned members of the Board of Directors of The Lamson &
Sessions Co., an Ohio corporation, which anticipates filing with the Securities
and Exchange Commission, Washington, D.C., an annual report of the Corporation
on Form 10-K for the fiscal year ended December 30, 1995 ("1995 Form 10-K")
under the provisions of the Securities Act of 1934, as amended, does hereby
constitute and appoint James J. Abel and John B. Schulze, jointly and
severally, with full power of substitution and resubstitution, as attorney(s)
to sign for him and in his name, in the capacities indicated below, the 1995
Form 10-K, including any amendments and exhibits thereto, with full power and
authority to do and perform any and all acts and things whatsoever necessary
and required to be done in connection with such signing as fully to all intents
and purposes as he would do if personally present, hereby ratifying and
approving the acts of said attorney(s) and any substitute(s) therefor in
connection with such signing.
EXECUTED as of February 29, 1996.
/s/ Francis H. Beam, Jr. /s/ George R. Hill
- ------------------------------- -----------------------------------
Francis H. Beam, Jr. - Director George R. Hill - Director
/s/ Leigh Carter /s/ A. Malachi Mixon, III
- ------------------------------- -----------------------------------
Leigh Carter - Director A. Malachi Mixon, III - Director
/s/ Martin J. Cleary /s/ Kevin O'Donnell
- ------------------------------- -----------------------------------
Martin J. Cleary - Director Kevin O'Donnell - Director
/s/ John C. Dannemiller /s/ D. Van Skilling
- ------------------------------- -----------------------------------
John C. Dannemiller - Director D. Van Skilling - Director
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000057497
<NAME> LAMSON &SESSIONS CO.
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> DEC-30-1995
<CASH> 1,431
<SECURITIES> 0
<RECEIVABLES> 34,828
<ALLOWANCES> 0
<INVENTORY> 35,018
<CURRENT-ASSETS> 81,044
<PP&E> 111,129
<DEPRECIATION> 59,382
<TOTAL-ASSETS> 135,471
<CURRENT-LIABILITIES> 50,384
<BONDS> 24,842
<COMMON> 1,329
0
0
<OTHER-SE> 29,590
<TOTAL-LIABILITY-AND-EQUITY> 135,471
<SALES> 299,166
<TOTAL-REVENUES> 299,166
<CGS> 242,608
<TOTAL-COSTS> 242,608
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,864
<INCOME-PRETAX> 8,174
<INCOME-TAX> (3,900)
<INCOME-CONTINUING> 12,074
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,074
<EPS-PRIMARY> .90
<EPS-DILUTED> .90
</TABLE>
