UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Quarterly Period Ended August 31, 1997.
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Transition Period From ______ to _______.
Commission File Number 1-8862
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MARK IV INDUSTRIES, INC.
-------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 23-1733979
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
501 John James Audubon Parkway, P.O. Box 810, Amherst, New York 14226-0810
- ---------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(716) 689-4972
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(Registrant's telephone number, including area code)
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
---
Number of shares outstanding of each class of the Registrant's common stock,
as of the latest practicable date:
Class Outstanding at September 26, 1997
----- -------------------------
Common stock $.01 par value 63,706,613
<PAGE>2
MARK IV INDUSTRIES, INC.
INDEX
Part I. Financial Information Page No.
Consolidated Condensed Balance Sheets as of
August 31, 1997 and February 28, 1997 3
Consolidated Statements of Income and Retained Earnings
For the Three Month Periods Ended August 31, 1997 and 1996 4
Consolidated Statements of Income and Retained Earnings
For the Six Month Periods Ended August 31, 1997 and 1996 5
Consolidated Statements of Cash Flows
For the Six Month Periods Ended August 31, 1997 and 1996 6
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Part II. Other Information 14
- ---------------------------
Signature Page 15
Exhibit Index 16
<PAGE>3
MARK IV INDUSTRIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
August 31, February 28,
1997 1997
--------- -----------
ASSETS (Unaudited)
Current Assets:
Cash and short-term investments $ 102,700 $ 1,300
Accounts receivable 430,300 390,100
Inventories 378,000 377,600
Other current assets 90,200 76,500
---------- ----------
Total current assets 1,001,200 845,500
Pension and other non-current assets 225,900 214,000
Property, plant and equipment, net 590,700 553,300
Cost in excess of net assets acquired 356,800 361,800
---------- ----------
TOTAL ASSETS $2,174,600 $1,974,600
========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable and current
maturities of debt $ 67,100 $ 89,300
Accounts payable 191,200 188,400
Compensation related liabilities 80,800 89,300
Accrued interest 21,800 20,400
Other current liabilities 83,500 93,500
---------- ----------
Total current liabilities 444,400 480,900
---------- ----------
Long-Term Debt:
Senior debt 12,600 22,000
Subordinated debentures 755,300 506,500
---------- ----------
Total long-term debt 767,900 528,500
---------- ----------
Other non-current liabilities 221,100 206,800
---------- ----------
Stockholders' Equity:
Preferred stock - -
Common stock 600 700
Additional paid-in capital 633,600 696,500
Retained earnings 131,900 79,300
Foreign currency translation adjustment (24,900) (18,100)
---------- ----------
Total stockholders' equity 741,200 758,400
---------- ----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $2,174,600 $1,974,600
========== ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>4
MARK IV INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (UNAUDITED)
For the Three Month Periods Ended August 31, 1997, and 1996
(Amounts in thousands, except per share data)
1997 1996
---- ----
(As Restated)
Net sales from continuing operations $531,100 $494,300
-------- --------
Operating costs:
Cost of products sold 357,600 333,200
Selling and administration 82,500 78,800
Research and development 12,000 10,200
Depreciation and amortization 18,500 17,000
-------- --------
Total operating costs 470,600 439,200
-------- --------
Operating income 60,500 55,100
Interest expense 15,600 15,400
-------- --------
Income before provision for taxes 44,900 39,700
Provision for income taxes 17,400 15,500
-------- --------
Income from continuing operations 27,500 24,200
Income from discontinued operations - 2,600
-------- --------
Net income 27,500 26,800
Retained earnings - beginning of the period 106,900 136,000
Cash dividends of $.04 and $.033 per share (2,500) (2,200)
-------- --------
Retained earnings - end of the period $131,900 $160,600
======== ========
Net income per share of common stock:
Primary:
Income from continuing operations $ .43 $ .37
Income from discontinued operations - .04
-------- --------
Net income $ .43 $ .41
Fully Diluted: ======== ========
Income from continuing operations $ .43 $ .36
Income from discontinued operations - .04
-------- --------
Net income $ .43 $ .40
======== ========
Weighted average number of shares outstanding:
Primary 63,700 66,300
======== ========
Fully-diluted 64,200 66,700
======== ========
The accompanying notes are an integral part of these financial statements.
<PAGE>5
MARK IV INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (UNAUDITED)
For the Six Month Periods Ended August 31, 1997, and 1996
(Amounts in thousands, except per share data)
1997 1996
---- ----
(As Restated)
Net sales from continuing operations $1,091,200 $1,035,200
---------- ----------
Operating costs:
Cost of products sold 734,400 698,300
Selling and administration 171,900 167,200
Research and development 23,800 21,000
Depreciation and amortization 37,000 33,900
--------- ----------
Total operating costs 967,100 920,400
--------- ----------
Operating income 124,100 114,800
Interest expense 29,900 30,300
--------- ----------
Income before provision for taxes 94,200 84,500
Provision for income taxes 36,600 33,000
--------- ----------
Income from continuing operations 57,600 51,500
Income from discontinued operations - 3,800
--------- ----------
Net income 57,600 55,300
Retained earnings - beginning of the period 79,300 109,700
Cash dividends of $.08 and $.066 per share (5,000) (4,400)
--------- ----------
Retained earnings - end of the period $ 131,900 $ 160,600
========= ==========
Net income per share of common stock:
Primary:
Income from continuing operations $ .89 $ .77
Income from discontinued operations - .06
--------- ----------
Net income $ .89 $ .83
========= ==========
Fully Diluted:
Income from continuing operations $ .89 $ .77
Income from discontinued operations - .06
--------- ----------
Net income $ .89 $ .83
========= ==========
Weighted average number of shares outstanding:
Primary 64,600 66,300
========= ==========
Fully-diluted 65,100 66,700
========= ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>6
MARK IV INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Month Periods Ended August 31, 1997 and 1996
(Dollars in thousands)
1997 1996
---- ----
(As Restated)
Cash flows from operating activities:
Income from continuing operations $ 57,600 $ 51,500
Items not affecting cash:
Depreciation and amortization 37,000 33,900
Pension and compensation related items (9,000) (7,100)
Deferred income taxes 16,100 13,100
Income from discontinued operations,
before non-cash charges - 7,700
Changes in assets and liabilities, net
of effects of acquired and divested businesses:
Accounts receivable (36,300) (33,600)
Inventories (17,000) 13,800
Other assets (32,300) (19,500)
Accounts payable 1,400 (19,200)
Other liabilities (23,300) (15,000)
Net assets of discontinued operations - (4,500)
-------- -------
Net cash provided from
(used in) operating activities (5,800) 21,100
-------- -------
Cash flows from investing activities:
Acquisitions and investments (6,600) (78,000)
Divestitures and asset sales 35,500 -
Purchase of plant and equipment, net
Continuing operations (70,400) (40,000)
Discontinued operations - (2,500)
-------- --------
Net cash used in investing activities (41,500) (120,500)
-------- --------
Cash flows from financing activities:
Credit agreement borrowings, net - 77,700
Issuance of subordinated notes 248,700 -
Other changes in long-term debt, net (9,900) (4,000)
Changes in short-term bank borrowings (21,500) 30,000
Common stock transactions (63,600) 300
Cash dividends paid (5,000) (4,400)
-------- --------
Net cash provided by financing activities 148,700 99,600
-------- --------
Net increase in cash and cash equivalents 101,400 200
Cash and cash equivalents:
Beginning of the period 1,300 900
-------- --------
End of the period $102,700 $ 1,100
======== ========
The accompanying notes are an integral part of these financial statements.
<PAGE>7
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. Financial Statements
The unaudited consolidated financial statements include the accounts of
the Company and all of its subsidiaries. All significant intercompany
transactions have been eliminated. The unaudited consolidated financial
statements have been prepared in conformity with generally accepted
accounting principles, which requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
as of the date of such financial statements, and the reported amounts of
revenues and expenses during the reporting periods. It should be
recognized that the actual results could differ from those estimates.
In the opinion of the Company's management, the accompanying unaudited
consolidated financial statements contain all adjustments necessary to
present fairly the financial position of the Company at August 31, 1997,
and the results of its operations and its cash flows for the periods
ended August 31, 1997 and 1996. Such results are not necessarily
indicative of the results to be expected for the full year.
2. Discontinued Operations
During the latter half of fiscal 1997, the Company substantially
completed a divestiture program aimed at selling its non-core
operations. The results of operations for the three and six month
periods ended August 31, 1996 have been restated to reflect the divested
businesses as discontinued operations.
3. Accounts Receivable and Inventories
Accounts receivable are presented net of allowances for doubtful
accounts of $14.6 million and $14.7 million at August 31, 1997 and
February 28, 1997, respectively.
Inventories consist of the following components (dollars in thousands):
August 31, February 28,
1997 1997
--------- ------------
Raw materials $ 96,200 $ 87,200
Work-in-process 58,600 68,700
Finished goods 223,200 221,700
-------- ---------
Total $378,000 $ 377,600
======== =========
<PAGE>8
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Since physical inventories taken during the year do not necessarily
coincide with the end of a quarter, management has estimated the
composition of inventories with respect to raw materials, work-in-
process and finished goods. It is management's opinion that this
estimate represents a reasonable approximation of the inventory
breakdown as of August 31, 1997. The amounts at February 28, 1997 are
based upon the audited balance sheet at that date.
4. Property, Plant and Equipment
Property, plant and equipment are stated at cost and consist of the
following components (dollars in thousands):
August 31, February 28,
1997 1997
---------- -----------
Land and land improvements $ 25,000 $ 25,000
Buildings 147,900 146,800
Machinery and equipment 578,600 529,800
-------- --------
Total property, plant and equipment 751,500 701,600
Less accumulated depreciation 160,800 148,300
-------- --------
Property, plant and equipment, net $590,700 $553,300
======== ========
5. Long-term debt
Long-term debt consists of the following (dollars in thousands):
August 31, February 28,
1997 1997
--------- -----------
Senior Debt:
Credit Agreement $ - $ -
Other borrowing arrangements 21,100 27,400
---------- ----------
Total 21,100 27,400
Less Current maturities (8,500) (5,400)
---------- ----------
Net senior debt 12,600 22,000
---------- ----------
Subordinated Debt:
7-3/4% Senior Subordinated Notes 248,600 248,500
8-3/4% Senior Subordinated Notes 258,000 258,000
7-1/2% Senior Subordinated Notes 248,700 -
---------- ----------
Total subordinated debt 755,300 506,500
---------- ----------
Total long-term debt 767,900 528,500
Total stockholders' equity 741,200 758,400
---------- ----------
Total capitalization $1,509,100 $1,286,900
========== ==========
Long-term debt as a percentage
of total capitalization 50.9% 41.1%
========== ==========
<PAGE>9
MARK IV INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
6. Cash Flow
For purposes of cash flows, the Company considers overnight investments
as cash equivalents. The Company made cash interest payments of
approximately $28.6 million and $25.5 million in the six month periods
ended August 31, 1997 and 1996, respectively. The Company also made
cash income tax payments of approximately $15.4 million and $14.2
million in the six month periods ended August 31, 1997 and 1996,
respectively.
7. Common Stock Repurchase
In March 1997, the Company announced its intention to acquire up to 7.3
million shares of its Common Stock outstanding. It is expected that
such shares would be purchased in the open-market, or through privately
negotiated transactions, at prices which the Company considers to be
attractive. Through August 31, 1997, the Company acquired approximately
2.7 million of such shares, at an average cost of $23.71 per share, or a
total cost of approximately $63.6 million.
8. Issuance of Subordinated Notes
On August 11, 1997, the Company completed the private placement of
$250,000,000 principal amount of its 7-1/2% Senior Subordinated Notes
due 2007 (the "7-1/2% Notes") at a purchase price of 99.471% of their
face amount. A portion of the net proceeds from the sale of the 7-1/2%
Notes was used to reduce outstanding indebtedness under the Company's
Credit Agreement and domestic demand lines. The balance of the net
proceeds was added to working capital and will be used for general
corporate purposes. The 7-1/2% Notes are general unsecured obligations
of the Company and are subordinated in right of payment to all existing
and future senior indebtedness, and rank the same in right of payment as
the Company's 8-3/4% Senior Subordinated Notes due April 2003 and the
Company's 7-3/4% Senior Subordinated Notes due April 2006. The Company
has agreed to make an offer to exchange the 7-1/2% Notes for a new issue
of debt securities registered under the Securities Act of 1933 (as
amended) with substantially identical terms. The Company is in the
process of registering the Exchange Offer.
<PAGE>10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
- --------------------------------
Cash provided by earnings (net income from continuing operations before non-
cash items) was $101.7 million for the six month period ended August 31, 1997,
an increase of $10.3 million (11%) over the six month period ended August 31,
1996. As of August 31, 1997, the Company had a working capital investment of
$556.8 million, which reflects an increase of $192.2 million (53%) over the
amount invested as of February 28, 1997. The increase is primarily the result
of the paydown of short-term borrowings and the purchase of short-term
investments with a portion of the proceeds from the Company's issuance of 7-
1/2% Notes. The increase also reflects requirements to facilitate the
restructuring efforts announced in October 1996. Management is focusing its
efforts at reducing its working capital requirements over the balance of the
fiscal year.
Capital expenditures for the six month period ended August 31, 1997 were $70.4
million, which exceeded depreciation and amortization expense of $37.0 million
for the same period, and reflects an increase in expenditures of $27.9 million
over the six month period ended August 31, 1996. The increased level of
expenditures relates primarily to the new facilities and equipment required to
support new products and markets, and increased business opportunities in
Europe and South America, as well as the Company's restructuring efforts.
Management anticipates that the Company's capital expenditure requirements
will exceed its annual depreciation and amortization charges in fiscal 1998,
due in part to capital required to effect the Company's restructuring efforts.
In March 1997, the Company announced its intention to acquire up to 7.3
million shares of its Common Stock outstanding. It is expected that such
shares would be purchased in the open-market, or through privately negotiated
transactions, at prices which the Company considers to be attractive. Through
August 31, 1997, the Company acquired approximately 2.7 million of such
shares, at an average cost of $23.71 per share, or a total cost of
approximately $63.6 million.
In March 1997 the Company sold its Data Systems and LFE Industrial Systems
businesses for total proceeds of approximately $35 million. Such proceeds
were used initially to reduce borrowings outstanding under the Company's
Credit Agreement.
On August 11, 1997, the Company completed the private placement of
$250,000,000 principal amount of its 7-1/2% Senior Subordinated Notes due
April 2007 at a purchase price of 99.471% of their face amount. A portion of
the net proceeds from the sale of the 7-1/2% Notes was used to reduce
outstanding indebtedness under the Company's Credit Agreement and domestic
demand lines.
<PAGE>11
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The balance of the net proceeds was added to working capital and will be used
for general corporate purposes. The 7-1/2% Notes are general unsecured
obligations of the Company and are subordinated in right of payment to all
existing and future senior indebtedness, and rank the same in right of payment
as the Company's 8-3/4% Senior Subordinated Notes due April 2003 and the
Company's 7-3/4% Senior Subordinated Notes due 2006. The Company has agreed
to make an offer to exchange the 7-1/2% Notes for a new issue of debt
securities registered under the Securities Act of 1933 (as amended), with
substantially identical terms. The Company is in the process of registering
the Exchange Offer.
The Company has borrowing availability under its primary credit agreement of
approximately $500 million and additional availability under its various
domestic and foreign demand lines of credit of approximately $190 million as
of August 31, 1997. Long-term debt at August 31, 1997 was $767.9 million, an
increase of approximately $239.4 million over the $528.5 million that was
outstanding as of February 28, 1997. The change reflects the Company's
issuance of its 7-1/2% Notes, as well as increased borrowings to fund the
Company's stock repurchase program and temporary working capital needs. The
issuance of the 7-1/2% Notes increases the Company's financial flexibility, as
well as fixes interest rates for a portion of the Company's long-term debt at
interest rates that the Company finds attractive for its long-term capital
needs.
Management believes cash generated from operations, as temporarily
supplemented by existing credit availability, should be sufficient to support
the Company's working capital requirements and anticipated capital expenditure
needs for the foreseeable future, including the costs associated with its
stock repurchase program and restructuring efforts.
Results of Operations
- ---------------------
The Company classifies its operations in two business segments: Automotive
and Industrial. The Company's current business strategy is focused upon the
enhancement of its business segments through internal growth, cost control and
quality improvement programs and selective, strategic acquisitions with an
emphasis on expanding each segment's international presence. The results of
operations for the three and six month periods ended August 31, 1996 have been
restated to reflect the businesses divested in fiscal 1997 as discontinued
operations.
Net sales from continuing operations for the three and six month periods ended
August 31, 1997 increased by $36.8 million (7%) and $56.0 million (5%),
respectively, over the comparable periods last year. In the Company's
Automotive segment, net sales increased $26.8 million (10%) for the three
month period ended August 31, 1997 and $37.6 million (7%) for the six month
period ended August 31, 1997 over the comparable periods last year. The
growth in the Automotive segment was primarily generated by the segment's
<PAGE>12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
domestic Automotive sector, with the OEM growth substantially outpacing
Aftermarket growth. The Automotive OEM sector showed significant growth in
its domestic markets for the three and six month periods ended August 31, 1997
over the comparable periods last year. In the foreign OEM markets, sales were
relatively flat for the three month period ended August 31, 1997 over the
comparable period last year. In the Aftermarket sector, domestic aftermarket
sales for the three month period ended August 31, 1997 were strong, showing an
improving total result seven percent better than last year's period. The
improved quarter in the Aftermarket sector helped six month sales in this
sector increase marginally in comparison to the prior year. The foreign
Aftermarket sector remained relatively flat for both the three and six month
periods as compared to the prior year.
In the Company's Industrial segment, net sales increased $10.0 million (4%)
and $18.4 million (4%), respectively, for the three and six month periods
ended August 31, 1997 over the comparable periods last year. This growth was
led by the segment's domestic general industrial sector which helped to offset
flat sales in the segment's foreign general industrial and transportation
sectors.
The cost of products sold as a percentage of consolidated net sales remained
relatively consistent at approximately 67.3% in the current period and 67.5%
in the prior year periods. Selling and administration costs as a percentage of
consolidated net sales were 15.5% and 15.8 %, respectively, for the three and
six month periods ended August 31, 1997, as compared to 15.9% and 16.2% for
the three and six month periods ended August 31, 1996. The slight reduction
in the level of costs indicates the Company's continued emphasis on cost
control and cycle time reduction has been successful in substantially
offsetting the impact of inflation on such costs.
Research and development costs increased by $1.8 million (18%) and $2.8
million (13%), respectively, for the three and six month periods ended August
31, 1997 as compared to the three and six month periods ended August 31, 1996.
As a percentage of consolidated net sales, these expenses remained relatively
consistent in the range of 2.0% to 2.3% in each period, reflecting the
Company's continuing emphasis on new product development.
Depreciation and amortization expense increased by $1.5 million (9%) and $3.1
million (9%) respectively, for the three and six month periods ended August
31, 1997 as compared to the three and six month periods ended August 31, 1996.
The increase is primarily attributable to the Company's increased level of
capital equipment expenditures.
Interest expense for each of the three and six month periods ended August 31,
1997 was comparable to the levels incurred in the three and six month periods
ended August 31, 1996. These consistent levels represent the benefits of the
proceeds from asset divestitures compensated for the cost of borrowings
incurred to finance the Company's stock repurchase program and increased
working capital and capital expenditure requirements.
<PAGE>13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The effective tax rate as a percentage of pre-tax accounting income for the
three and six month periods ended August 31, 1997 and 1996 remained relatively
consistent at approximately 39%. The higher rate in comparison to the U.S.
statutory tax rate is primarily the result of income in foreign jurisdictions
with higher statutory tax rates than in the U.S., and state and local taxes.
As a result of all of the above, income from continuing operations for the
three and six month periods ended August 31, 1997 reflects an increase of $3.3
million (14%) and $6.1 million (12%) over income from continuing operations
for the comparable prior year periods. On a fully diluted per share basis,
such amounts for the three and six month periods ended August 31, 1997
represent an increase of 19% and 16%, respectively, over the comparable prior
year periods.
Net income increased approximately $.7 million (3%) and $2.3 million (4%) for
the three and six month periods ended August 31, 1997 as compared to the three
and six month periods ended August 31, 1996, with the prior year periods also
including income of $2.6 million and $3.8 million, respectively, from
discontinued operations.
Impact of Inflation
- -------------------
Although the Company has experienced delays in its ability to pass on certain
inflation related cost increases, the Company does not expect that such delays
or the overall impact of inflation will have a material impact on the
Company's operations.
<PAGE>14
Part II. OTHER INFORMATION
- ---------------------------
Items 1, 2, 3 and 5 are inapplicable and have been omitted.
Item 4 - Results of Votes of Security Holders
- ---------------------------------------------
On July 21, 1997, the Annual Meeting of Stockholders of the company was held.
At this meeting, the stockholders voted on the following matters:
(1) William P. Montague and Joseph G. Donohoo were elected to serve as
Class I Directors until the 2000 Annual Meeting. Mr. Montague was
elected with 59,958,000 shares voting for his election; and
983,698 shares withholding authority. Mr. Donohoo was elected
with 59,926,036 shares voting for his election; and 1,015,662
shares withholding authority.
The following is a list of Directors whose term of office
continued after the meeting:
Sal H. Alfiero
William P. Montague
Clement R. Arrison
Gerald S. Lippes
Joseph G. Donohoo
Herbert Roth, Jr.
Item 6(a) - Exhibits
- --------------------
Exhibit No.
* 10.1 Amendment and Restatement of Mark IV Industries, Inc. and
Subsidiaries 1992 Incentive Stock Option Plan.
* 10.2 First Amendment and Restatement of Mark IV Industries, Inc.
and Subsidiaries 1996 Incentive Stock Option Plan.
* 11 Statement Regarding Computation of Per Share Earnings
* 27 Financial Data Schedule
* Filed herewith by direct transmission pursuant to the EDGAR
Program
Item 6(b) Reports on Form 8-K
- ------------------------------
The following report on Form 8-K was filed pertaining to events occurring
during the quarter ended August 31, 1997.
(1) A current report on Form 8-K dated August 11, 1997, was filed to
report under Item 5, pertaining to the Company's issuance of
$250,000,000 aggregate principal amount of 7-1/2% Senior
Subordinated Notes due 2007 at a purchase price of 99.471% of
their face amount. The Notes were sold in a private transaction
pursuant to Rule 144a under the Securities Act of 1933.
<PAGE>15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MARK IV INDUSTRIES, INC.
Registrant
DATE: October 1, 1997 /s/ Sal H. Alfiero
--------------- ------------------------
Sal H. Alfiero
Chairman of the Board
DATE: October 1, 1997 /s/ William P. Montague
--------------- -------------------------
William P. Montague
President
DATE: October 1, 1997 /s/ John J. Byrne
--------------- -------------------------
John J. Byrne
Vice President - Finance
and Chief Financial Officer
DATE: October 1, 1997 /s/ Richard L. Grenolds
--------------- -------------------------
Richard L. Grenolds
Vice President and
Chief Accounting Officer
DATE: October 1, 1997 /s/ Clement R. Arrison
--------------- -------------------------
Clement R. Arrison
Director
<PAGE>16
EXHIBIT INDEX
Description
- -----------
Page No.
* 10.1 Amendment and Restatement of Mark IV
Industries, Inc. and Subsidiaries 1992
Incentive Stock Option Plan. 17
* 10.2 First Amendment and Restatement of Mark IV
Industries, Inc. and Subsidiaries 1996
Incentive Stock Option Plan. 31
* 11 Statement Regarding Computation of Per Share Earnings 44
* 27 Financial Data Schedule 45
* Filed herewith by direct transmission pursuant to the EDGAR
Program
<PAGE>17
EXHIBIT 10.1
MARK IV INDUSTRIES, INC.
AND SUBSIDIARIES, 1992
INCENTIVE STOCK OPTION PLAN
______________________________
Amendment and Restatement
Effective July 29, 1996
______________________________
WHEREAS, Mark IV Industries, Inc., a Delaware corporation with offices
at One Towne Centre, 501 John James Audubon Parkway, Amherst, New York (the
"Company"), by resolution of the Company's Board of Directors adopted on
September 3, 1992, adopted an incentive stock option plan known as the "Mark
IV Industries, Inc. and Subsidiaries 1992 Incentive Stock Option Plan (the
"Plan") to provide a tool to the Company's management to attract, retain and
motivate highly skilled employees of the Company and its subsidiaries; and
WHEREAS, on December 16, 1992, the Plan was amended to provide that the
Plan would be administered by the Compensation Committee of the Company's
Board of Directors in order to comply with the provisions of Rule 16b
promulgated under the Securities Exchange Act of 1934; and
WHEREAS, as contemplated by Section 422 of the Internal Revenue Code, on
August 17, 1993, the Plan was approved by the Company's shareholders; and
WHEREAS, the Company amended the Plan effective November 11, 1993, to
provide Optionees that are employed by a division of the Company, a Subsidiary
(as hereinafter defined) or a division of a Subsidiary, the immediate right to
exercise their options in the event the Optionee's employment with the Company
or such Subsidiary is terminated in connection with a sale of all or
substantially all the assets of the division or Subsidiary by which the
Optionee is employed or in the event that all or substantially all the stock
of the Subsidiary by whom the Optionee is employed is sold; and
WHEREAS, the Company amended the Plan effective March 30, 1994 to permit
key employees and officers which own more than ten percent (10%) of the
outstanding stock of the Company to receive options under the terms of the
Plan and to permit Optionees to pay the purchase price for shares of common
stock of the Company which may be acquired pursuant to options granted under
this Plan with previously acquired shares of the Company's common stock and to
make certain other technical corrections to the Plan; and
WHEREAS, as a result of a change in the rules promulgated by the
Securities and Exchange Commission under the terms of the Securities and
Exchange Act of 1934, as amended, the Company desires to amend and restate the
provisions of the Plan to permit Executive Officers of the Company to transfer
options they have been granted under the terms of the Plan to the extent that
such options are not "qualified" incentive stock options and to make certain
other technical changes to the Plan;
<PAGE>18
NOW, THEREFORE, in consideration of the foregoing, Mark IV Industries,
Inc. hereby adopts the following Amendment and Restatement of the Mark IV
Industries, Inc. and Subsidiaries 1992 Incentive Stock Option Plan effective
July 29, 1996;
1. Purpose of Plan; Current Status of the Plan. The Mark IV
Industries, Inc. and Subsidiaries, 1992 Incentive Stock Option Plan
(hereinafter called the "Plan") is intended to provide officers and other key
employees of Mark IV Industries, Inc., a Delaware corporation (hereinafter
called the "Company") and officers and other key employees of each Subsidiary
of the Company as that term is defined in Section 3 below (hereinafter
individually referred to as a "Subsidiary" and collectively as "Subsidiaries")
with an additional incentive for them to promote the success of the business,
to increase their proprietary interest in the success of the Company and its
Subsidiaries, and to encourage them to remain in the employ of the Company or
its Subsidiaries. The above aims will be effectuated through the granting of
certain stock options, as herein provided, which are intended to qualify as
Incentive Stock Options (hereinafter called "ISOs") under Section 422 of the
Internal Revenue Code of 1986, as the same has been and shall be amended
(hereinafter called the "Code").
2. Administration. The Plan shall be administered by the Compensation
Committee of the Board of Directors of the Company (hereinafter called the
"Committee") composed of not less than two (2) directors of the Company. The
Committee is authorized to adopt such rules and regulations for the
administration of the Plan and the conduct of its business as may seem to it
proper.
Any action taken or interpretation by the Committee under any provision
of the Plan or any option granted hereunder shall be in accordance with the
provisions of the Code, and the regulations and rulings issued thereunder as
such may be amended, promulgated, issued, renumbered or continued from time to
time hereafter in order that the options granted hereunder shall, to the
fullest extent possible, constitute "incentive stock options" within the
meaning of the Code. All action taken pursuant to this Plan shall be lawful
and with a view to obtaining for the Company and the option holder the maximum
advantages under the law as then obtaining, and in the event that any dispute
shall arise as to any action taken or interpretation by the Committee under
any provision of the Plan, then all doubts shall be resolved in favor of such
having been done in accordance with the said Code and such revenue laws,
amendments, regulations, rulings and provisions as may then be applicable.
Any action taken or interpretation by the Committee under any provision of the
Plan shall be final. No member of the Committee shall be liable for any
action, determination or interpretation under any provision of the Plan or
otherwise if done in good faith.
<PAGE>19
3. Participation. The Committee shall determine which of the employees
of the Company and its Subsidiaries will receive options under the terms of
this Plan from among officers and key employees of the Company and its
Subsidiaries (including, subject to the provisions of Section 422(c)(5) of the
Code, officers or key employees that own stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of
the Company). Those individuals to whom options are granted under the terms
of this Plan are sometimes hereinafter referred to as "Optionees". The
Committee shall determine the terms and provisions of the options granted
hereunder (which need not be identical), the time or times at which options
shall be granted and the number of shares of common stock of the Company
(sometimes hereinafter referred to as "Common Stock") (or such number of
shares of stock in which the Common Stock may at any time hereafter be
constituted), for which options are granted. Notwithstanding the foregoing,
in no event shall the Committee grant any options to the Company's Chief
Executive Officer or any of the four (4) most highly compensated officers of
the Company if the aggregate number of shares of Common Stock which can be
purchased by any such individual through the exercise of all options granted
to him or her under the Plan exceeds 200,000 shares of Common Stock, adjusted
as provided for in Section 5 hereof. For purposes of this Plan, the term
"Subsidiary" shall mean any corporation which satisfies the definition of a
"subsidiary corporation" as contained in Section 424(f) of the Code and the
term "Subsidiaries" shall mean all corporations which satisfy the definition
of a "subsidiary corporation" as contained in Section 424(f) of the Code when,
in each case, for purposes of applying such definition, the "employer
corporation" is deemed to mean the Company.
In selecting Optionees and in determining the number of shares for
which options are granted, the Committee may weigh and consider the following
factors: the office or position of the Optionee and his degree of
responsibility for the growth and success of the Company, length of service,
remuneration, promotions and potential. The foregoing factors shall not be
considered to be exclusive or obligatory upon the Committee, and the Committee
may properly consider any other factors which to it seems appropriate.
An Optionee who has been granted an option under the Plan may be
granted additional options under the Plan if the Committee shall so determine.
In no event shall any options be granted under this Plan at any
time after the termination date set forth at the end of this Plan.
4. Shares Subject to the Plan. Subject to adjustment as provided in
Section 5 of this Plan, the aggregate number of reserved shares of Common
Stock for which options may be granted hereunder shall not exceed one million
five hundred thousand (1,500,000) shares, determined as of September 3, 1992,
(the effective date of this Plan); provided, however, that as to shares
subject to options which expire or terminate pursuant to the provisions of
this Plan without having been exercised in full, such shares shall be
considered to be available again for placement under options granted
thereafter under the Plan. Shares issued pursuant to the exercise of
incentive stock options granted under the Plan shall be fully paid and non-
assessable.
<PAGE>20
5. Anti-Dilution Provisions. The aggregate number of shares and the
class of shares as to which options may be granted under the Plan, the number
and class of shares subject to each outstanding option, the price per share
thereof (but not the total price), and the number of shares as to which an
option may be exercised at any one time, shall all be adjusted proportionately
in the event of any change, increase or decrease in the outstanding shares of
Common Stock or any change in classification of the Company's Common Stock
without receipt of consideration by the Company which results either from a
split-up, reverse split or consolidation of shares, payment of a stock
dividend, recapitalization, reclassification or other like capital adjustment
so that upon exercise of the option, the Optionee shall receive the number and
class of shares that he would have received had he been the holder of the
number of shares of Common Stock for which the option is being exercised
immediately preceding such change, increase or decrease in the outstanding
shares of Common Stock of the Company. Any such adjustment made by the
Committee shall be final and binding upon all Optionees, the Company, and all
other interested persons. Any adjustment of an incentive stock option under
this paragraph shall be made in such manner as not to constitute a
"modification" within the meaning of Section 424(h)(3) of the Code.
Anything in this Section 5 to the contrary notwithstanding, no
fractional shares or scrip representative of fractional shares shall be issued
upon the exercise of any option. Any fractional share interest resulting from
any change, increase or decrease in the outstanding shares of Common Stock of
the Company or resulting from any reorganization, merger, or consolidation for
which adjustment is provided in this Section 5 shall disappear and be absorbed
into the next lowest number of whole shares, and the Company shall not be
liable for any payment for such fractional share interest to the Optionee upon
his exercise of the option.
6. Option Price. The purchase price for each share of Common Stock
which may be acquired upon the exercise of each option issued under the Plan
shall be determined by the Committee at the time the option is granted, but in
no event shall such purchase price be less than one hundred percent (100%) of
the fair market value of the Company's Common Stock on the date of grant. If
the Common Stock of the Company is listed upon an established stock exchange
or exchanges on the day the option is granted, such fair market value shall be
deemed to be the highest closing price of the Common Stock of the Company on
such stock exchange or exchanges on the day the option is granted, or if no
sale of the Company's Common Stock shall have been made on any stock exchange
on that day, on the next preceding day on which there was a sale of such
stock.
<PAGE>21
7. Option Exercise Periods. (a) The time within which any option
granted hereunder may be exercised shall be, by its terms, not earlier than
one (1) year from the date such option is granted and not later than ten (10)
years from the date such option is granted. Except as otherwise provided for
herein, the Optionee must remain in the continuous employment of the Company
or any of its subsidiaries from the date of the grant of the option to and
including the date of exercise of option in order to be entitled to exercise
his option. Options granted hereunder shall be exercisable in such
installments and at such dates as the Committee may specify. Unless the
Committee shall specify otherwise, the right of each Optionee to exercise his
option to purchase the number of shares to which his option initially related
shall accrue on a cumulative basis as follows:
(i) the Optionee shall have the right to purchase one-
fourth (1/4) of the total number of shares of Common Stock which can be
purchased pursuant to the option (subject to adjustment as provided in Section
5 hereof) at the end of the one (1) year period following the date the option
is granted;
(ii) the Optionee shall have the right to purchase an
additional one-fourth (1/4) of the total number of shares of Common Stock
which can be purchased pursuant to the option (subject to adjustment as
provided in Section 5 hereof) at the end of the two (2) year period following
the date the option is granted;
(iii) the Optionee shall have the right to purchase an
additional one-fourth (1/4) of the total number of shares of Common Stock
which can be purchased pursuant to the option (subject to adjustment as
provided in Section 5 hereof) at the end of the three (3) year period
following the date the option is granted;
(iv) the Optionee shall have the right to purchase the
remaining one-fourth (1/4) of the total number of shares of Common Stock which
can be purchased pursuant to the option (subject to adjustment as provided in
Section 5 hereof) at the end of the four (4) year period following the date
the option is granted.
Continuous employment shall not be deemed to be interrupted by
transfers between the Subsidiaries or between the Company and any Subsidiary,
whether or not elected by termination from any Subsidiary and re-employment by
any other Subsidiary or the Company. Time of employment with the Company
shall be considered to be one employment for the purposes of this Plan,
provided there is no intervening employment by a third party or no interval
between employments which, in the opinion of the Committee, is deemed to break
continuity of service. The Committee shall, at its discretion, determine the
effect of approved leaves of absence and all other matters having to do with
"continuous employment". Where an Optionee dies while employed by the Company
or any of its Subsidiaries, his options may be exercised following his death
in accordance with the provisions of Section 10 below.
<PAGE>22
(b) Notwithstanding the foregoing provisions of Section 7(a), in
the event the Company or the shareholders of the Company enter into an
agreement to dispose of all or substantially all of the assets or stock of the
Company by means of a sale, merger, consolidation, reorganization,
liquidation, or otherwise, or in the event a Change of Control (as hereinafter
defined) of the Company shall occur, all unexercised options granted hereunder
shall become immediately exercisable with respect to the full number of shares
subject to that option during the period commencing as of the date of
execution of such agreement and ending as of the earlier of (i) ten (10) years
from the date such option was granted, or (ii) ninety (90) days following the
date on which a Change in Control occurs or the disposition of assets or stock
contemplated by this sentence is consummated. In addition, in the event that
substantially all the stock of any Subsidiary by whom an Optionee is employed
is sold or otherwise disposed of by merger, consolidation, reorganization,
liquidation or otherwise, or in the event that substantially all the assets of
any division of the Company or any division of any Subsidiary by whom the
Optionee is employed are sold or disposed of by means of a sale, merger,
consolidation, reorganization, liquidation or otherwise and, in connection
with any such asset sale, the Optionee's employment with the Company or the
Subsidiary (as the case may be) is terminated, the options of an Optionee
employed by such a division or Subsidiary shall, unless the Optionee remains
in the employ of the Company or any Subsidiary of the Company immediately
following any such sale or other disposition of stock or assets, become
immediately exercisable with respect to the full number of shares subject to
that option during the period commencing as of the date of execution of the
agreement providing for such sale or other disposition and ending as of the
earlier of (x) ten (10) years from the date such option was granted and (y)
ninety (90) days following the date on which the disposition of the assets or
stock contemplated by this sentence is consummated. Ninety (90) days
following the consummation of any disposition of assets or stock referred to
in the preceding sentence, any unexercised options issued hereunder which have
become exercisable pursuant to this paragraph (or any unexercised portion
thereof) shall terminate and cease to be effective. In addition, if any
disposition of assets or stock referred to in this paragraph occurs with
respect to substantially all the assets or stock of the Company or if a Change
in Control occurs, ninety (90) days following such disposition of assets or
stock or Change in Control, this Plan and any unexercised options issued
hereunder which have become exercisable pursuant to this paragraph (or any
unexercised portion thereof) shall terminate and cease to be effective, unless
provision is made in connection with such transaction for assumption of
options previously granted or the substitution for such options of new options
covering the securities of a successor corporation or an affiliate thereof,
with appropriate adjustments as to the number and kind of securities and
prices.
<PAGE>23
(c) For purposes of this Plan, a "Change in Control" shall be
deemed to have occurred if:
(i) any "person" or "group" (within the meaning of Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Act")) becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Act) of more than thirty percent (30%) of the then outstanding voting stock of
the Company, otherwise than through a transaction arranged by, or consummated
with the prior approval of its Board of Directors; or
(ii) during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board of Directors of the
Company (and any new director whose election to the Board of Directors or
whose nomination for election by the Company's shareholders was approved by a
vote of at least two thirds of the directors then still in office who either
were directors at the beginning of such period or whose election or nomination
for election was previously so approved) (hereinafter referred to as the
"Continuing Directors") cease for any reason to constitute a majority thereof;
or
(iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger
or consolidation which would result in the voting securities of the Company
immediately prior thereto continuing to represent (either by remaining
outstanding or being converted into voting securities of the surviving entity)
at least 80% of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation (provided, however, that if prior to the merger or
consolidation, the Board of Directors of the Company adopts a resolution that
is approved by a majority of the Continuing Directors providing that such
merger or consolidation shall not constitute a "change in control" for
purposes of the Plan, then such a merger or consolidation shall not constitute
a "change in control"); or
(iv) the shareholders of the Company approve an agreement
for the sale or disposition by the Company of all or substantially all the
assets of the Company.
(d) Any change or adjustment made pursuant to the terms of this
Section 7 shall be made in such a manner so as not to constitute a
"modification" as defined in Section 424 of the Code, and so as not to cause
any incentive stock option issued under this Plan to fail to continue to
qualify as an incentive stock option as defined in Section 422(b) of the Code.
Notwithstanding the foregoing, in the event that any such agreement shall be
terminated without consummating the disposition of said stock or assets, any
<PAGE>24
unexercised unaccrued portion of any option that had become exercisable solely
by reason of the provisions of this paragraph shall again become unaccrued and
unexercisable as of said termination of such agreement; subject, however, to
such portion of such option accruing pursuant to the normal accrual schedule
provided in the terms under which such option was granted. Any exercise of
any portion of any option prior to said termination of said agreement shall
remain effective despite the fact that such portion became exercisable solely
by reason of the Company or its shareholders entering into said agreement to
dispose of the stock or assets of the Company or the stock or assets of any
Subsidiary of the Company, any division of the Company or any division of any
Subsidiary of the Company.
8. Exercise of Option. Options shall be exercised as follows:
(a) Notice and Payment. Each option, or any installment thereof,
shall be exercised, whether in whole or in part, by giving written notice to
the Company at its principal office, (the "Exercise Notice") that the Optionee
intends to exercise all or part of any option he has been granted and by
paying to the Company the purchase price for the number of shares of Common
Stock of the Company which the Optionee desires to purchase at the price per
share (as adjusted) set forth in the option which the Optionee desires to
exercise.
(b) The Exercise Notice: (i) shall state the identity of the
options being exercised (by reference to the date of the grant of the option);
(ii) shall state the number of shares to be purchased and the purchase price
to be paid; and (iii) shall contain representations on behalf of the Optionee
that he acknowledges that the Company is selling the shares being acquired by
him under a claim of exemption from registration under the Securities Act of
1933 as amended (hereinafter referred to as the "Act"), as a transaction not
involving any public offering; that he represents and warrants that he is
acquiring such shares with a view to "investment" and not with a view to
distribution or resale; and that he agrees not to transfer, encumber or
dispose of the shares unless: (A) a registration statement with respect to
the shares shall be effective under the Act, together with proof satisfactory
to the Company that there has been compliance with applicable state law; or
(B) the Company shall have received an opinion of counsel in form and content
satisfactory to the Company to the effect that the transfer qualifies under
Rule 144 or some other disclosure exemption from registration and that no
violation of the Act or applicable state laws will be involved in such
transfer, and/or such other documentation in connection therewith as the
Company's counsel may in its sole discretion require.
<PAGE>25
(c) Payment of the purchase price for shares of Common Stock to
be acquired in connection with the exercise of any options granted under this
Plan shall be made: (i) by delivery to the Company of cash or a certified or
bank check payable to the order of the Company in an amount equal to the
portion of the purchase price which is payable in connection with the exercise
of such option; (ii) by delivery to the Company of previously acquired shares
of the Company's Common Stock having an aggregate fair market value equal to
the portion of the purchase price which is payable in connection with the
exercise of such option provided that such previously acquired shares of
Common Stock have been held by the Optionee for at least six (6) months or
such other period of time as may be required by the Committee at the time such
shares are delivered to the Company in connection with the Optionee's exercise
of his or her option hereunder; or (iii) by the Company's retention of a
portion of the shares of the Company's Common Stock to be issued in connection
with the exercise of such option, which shares of Common Stock have an
aggregate fair market value, determined as of the date of such exercise, equal
to the total exercise price payable for that number of shares of the Company's
Common Stock (including retained shares) which is to be issued upon the
exercise by the Optionee of his option to purchase the number of shares
identified in the exercise notice. If shares of the Company's Common Stock
are delivered as payment of the purchase price for shares of Common Stock to
be purchased in connection with the exercise of options granted hereunder, the
shares of Common Stock which are delivered in payment of such purchase price
shall be equal to the fair market value (determined in accordance with the
principles set forth in Section 6 hereof) of the Common Stock on the day
immediately preceding the day on which such Common Stock is delivered in
payment of the purchase price for shares of Common Stock to be acquired in
connection with the exercise of options granted hereunder.
(d) Issuance of Certificates. Certificates representing the
shares purchased by the Optionee shall be issued as soon as practicable after
the Optionee has complied with the provisions of Section 8(a) hereof.
(e) Rights as a Shareholder. The Optionee shall have no rights
as a shareholder with respect to the shares purchased until the date of the
issuance to him of a Certificate representing such shares.
9. Assignment of Option. (a) Subject to the provisions of Sections
9(b) and 10 hereof, options granted under this Plan may not be assigned
voluntarily or involuntarily or by operation of law. Any attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of, or to subject to
execution, attachment or similar process, any incentive stock option, or any
right thereunder, contrary to the provisions hereof shall be void and
ineffective, shall give no right to the purported transferee, and shall, at
the sole discretion of the Committee, result in forfeiture of the option with
respect to the shares involved in such attempt.
<PAGE>26
(b) Notwithstanding anything to the contrary contained in the
terms of the Plan as in effect at any time prior to the date hereof and
notwithstanding anything to the contrary contained in the terms of any
statement, letter or other document or agreement setting forth the terms and
conditions of any options previously issued pursuant to the terms of this
Plan, any and all Non-Qualified Options (as defined in Section 13 hereof)
previously issued to any officer of the Company (as defined in Rule 16a-1(f)
issued under the Securities and Exchanged Act of 1934 (hereinafter an
"Executive Officer")) pursuant to the terms of the Plan and, subject to the
approval of the Committee, any Non-Qualified Options which may be granted or
issued to any Executive Officer of the Company at any time in the future
pursuant to the terms of the Plan shall be transferable by the Executive
Officer to whom such Non-Qualified Options have been or are granted to: (i)
the spouse, children or grandchildren of the Executive Officer (hereinafter
"Immediate Family Members"); (ii) a trust or trusts for the exclusive benefit
of such Immediate Family Members; (iii) a partnership or limited liability
company in which such Immediate Family Members are the only partners or
members; or (iv) a private foundation established by the Executive Officer;
provided that (x) there may be no consideration for any such transfer; (y) in
the case of Non-Qualified Options which may be granted in the future, the
statement, letter or other document or agreement setting forth the terms and
conditions of any such Non-Qualified Options must be approved by the Committee
and must expressly provide for and limit the transferability of such Non-
Qualified Options to transfers which are permitted by the foregoing provisions
of this Section 9(b); and (z) any subsequent transfer of transferred Non-
Qualified Options shall, except for transfers occurring as a result of the
death of the transferee as contemplated by Section 10(c), be prohibited.
Following the transfer of any Non-Qualified Options as permitted by the
foregoing provisions of this Section 9(b), any such transferred Non-Qualified
Options shall continue to be subject to the same terms and conditions
applicable to such Non-Qualified Options immediately prior to the transfer;
provided that, for purposes of this Plan, the term "Optionee" shall be deemed
to refer to the transferee. Notwithstanding the foregoing, the events of
termination of employment of Section 10 hereof shall continue to be applied
with respect to the original Optionee for the purpose of determining whether
or not the Non-Qualified Options shall be exercisable by the transferee and,
upon termination of the original Optionee's employment, the Non-Qualified
Options shall be exercisable by the transferee only to the extent and for the
periods specified in Section 10 below.
10. Effect of Termination of Employment, Death or Disability.
(a) In the event of the termination of employment of an Optionee
during the two (2) year period after the date of issuance of an option to him
either by reason of (i) a discharge for cause, or (ii) voluntary separation on
the part of the Optionee and without consent of the Company or the Subsidiary
for whom the Optionee was employed, any option or options theretofore granted
to him under this Plan, to the extent not theretofore exercised by him, shall
forthwith terminate.
<PAGE>27
(b) In the event of the termination of employment of an Optionee
(otherwise than by reason of death or retirement of the Optionee at his
Retirement Date) by the Company or by any of the Subsidiaries employing the
Optionee at such time, any option or options granted to him under the Plan to
the extent not theretofore exercised shall be deemed cancelled and terminated
forthwith, except that, subject to the provisions of subparagraph (a) of this
Section, such Optionee may exercise any options theretofore granted to him,
which have not then expired and which are otherwise exercisable within the
provisions of Section 7 hereof, within three (3) months after such
termination. If the employment of an Optionee shall be terminated by reason
of the Optionee's retirement at his Retirement Date by the Company or by any
of the Subsidiaries employing the Optionee at such time, the Optionee shall
have the right to exercise such option or options held by him to the extent
that such options have not expired, at any time within three (3) months after
such retirement. The provisions of Section 7 to the contrary notwithstanding,
upon retirement, all options held by an Optionee shall be immediately
exercisable in full. The transfer of an Optionee from the employ of the
Company to a Subsidiary of the Company or vice versa, or from one Subsidiary
of the Company to another, shall not be deemed to constitute a termination of
employment for purposes of this Plan.
(c) In the event that an Optionee shall die while employed by the
Company or by any of the Subsidiaries or shall die within three (3) months
after retirement on his Retirement Date (from the Company or any Subsidiary),
any option or options granted to him under this Plan and not theretofore
exercised by him or expired shall be exercisable by the estate of the Optionee
or by any person who acquired such option by bequest or inheritance from the
Optionee in full, notwithstanding Section 7, at any time within one (1) year
after the death of the Optionee. References hereinabove to the Optionee shall
be deemed to include any person entitled to exercise the option after the
death of the Optionee under the terms of this Section.
(d) In the event of the termination of employment of an Optionee
by reason of the Optionees' disability, the Optionee shall have the right,
notwithstanding the provisions of Section 7 hereof, to exercise all options
held by him, to the extent that options have not previously expired or been
exercised, at any time within one (1) year after such termination. The term
"disability" shall, for the purposes of this Plan, be defined in the same
manner as such term is defined in Section 105(d)(4) of the Internal Revenue
Code of 1986.
(e) For the purposes of this Plan, "Retirement Date" shall mean,
with respect to an Optionee, the date the Optionee actually retires from his
employment with the Company or, if applicable, the Subsidiary by whom he is
employed; provided that such date occurs on or after the date the Optionee is
otherwise entitled to retire under the terms of the Company's retirement plan
or, if applicable, the retirement plan of the Subsidiary by whom the Optionee
is employed.
<PAGE>28
11. Amendment and Termination of the Plan. The Board of Directors of
the Company may at any time suspend, amend or terminate the Plan; provided,
however, that except as permitted in Section 12 hereof, no amendment or
modification of the Plan which would:
(a) increase the maximum aggregate number of shares as to which
options may be granted hereunder (except as contemplated in Section 5); or
(b) reduce the option price or change the method of determining
the option price; or
(c) increase the time for exercise of options to be granted or
those which are outstanding beyond the terms of ten (10) years; or
(d) change the designation of the employees or class of employees
eligible to receive options under this Plan, may be adopted unless with the
approval of the holders of a majority of the outstanding shares of Common
Stock represented at a shareholders' meeting of the Company, or with the
written consent of the holders of a majority of the outstanding shares of
Common Stock. No amendment, suspension or termination of the Plan may,
without the consent of the holder of the option, terminate his option or
adversely affect his rights in any material respect.
12. Incentive Stock Options Power to Establish Other Provisions. It is
intended that the Plan shall conform to and (except as expressly set forth
herein) each option shall qualify and be subject to exercise only to the
extent that it does qualify as an "incentive stock option" as defined in
Section 422 of the Code and as such section may be amended from time to time
or be accorded similar tax treatment to that accorded to an incentive stock
option by virtue of any new Revenue Laws of the United States. The Board of
Directors may make any amendment to the Plan which shall be required so to
conform the Plan. Subject to the provisions of the Code, the Committee shall
have the power to include such other terms and provisions in options granted
under this Plan as the Committee shall deem advisable.
The grant of any options pursuant to the terms of this Plan which do not
qualify as "incentive stock options" (as defined in Section 422 of the Code)
as a result of the application of the $100,000 annual limitation contained in
Section 13 hereof is hereby approved provided that the maximum number of
shares of Common Stock of the Company which can be issued pursuant to the
terms of this Plan (as provided for in Section 4 hereof) is not exceeded by
the grant of any such options and, to the extent that any options previously
granted pursuant to the terms of this Plan were not "incentive stock options"
within the meaning of Section 422 of the Code, the grant of such options is
hereby ratified, approved and confirmed.
<PAGE>29
13. Maximum Annual Value of Options Exercisable. Notwithstanding any
provisions of the Plan to the contrary if: (a) the sum of: (i) the fair market
value (determined as of the date of the grant) of all options granted to an
Optionee under the terms of the Plan which become exercisable for the first
time in any one calendar year; and (ii) the fair market value (determined as
of the date of the grant) of all options previously granted to such Optionee
under the terms of this Plan or any other incentive stock option plan of the
Company or its subsidiaries which also become exercisable for the first time
in such calendar year; exceeds (b) $100,000; then, (c) those options shall
continue to be binding upon the Company in accordance with their terms, but to
the extent that the aggregate fair market of all such options which become
exercisable for the first time in any one calendar year (determined as of the
date of the grant) exceeds $100,000, such options (referred to, for purposes
of this Plan, as "Non-Qualified Options"), shall not be deemed to be incentive
stock options as defined in Section 422(b) of the Code. For purposes of the
foregoing, the determination of which options shall be recharacterized as not
being incentive stock options issued under the terms of this Plan shall be
made in inverse order of their grant dates, and accordingly, the last options
received by the Optionee shall be the first options to be recharacterized as
not being incentive stock options granted pursuant to the terms of the Plan.
14. General Provisions. (a) No incentive stock option shall be
construed as limiting any right which the Company or any parent or subsidiary
of the Company may have to terminate at any time, with or without cause, the
employment of an Optionee.
(b) The Section headings used in this Plan are intended solely
for convenience of reference and shall not in any manner amplify, limit,
modify or otherwise be used in the construction or interpretation of any of
the provisions hereof.
(c) The masculine, feminine or neuter gender and the singular or
plural number shall be deemed to include the other whenever the content so
indicates or requires.
(d) No options shall be granted under the Plan after ten (10)
years from the date the Plan is adopted by the Board of Directors of the
Company or approved by the stockholders of the Company, whichever is earlier.
15. Effective Date and Duration of the Plan. The Plan became effective
on September 3, 1992, the date adoption of the Plan was approved by the Board
of Directors of the Company. On August 17, 1993, as required by Section 422
of the Code, the Plan was approved by the Shareholders of the Company. The
Plan will terminate on September 2, 2002; provided however, that the
termination of the Plan shall not be deemed to modify, amend or otherwise
affect the term of any options outstanding on the date the Plan terminates.
<PAGE>30
IN WITNESS WHEREOF, the undersigned has executed this Amendment
and Restatement to the Mark IV Industries, Inc. and Subsidiaries 1992
Incentive Stock Option Plan for and on behalf of Mark IV Industries, Inc. this
29th day of July, 1996.
MARK IV INDUSTRIES, INC.
By: /s/Richard L. Grenolds
----------------------
Vice President and
Chief Accounting Officer
<PAGE>31
EXHIBIT 10.2
MARK IV INDUSTRIES, INC.
1996 INCENTIVE STOCK OPTION PLAN
_________________________________
First Amendment And Restatement
________________________________
Recitals:
On April 25, 1996, Mark IV Industries, Inc., a Delaware corporation with
offices at One Towne Centre, 501 John James Audubon Parkway, Amherst, New York
(the "Company") adopted a stock option plan which was intended to enable the
Company to grant incentive stock options (within the meaning of Section 422 of
the Internal Revenue Code) to officers and other key employees of the Company
and its subsidiaries. This stock option plan, known as "The Mark IV
Industries, Inc. 1996 Incentive Stock Option Plan" (hereinafter the "Plan")
was approved by the stockholders of the Company on July 29, 1996.
On May 30, 1996, the United States Securities and Exchange Commission
promulgated new rules under Section 16 of the Securities and Exchange Act of
1934 as amended. As a result of these new rules, the Plan is no longer
required to prohibit transfers of options which have been granted under the
terms of the Plan in order for the grant of options under the Plan to be
exempt from the prohibition against short swing trading profits contained in
Section 16 of the Securities and Exchange Act of 1934 as amended.
The Company now desires to amend and restate the provisions of the Plan
to permit Executive Officers of the Company to transfer options they have been
granted under the terms of the Plan to the extent that such options are not
"qualified" incentive stock options and to make certain other technical
changes to the terms of the Plan.
Consideration:
NOW, THEREFORE, in consideration of the foregoing, the Company hereby
adopts the following as the First Amendment and Restatement of the Plan
effective as of July 29, 1996:
1. Purpose of Plan; Current Status of the Plan.
The Mark IV Industries, Inc., 1996 Incentive Stock Option Plan
(hereinafter called the "Plan") is intended to provide officers and other key
employees of Mark IV Industries, Inc., a Delaware corporation (hereinafter
called the "Company") and officers and other key employees of each Subsidiary
of the Company as that term is defined in Section 3 below (hereinafter
individually referred to as a "Subsidiary" and collectively as "Subsidiaries")
with an additional incentive for them to promote the success of the business,
to increase their proprietary interest in the success of the Company and its
Subsidiaries, and to encourage them to remain in the employ of the Company or
its Subsidiaries. The above aims will be effectuated through the granting of
certain stock options, as herein provided, which are intended to qualify as
Incentive Stock Options (hereinafter called "ISOs") under Section 422 of the
Internal Revenue Code of 1986, as the same has been and shall be amended
(hereinafter called the "Code").
<PAGE>32
2. Administration
The Plan shall be administered by the Compensation Committee of the
Board of Directors of the Company (hereinafter called the "Committee")
composed of not less than two (2) directors of the Company. The Committee is
authorized to adopt such rules and regulations for the administration of the
Plan and the conduct of its business as may seem to it proper.
Any action taken or interpretation by the Committee under any provision
of the Plan or any option granted hereunder shall be in accordance with the
provisions of the Code, and the regulations and rulings issued thereunder as
such may be amended, promulgated, issued, renumbered or continued from time to
time hereafter in order that the options granted hereunder shall, to the
fullest extent possible, constitute "incentive stock options" within the
meaning of the Code. All action taken pursuant to this Plan shall be lawful
and with a view to obtaining for the Company and the option holder the maximum
advantages under the law as then obtaining, and in the event that any dispute
shall arise as to any action taken or interpretation by the Committee under
any provision of the Plan, then all doubts shall be resolved in favor of such
having been done in accordance with the said Code and such revenue laws,
amendments, regulations, rulings and provisions as may then be applicable.
Any action taken or interpretation by the Committee under any provision of the
Plan shall be final. No member of the Committee shall be liable for any
action, determination or interpretation under any provision of the Plan or
otherwise if done in good faith.
3. Participation
The Committee shall determine which of the employees of the
Company and its Subsidiaries will receive options under the terms of this Plan
from among officers and other key employees of the Company and its
Subsidiaries (including, subject to the provisions of Section 422(c)(5) of the
Code, officers or other key employees possessing more than ten percent (10%)
of the total combined voting power of all classes of stock of the Company).
Those individuals to whom options are granted under the terms of this Plan are
sometimes hereinafter referred to as "Optionees". The Committee shall
determine the terms and provisions of the options granted hereunder (which
need not be identical), the time or times at which options shall be granted
and the number of shares of common stock of the Company (sometimes hereinafter
referred to as "Common Stock") (or such number of shares of stock in which
the Common Stock may at any time hereafter be constituted), for which options
are granted. Notwithstanding the foregoing, in no event shall the Committee
grant any options to the Company's Chief Executive Officer, any of the four
(4) most highly compensated officers, or any other employee of the Company if
the aggregate number of shares of Common Stock which can be purchased by any
such individual through the exercise of all options granted to him or her
under the Plan exceeds 300,000 shares of Common Stock, adjusted as provided
for in Section 5 hereof. For purposes of this Plan, the term "Subsidiary"
shall mean any corporation which satisfies the definition of a "subsidiary
corporation" as contained in Section 424(f) of the Code and the term
"Subsidiaries" shall mean all corporations which satisfy the definition of a
"subsidiary corporation" as contained in Section 424(f) of the Code when, in
each case, for purposes of applying such definition, the "employer
corporation" is deemed to mean the Company.
<PAGE>33
In selecting Optionees and in determining the number of shares for
which options are granted, the Committee may weigh and consider the following
factors: the office or position of the Optionee and his/her degree of
responsibility for the growth and success of the Company, length of service,
remuneration, promotions and potential. The foregoing factors shall not be
considered to be exclusive or obligatory upon the Committee, and the Committee
may properly consider any other factors which to it seems appropriate.
An Optionee who has been granted an option under the Plan may be
granted additional options under the Plan if the Committee shall so determine.
In no event shall any options be granted under this Plan at any
time after the termination date set forth at the end of this Plan.
4. Shares Subject to the Plan
Subject to adjustment as provided in Section 5 of this Plan, the
aggregate number of reserved shares of Common Stock for which options may be
granted hereunder shall not exceed three million (3,000,000) shares,
determined as of April 24, 1996, (the effective date of this Plan); provided,
however, that as to shares subject to options which expire or terminate
pursuant to the provisions of this Plan without having been exercised in full,
such shares shall be considered to be available again for placement under
options granted thereafter under the Plan. Shares issued pursuant to the
exercise of incentive stock options granted under the Plan shall be fully paid
and non-assessable.
5. Anti-Dilution Provisions
The aggregate number of shares and the class of shares as to which
options may be granted under the Plan, the number and class of shares subject
to each outstanding option, the price per share thereof (but not the total
price), and the number of shares as to which an option may be exercised at any
one time, shall all be adjusted proportionately in the event of any change,
increase or decrease in the outstanding shares of Common Stock or any change
in classification of the Company's Common Stock without receipt of
consideration by the Company which results either from a split-up, reverse
split or consolidation of shares, payment of a stock dividend,
recapitalization, reclassification or other like capital adjustment so that
upon exercise of the option, the Optionee shall receive the number and class
of shares that he would have received had he been the holder of the number of
shares of Common Stock for which the option is being exercised immediately
preceding such change, increase or decrease in the outstanding shares of
Common Stock of the Company. Any such adjustment made by the Committee shall
be final and binding upon all Optionees, the Company, and all other interested
persons. Any adjustment of an incentive stock option under this paragraph
shall be made in such manner as not to constitute a "modification" within the
meaning of Section 424(h)(3) of the Code.
Anything in this Section 5 to the contrary notwithstanding, no
fractional shares or scrip representative of fractional shares shall be issued
upon the exercise of any option. Any fractional share interest resulting from
any change, increase or decrease in the outstanding shares of Common Stock of
the Company or resulting from any reorganization, merger, or consolidation for
which adjustment is provided in this Section 5 shall disappear and be absorbed
into the next lowest number of whole shares, and the Company shall not be
liable for any payment for such fractional share interest to the Optionee upon
his exercise of the option.
<PAGE>34
6. Option Price
The purchase price for each share of Common Stock which may be
acquired upon the exercise of each option issued under the Plan shall be
determined by the Committee at the time the option is granted, but in no event
shall such purchase price be less than one hundred percent (100%) of the fair
market value of the Company's Common Stock on the date of grant. If the
Common Stock of the Company is listed upon an established stock exchange or
exchanges on the day the option is granted, such fair market value shall be
deemed to be the highest closing price of the Common Stock of the Company on
such stock exchange or exchanges on the day the option is granted, or if no
sale of the Company's Common Stock shall have been made on any stock exchange
on that day, on the next preceding day on which there was a sale of such
stock.
7. Option Exercise Periods
a. The time within which any option granted hereunder may be
exercised shall be, by its terms, not earlier than one (1) year from the date
such option is granted and not later than ten (10) years from the date such
option is granted. Except as otherwise provided for herein, the Optionee must
remain in the continuous employment of the Company or any of its Subsidiaries
from the date of the grant of the option to and including the date of exercise
of option in order to be entitled to exercise his option. Options granted
hereunder shall be exercisable in such installments and at such dates as the
Committee may specify. Unless the Committee shall specify otherwise, the
right of each Optionee to exercise his option to purchase the number of shares
to which his option initially related shall accrue on a cumulative basis as
follows:
(i). the Optionee shall have the right to purchase one-
fourth (1/4) of the total number of shares of Common Stock which can be
purchased pursuant to the option (subject to adjustment as provided in Section
5 hereof) at the end of the one (1) year period following the date the option
is granted;
(ii). the Optionee shall have the right to purchase an
additional one-fourth (1/4) of the total number of shares of Common Stock
which can be purchased pursuant to the option (subject to adjustment as
provided in Section 5 hereof) at the end of the two (2) year period following
the date the option is granted;
(iii). the Optionee shall have the right to purchase an
additional one-fourth (1/4) of the total number of shares of Common Stock
which can be purchased pursuant to the option (subject to adjustment as
provided in Section 5 hereof) at the end of the three (3) year period
following the date the option is granted;
(iv). the Optionee shall have the right to purchase the
remaining one-fourth (1/4) of the total number of shares of Common Stock which
can be purchased pursuant to the option (subject to adjustment as provided in
Section 5 hereof) at the end of the four (4) year period following the date
the option is granted.
<PAGE>35
Continuous employment shall not be deemed to be interrupted by
transfers between the Subsidiaries or between the Company and any Subsidiary,
whether or not elected by termination from any Subsidiary and re-employment by
any other Subsidiary or the Company. Time of employment with the Company
shall be considered to be one employment for the purposes of this Plan,
provided there is no intervening employment by a third party or no interval
between employments which, in the opinion of the Committee, is deemed to break
continuity of service. The Committee shall, at its discretion, determine the
effect of approved leaves of absence and all other matters having to do with
"continuous employment". Where an Optionee dies while employed by the Company
or any of its Subsidiaries, his options may be exercised following his death
in accordance with the provisions of Section 10 below.
b. Notwithstanding the foregoing provisions of Section 7(a), in
the event the Company or the shareholders of the Company enter into an
agreement to dispose of all or substantially all of the assets or stock of the
Company by means of a sale, merger, consolidation, reorganization,
liquidation, or otherwise, or in the event a Change of Control (as hereinafter
defined) of the Company shall occur, all unexercised options granted hereunder
shall become immediately exercisable with respect to the full number of shares
subject to that option during the period commencing as of the date of
execution of such agreement and ending as of the earlier of (i) ten (10) years
from the date such option was granted, or (ii) ninety (90) days following the
date on which a Change in Control occurs or the disposition of assets or stock
contemplated by this sentence is consummated. In addition, in the event that
substantially all the stock of any Subsidiary by whom an Optionee is employed
is sold or otherwise disposed of by merger, consolidation, reorganization,
liquidation or otherwise, or in the event that substantially all the assets of
any division of the Company or any division of any Subsidiary by whom the
Optionee is employed are sold or disposed of by means of a sale, merger,
consolidation, reorganization, liquidation or otherwise and, in connection
with any such asset sale, the Optionee's employment with the Company or the
Subsidiary (as the case may be) is terminated, the options of an Optionee
employed by such a division or Subsidiary shall, unless the Optionee remains
in the employ of the Company or any Subsidiary of the Company immediately
following any such sale or other disposition of stock or assets, become
immediately exercisable with respect to the full number of shares subject to
that option during the period commencing as of the date of execution of the
agreement providing for such sale or other disposition and ending as of the
earlier of (x) ten (10) years from the date such option was granted and (y)
ninety (90) days following the date on which the disposition of the assets or
stock contemplated by this sentence is consummated. Ninety (90) days
following the consummation of any disposition of assets or stock referred to
in the preceding sentence, any unexercised options issued hereunder which have
become exercisable pursuant to this paragraph (or any unexercised portion
thereof) shall terminate and cease to be effective. In addition, if any
disposition of assets or stock referred to in this paragraph occurs with
respect to substantially all the assets or stock of the Company or if a Change
<PAGE>36
in Control occurs, ninety (90) days following such disposition of assets or
stock or Change in Control, this Plan and any unexercised options issued
hereunder which have become exercisable pursuant to this paragraph (or any
unexercised portion thereof) shall terminate and cease to be effective, unless
provision is made in connection with such transaction for assumption of
options previously granted or the substitution for such options of new options
covering the securities of a successor corporation or an affiliate thereof,
with appropriate adjustments as to the number and kind of securities and
prices.
c. For purposes of this Plan, a "Change in Control" shall be
deemed to have occurred if:
(i). any "person" or "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Act")) becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Act) of more than thirty percent (30%) of the then outstanding voting
stock of the Company, otherwise than through a transaction arranged by, or
consummated with the prior approval of its Board of Directors; or
(ii). during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of the Company (and any new director whose election to the Board of
Directors or whose nomination for election by the Company's shareholders was
approved by a vote of at least two thirds of the directors then still in
office who either were directors at the beginning of such period or whose
election or nomination for election was previously so approved) (hereinafter
referred to as the "Continuing Directors") cease for any reason to constitute
a majority thereof; or
(iii). the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger
or consolidation which would result in the voting securities of the Company
immediately prior thereto continuing to represent (either by remaining
outstanding or being converted into voting securities of the surviving entity)
at least 80% of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation (provided, however, that if prior to the merger or
consolidation, the Board of Directors of the Company adopts a resolution that
is approved by a majority of the Continuing Directors providing that such
merger or consolidation shall not constitute a "change in control" for
purposes of the Plan, then such a merger or consolidation shall not constitute
a "change in control"); or
(iv). the shareholders of the Company approve an agreement
for the sale or disposition by the Company of all or substantially all the
assets of the Company.
<pae>37
d. Any change or adjustment made pursuant to the terms of this
Section 7 shall be made in such a manner so as not to constitute a
"modification" as defined in Section 424 of the Code, and so as not to cause
any incentive stock option issued under this Plan to fail to continue to
qualify as an incentive stock option as defined in Section 422(b) of the Code.
Notwithstanding the foregoing, in the event that any such agreement shall be
terminated without consummating the disposition of said stock or assets, any
unexercised unaccrued portion of any option that had become exercisable solely
by reason of the provisions of this paragraph shall again become unaccrued and
unexercisable as of said termination of such agreement; subject, however, to
such portion of such option accruing pursuant to the normal accrual schedule
provided in the terms under which such option was granted. Any exercise of
any portion of any option prior to said termination of said agreement shall
remain effective despite the fact that such portion became exercisable solely
by reason of the Company or its shareholders entering into said agreement to
dispose of the stock or assets of the Company or the stock or assets of any
Subsidiary of the Company, any division of the Company or any division of any
Subsidiary of the Company.
8. Exercise of Option
Options shall be exercised as follows:
a. Notice and Payment. Each option, or any installment
thereof, shall be exercised, whether in whole or in part, by giving written
notice to the Company at its principal office, (the "Exercise Notice") that
the Optionee intends to exercise all or part of any option he has been granted
and by paying to the Company the purchase price for the number of shares of
Common Stock of the Company which the Optionee desires to purchase at the
price per share (as adjusted) set forth in the option which the Optionee
desires to exercise.
b. The Exercise Notice: (i) shall state the identity of the
options being exercised (by reference to the date of the grant of the option);
(ii) shall state the number of shares to be purchased and the purchase price
to be paid; and (iii) shall contain representations on behalf of the Optionee
that he acknowledges that the Company is selling the shares being acquired by
him under a claim of exemption from registration under the Securities Act of
1933 as amended (hereinafter referred to as the "Act"), as a transaction not
involving any public offering; that he represents and warrants that he is
acquiring such shares with a view to "investment" and not with a view to
distribution or resale; and that he agrees not to transfer, encumber or
dispose of the shares unless: (A) a registration statement with respect to
the shares shall be effective under the Act, together with proof satisfactory
to the Company that there has been compliance with applicable state law; or
(B) the Company shall have received an opinion of counsel in form and content
satisfactory to the Company to the effect that the transfer qualifies under
Rule 144 or some other disclosure exemption from registration and that no
violation of the Act or applicable state laws will be involved in such
transfer, and/or such other documentation in connection therewith as the
Company's counsel may in its sole discretion require.
<PAGE>38
c. Payment of the purchase price for shares of Common Stock to
be acquired in connection with the exercise of any options granted under this
Plan shall be made: (i) by delivery to the Company of cash or a certified or
bank check payable to the order of the Company in an amount equal to the
portion of the purchase price which is payable in connection with the exercise
of such option; (ii) by delivery to the Company of previously acquired shares
of the Company's Common Stock having an aggregate fair market value equal to
the portion of the purchase price which is payable in connection with the
exercise of such option, provided that such previously acquired shares of
Common Stock have been held by the Optionee for at least six (6) months or
such other period of time as may be required by the Committee at the time such
shares are delivered to the Company in connection with the Optionee's exercise
of his/her option hereunder; or (iii) by the Company's retention of a portion
of the shares of the Company's Common Stock to be issued in connection with
the exercise of such option, which shares of Common Stock have an aggregate
fair market value equal to the total exercise price payable for that number of
shares of the Company's Common Stock (including retained shares) which is to
be issued upon the exercise by the optionee of the number of options
identified by the optionee in the exercise notice. If shares of the Company's
Common Stock are delivered (or retained by the Company) as payment of the
purchase price for shares of Common Stock to be acquired in connection with
the exercise of options granted hereunder, the shares of Common Stock which
are delivered (or retained by the Company) in payment of such purchase price
shall be equal to the fair market value (determined in accordance with the
principles set forth in Section 6 hereof) of the Common Stock on the day
immediately preceding the day on which such Common Stock is delivered (or
retained by the Company) in payment of the purchase price for shares of Common
Stock to be acquired in connection with the exercise of options granted
hereunder.
d. Issuance of Certificates. Certificates representing the
shares purchased by the Optionee shall be issued as soon as practicable after
the Optionee has complied with the provisions of Section 8(a) hereof.
e. Rights as a Shareholder. The Optionee shall have no rights
as a shareholder with respect to the shares purchased until the date of the
issuance to him of a Certificate representing such shares.
9. Assignment of Option
a. Subject to the provisions of Sections 9(b) and 10 hereof,
options granted under this Plan may not be assigned voluntarily or
involuntarily or by operation of law. Any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of, or to subject to execution,
attachment or similar process, any incentive stock option, or any right
thereunder, contrary to the provisions hereof shall be void and ineffective,
shall give no right to the purported transferee, and shall, at the sole
discretion of the Committee, result in forfeiture of the option with respect
to the shares involved in such attempt.
<PAGE>39
b. Notwithstanding anything to the contrary contained in the
terms of the Plan as in effect at any time prior to the date hereof and
notwithstanding anything to the contrary contained in the terms of any
statement, letter or other document or agreement setting forth the terms and
conditions of any options previously issued pursuant to the terms of this
Plan, any and all Non-Qualified Options (as defined in Section 13 hereof)
previously issued to any officer of the Company (as defined in Rule 16a-l(f)
issued under the Securities and Exchange Act of 1934 (hereinafter an
"Executive Officer")) pursuant to the terms of the Plan and, subject to the
approval of the Committee, any Non-Qualified Options which may be granted or
issued to any Executive Officer of the Company at any time in the future
pursuant to the terms of the Plan shall be transferable by the Executive
Officer to whom such Non-Qualified Options have been or are granted to: (a)
the spouse, children or grandchildren of the Executive Officer (hereinafter
"Immediate Family Members"); (b) a trust or trusts for the exclusive benefit
of such Immediate Family Members: (c) a partnership or limited liability
company in which such Immediate Family Members are the only partners or
members; or (d) a private foundation established by the Executive Officer;
provided that (x) there may be no consideration for any such transfer; (y) in
the case of Non-Qualified Options which may be granted in the future, the
statement, letter or other document or agreement setting forth the terms and
conditions of any such Non-Qualified Options must be approved by the Committee
and must expressly provide for and limit the transferability of such Non-
Qualified Options to transfers which are permitted by the foregoing provisions
of this Section 9(b); and (z) any subsequent transfer of transferred Non-
Qualified Options shall, except for transfers occurring as a result of the
death of the transferee as contemplated by Section 10(e), be prohibited.
Following the transfer of any Non-Qualified Options as permitted by the
foregoing provisions of this Section 9(b), any such transferred Non-Qualified
Options shall continue to be subject to the same terms and conditions
applicable to such Non-Qualified Options immediately prior to the transfer;
provided that, for purposes of this Plan, the term "Optionee" shall be deemed
to refer to the transfer. Notwithstanding the foregoing, the events of
termination of employment of Section 10 hereof shall continue to be applied
with respect to the original Optionee for the purpose of determining whether
or not the Non-Qualified Options shall be exercisable by the transferee and,
upon termination of the original Optionee's employment, the Non-Qualified
Options shall be exercisable by the transferee only to the extent and for the
periods specified in Section 10 below.
10. Effect of Termination of Employment, Death or Disability
a. In the event of the termination of employment of an Optionee
during the two (2) year period after the date of issuance of an option to him
either by reason of (i) a discharge for cause, or (ii) voluntary separation on
the part of the Optionee and without consent of the Company or the Subsidiary
for whom the Optionee was employed, any option or options theretofore granted
to him under this Plan, to the extent not theretofore exercised by him, shall
forthwith terminate.
<PAGE>40
b. In the event of the termination of employment of an Optionee
(otherwise than by reason of death or retirement of the Optionee at his
Retirement Date) by the Company or by any of the Subsidiaries employing the
Optionee at such time, any option or options granted to him under the Plan to
the extent not theretofore exercised shall be deemed canceled and terminated
forthwith, except that, subject to the provisions of subparagraph (a) of this
Section, such Optionee may exercise any options theretofore granted to him,
which have not then expired and which are otherwise exercisable within the
provisions of Section 7 hereof, within three (3) months after such
termination. If the employment of an Optionee shall be terminated by reason
of the Optionee's retirement at his Retirement Date from the Company or from
any of the Subsidiaries employing the Optionee at such time, the Optionee
shall have the right to exercise such option or options held by him to the
extent that such options have not expired, at any time within three (3) months
after such retirement. The provisions of Section 7 to the contrary
notwithstanding, upon retirement, all options held by an Optionee shall be
immediately exercisable in full. The transfer of an Optionee from the employ
of the Company to a Subsidiary of the Company or vice versa, or from one
Subsidiary of the Company to another, shall not be deemed to constitute a
termination of employment for purposes of this Plan.
c. In the event that an Optionee shall die while employed by
the Company or by any of the Subsidiaries or shall die within three (3) months
after retirement on his Retirement Date (from the Company or any Subsidiary),
any option or options granted to him under this Plan and not theretofore
exercised by him or expired shall be exercisable by the estate of the Optionee
or by any person who acquired such option by bequest or inheritance from the
Optionee in full, notwithstanding Section 7, at any time within one (1) year
after the death of the Optionee. References hereinabove to the Optionee shall
be deemed to include any person entitled to exercise the option after the
death of the Optionee under the terms of this Section.
d. In the event of the termination of employment of an Optionee
by reason of the Optionees' disability, the Optionee shall have the right,
notwithstanding the provisions of Section 7 hereof, to exercise all options
held by him, to the extent that options have not previously expired or been
exercised, at any time within one (1) year after such termination. The term
"disability" shall, for the purposes of this Plan, be defined in the same
manner as such term is defined in Section 105(d)(4) of the Internal Revenue
Code of 1986.
e. For the purposes of this Plan, "Retirement Date" shall mean
with respect to an Optionee, the date the Optionee actually retires from his
employment with the company or, if applicable, the Subsidiary by whom he is
employed; provided that such date occurs on or after the date the Optionee is
otherwise entitled to retire under the terms of the company's retirement plan
or, if applicable, the retirement plan of the Subsidiary by whom the Optionee
is employed.
<PAGE>41
11. Amendment and Termination of the Plan
The Board of Directors of the Company may at any time suspend,
amend or terminate the Plan; provided, however, that except as permitted in
Section 12 hereof, no amendment or modification of the Plan which would:
a. increase the maximum aggregate number of shares as to which
options may be granted hereunder (except as contemplated in Section 5); or
b. reduce the option price or change the method of determining
the option price; or
c. increase the time for exercise of options to be granted or
those which are outstanding beyond the terms of ten (10) years; or
d. change the designation of the employees or class of
employees eligible to receive options under this Plan, may be adopted unless
with the approval of the holders of a majority of the outstanding shares of
Common Stock represented at a shareholders' meeting of the Company, or with
the written consent of the holders of a majority of the outstanding shares of
Common Stock. No amendment, suspension or termination of the Plan may,
without the consent of the holder of the option, terminate his option or
adversely affect his rights in any material respect.
12. Incentive Stock Options Power to Establish Other Provisions.
It is intended that the Plan shall conform to and (except as
otherwise expressly set forth herein) each option shall qualify and be subject
to exercise only to the extent that it does qualify as an "incentive stock
option" as defined in Section 422 of the Code and as such section may be
amended from time to time or be accorded similar tax treatment to that
accorded to an incentive stock option by virtue of any new Revenue Laws of the
United States. The Board of Directors may make any amendment to the Plan
which shall be required so to conform the Plan. Subject to the provisions of
the Code, the Committee shall have the power to include such other terms and
provisions in options granted under this Plan as the Committee shall deem
advisable.
The grant of any options pursuant to the terms of this Plan which do not
qualify as "incentive stock options" (as defined in Section 422 of the Code)
as a result of the application of the $100,000 annual limitation contained in
Section 13 hereof is hereby approved provided that the maximum number of
shares of common Stock of the Company which can be issued pursuant to the
terms of this Plan (as provided for in Section 4 hereof) is not exceeded by
the grant of any such options and, to the extent that any options previously
granted pursuant to the terms of this Plan were not "incentive stock options"
within the meaning of Section 422 of the Code, the grant of such options is
hereby ratified, approved and confirmed.
<PAGE>42
13. Maximum Annual Value of Options Exercisable.
Notwithstanding any provisions of this Plan to the contrary if: (a) the
sum of: (i) the fair market value (determined as of the date of the grant) of
all options granted to an Optionee under the terms of this Plan which become
exercisable for the first time in any one calendar year; and (ii) the fair
market value (determined as of the date of the grant) of all options
previously granted to such Optionee under the terms of this Plan or any other
incentive stock option plan of the Company or its subsidiaries which also
become exercisable for the first time in such calendar year; exceeds (b)
$100,000; then, (c) those options shall continue to be binding upon the
Company in accordance with their terms but, to the extent that the aggregate
fair market of all such options which become exercisable for the first time in
any one calendar year (determined as of the date of the grant) exceeds
$100,000, such options (referred to, for purposes of this Plan, as "Non-
Qualified Options") shall not be deemed to be incentive stock options as
defined in Section 422 (b) of the Code. For purposes of the foregoing, the
determination of which options shall be recharacterized as not being incentive
stock options issued under the terms of this Plan shall be made in inverse
order of their grant dates and, accordingly, the last options received by the
Optionee shall be the first options to be recharacterized as not being
incentive stock options granted pursuant to the terms of the Plan.
14. General Provisions
a. No incentive stock option shall be construed as limiting any
right which the Company or any parent or subsidiary of the Company may have to
terminate at any time, with or without cause, the employment of an Optionee.
b. The Section headings used in this Plan are intended solely
for convenience of reference and shall not in any manner amplify, limit,
modify or otherwise be used in the construction or interpretation of any of
the provisions hereof.
c. The masculine, feminine or neuter gender and the singular or
plural number shall be deemed to include the other whenever the content so
indicates or requires.
d. No options shall be granted under the Plan after ten (10)
years from the date the Plan is adopted by the Board of Directors of the
Company or approved by the stockholders of the Company, whichever is earlier.
15. Effective Date and Duration of the Plan
The Plan will become effective as of April 24, 1996, assuming, as
required by Section 422 of the Code, the Plan is approved by the Shareholders
of the Company at the 1996 Annual Meeting. The Plan will terminate on April
23, 2006 provided however, that the termination of the Plan shall not be
deemed to modify, amend or otherwise affect the term of any options
outstanding on the date the Plan terminates.
<PAGE>43
IN WITNESS WHEREOF, the undersigned has executed this First
Amendment and Restatement of the Mark IV Industries, Inc. 1996 Incentive Stock
Option Plan for and on behalf of Mark IV Industries, Inc. this 29th day of
July, 1996.
MARK IV INDUSTRIES, INC.
By: /s/Richard L. Grenolds
-----------------------
Richard L. Grenolds
Vice President and
Chief Accounting Officer
<PAGE>44
EXHIBIT 11
MARK IV INDUSTRIES, INC.
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS(UNAUDITED)
For the Three and Six Month Periods Ended August 31, 1997 and 1996
(Amounts in thousands, except per share data)
Three Months Six Months
Ended August 31, Ended August 31,
----------------- ---------------
1997 1996 1997 1996
---- ---- ---- ----
PRIMARY
Shares outstanding:
Weighted average number of
shares outstanding 63,700 66,300 64,600 66,300
Net effect of dilutive stock
options (1) 500 400 500 400
------ ------ ------ ------
Total 64,200 66,700 65,100 66,700
====== ====== ====== ======
Income from continuing operations $27,500 $24,200 $57,600 $51,500
Income from discontinued operations - 2,600 - 3,800
------- ------- ------- -------
Net income $27,500 $26,800 $57,600 $55,300
======= ======= ======= =======
Income per share from
continuing operations (2) $ .43 $ .36 $ .89 $ .77
Income per share from
discontinued operations - .04 - .06
------- ------- ------- -------
Net income per share (2) $ .43 $ .40 $ .89 $ .83
======= ======= ======= =======
FULLY-DILUTED
Shares outstanding:
Weighted average number of
shares outstanding 63,700 66,300 64,600 66,300
Net effect of dilutive stock
options (1) 500 400 500 400
------- ------ ------ ------
Total 64,200 66,700 65,100 66,700
======= ====== ====== ======
Income from continuing operations $27,500 $24,200 $57,600 $51,500
Income from discontinued operations - 2,600 - 3,800
------- ------- ------- -------
Net income per share $27,500 $26,800 $57,600 $55,300
======= ======= ======= =======
Income per share from
continuing operations $ .43 $ .36 $ .89 $ .77
Income per share from
discontinued operations - .04 - .06
------- ------- ------- -------
Net income $ .43 $ .40 $ .89 $ .83
======= ======= ======= =======
- ------------------------------------
(1) The net effects for the three and six month periods ended August 31,
1997 and 1996 are based upon the treasury stock method using the average
market price during the periods for the primary amounts, and the higher
of the average market price or the market price at the end of the period
for the fully-diluted amounts.
(2) Primary earnings per share have been reported in the Company's financial
statements based only upon the shares of common stock outstanding, since
the dilutive effect of the stock options is not considered to be
material.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Mark IV Industries, Inc. and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-END> AUG-31-1998
<CASH> 102,700
<SECURITIES> 0
<RECEIVABLES> 444,900
<ALLOWANCES> 14,600
<INVENTORY> 378,000
<CURRENT-ASSETS> 1,001,200
<PP&E> 751,500
<DEPRECIATION> 160,800
<TOTAL-ASSETS> 2,174,600
<CURRENT-LIABILITIES> 444,400
<BONDS> 767,900
0
0
<COMMON> 600
<OTHER-SE> 740,600
<TOTAL-LIABILITY-AND-EQUITY> 2,174,600
<SALES> 1,091,200
<TOTAL-REVENUES> 1,091,200
<CGS> 734,400
<TOTAL-COSTS> 967,100
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,900
<INCOME-PRETAX> 94,200
<INCOME-TAX> 36,600
<INCOME-CONTINUING> 57,600
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 57,600
<EPS-PRIMARY> .89
<EPS-DILUTED> .89
</TABLE>
